How Do You Create a Cloud Migration Plan for a Bank?

Why Migrate in the First Place?

A Cloud Migration Plan Can Help Banks Set Expectations, Mitigate Risk, and Calm Some Nerves

When it comes to the type of change that’s involved with cloud migrations, decision-makers of Canadian banks are a little like overprotective parents. You know the type. They like to hover close by, keep an eye on things, always be within arm’s reach to ensure they can intervene if anything ever goes wrong. They do a lot of active watching let’s call it, a kind of watching that involves logical calculation. If there’s ever an unleashed dog off in the distance at the other end of a park, they’re the first to know about it—as if they can sense the potential risk. The moment the animal is unleashed, they’ve already envisioned the multitude of scenarios in which that potential threat could be a danger to their investment. On top of that, they’ve formed numerous solutions and alternative options for how they will intervene to keep things under control and keep things safe. They like to plan. They like to watch closely for any hint of danger. That’s not a bad thing, either.

Look at the industry’s approach to adoption of open banking around the world. The right balance of active watching ensures that the moves we make are deliberate and controlled, mitigating risk while evaluating opportunities.

Unfortunately, though, being overprotective seems to have underlying negative connotations. It implies that there’s a level of protectiveness that’s acceptable and beyond that you’re somehow overdoing it. You’re being too cautious. You’re doing something wrong. But just like those overprotective parents, cautious decision-makers of banks and Canadian financial leaders know that when it comes to something this valuable there’s really no such thing as being too cautious.

They also know that the best way to limit risk is to always have a good plan.

What Is a Cloud Migration or Cloud Banking Migration?

A cloud migration is a transformational change that involves moving and deploying a bank or financial institution’s hardware, infrastructure, applications, data, and workloads to a public cloud service provider (CSP). It’s quickly becoming one of the foundational steps on a financial institution’s journey to core modernization and digital transformation. But a cloud migration is an enormous undertaking that comes with potential risks to day-to-day operations and requires an incredible amount of foresight and planning in order to ensure business process interruptions are mitigated, financial data remains secure, consumer privacy is protected, and stringent compliance and regulatory requirements are continuously met.

While opportunities around flexibility and innovation are easily exploited by fintechs and other third-party service providers—particularly financial technology startups that have the ability to build modern digital financial service solutions from scratch—banks aren’t so lucky. They have antiquated and monolithic core systems to consider, and those legacy systems are infamously challenging to update or replace.

While complete core modernization is integral to a bank’s long term digital transformation, a cloud migration can play a fundamental role on the path to modernization by unlocking many of the opportunities enjoyed by smaller fintechs. That’s because a cloud migration can provide banks with a framework to improve and expand the capabilities of core legacy systems through APIs and unlock a number of innovation-driven efficiencies, including on-demand scalability as well as adaptable product development and rapid testing opportunities. Unlocking those efficiencies by migrating to and building on a cloud-based infrastructure can also improve integration within DevOps by centralizing development environments, as well as automating infrastructure changes, testing, workflows, and performance measurements.

Ultimately, cloud migrations can provide invaluable opportunities that can help ensure banks and financial institutions have the capacity and the flexibility to explore and develop innovative banking experiences that digital natives and maturing millennial demographic consumers have come to expect.

Learn more about Cloud Banking here.

How Do You Create a Detailed Cloud Migration Plan for a Bank?

Not all cloud migrations will be the same. Every bank and financial institution will have a different set of internal systems, business processes, workloads, and data and security requirements that are unique to each organization. They will also have different teams with different skillsets. That means a cloud migration is anything but a one-size-fits-all solution. Some financial institutions will have more work than others depending on their reliance on things like legacy applications, internal hardware and systems, and custom workflows. But while all migrations will be executed differently, many financial institutions will take similar strategic approaches to cloud migration and deployment, and all of them will start the same strategic initiative—creating a cloud migration plan.

A cloud migration plan is a financial institution’s guiding reference material that outlines the specific details for the organization’s cloud migration strategy. It identifies exactly how the financial institution will move its data and applications to the cloud while providing a strategic perspective on how the migration will directly contribute to the financial institution’s digital transformation.

What Does Cloud Migration Look Like?

A detailed cloud migration plan may include the following information:

• A detailed roadmap for the cloud migration journey
• An identified cloud service provider
• Disruptive competitive forces in the industry
• Current infrastructure challenges
• Industry-specific challenges
• Unique benefits to cloud migration
• The identified cloud migration leader and migration team
• Details of the proposed cloud-based architecture
• Information on how to effectively meet security and compliance requirements
• A list of deadline-driven key milestones
• A strategy for core modernization

Where To Begin With Cloud Banking?

1. Lay the Foundation for Cloud Migration

The cloud migration plan should include a detailed roadmap for the cloud migration journey ahead, identifying a clear path to a cloud service provider’s infrastructure while also outlining the project’s key priorities. Creating a plan is a perfect opportunity to capture and provide an executive summary of the financial institution’s unique proposition for why a cloud migration is necessary at this time and how the cloud-based infrastructure will help the financial institution prepare for and respond to broad technological and business challenges that are expected in the industry in the near future.

2. Pay Attention to Your Surroundings and Influence on Your Own Infrastructure

While providing a background on anticipated industry changes, the cloud migration plan should take into consideration and adequately frame any disruptive competitive forces currently at play in the market. That includes the emergence of new fintech firms and how modern digital technologies have dramatically influenced consumer expectations for personalized financial services. When capturing these generalized details, it’s particularly important to illustrate how they specifically relate to the financial institution’s unique products, customers, and position in the market. Incorporating any quantitative data and internal insights can be a powerful technique for helping the organization understand its unique challenges and help gain project understanding and support from internal teams.

A cloud migration plan should also include a background on the current infrastructure, outlining important technological challenges with applications, product development initiatives, and sporadic or recurring performance issues. Identifying current or longstanding challenges with in-house technology allows the cloud migration team to address those challenges early on and build a strategy for their remediation and modernization into the plan.

With a detailed background capturing both industry and internal challenges, financial institutions will have a solid foundation for documenting a migration strategy that addresses their unique requirements and identifies expected benefits from the cloud migration. This could include benefits related to on-demand scalability, performance, and storage flexibility. Other benefits may include improvements to infrastructure security, DevOps testing and automation capabilities, and the ability to explore core modernization and open banking opportunities. By explicitly detailing both the anticipated technological and business benefits of transitioning to a cloud-based architecture in the migration plan, the cloud migration team can set and reinforce expectations for the project with senior executives, board members, stakeholders, and internal teams.

3. Provide Leadership and Establish a Team

The cloud migration plan should identify a cloud migration leader as well as the internal team that will be responsible for the project’s execution and success. That team should include an executive sponsor, as well as key individuals across the organization, including a cloud solution architect, project managers, compliance specialists, and cloud security experts. If external partners are required for the migration, they should also be listed with brief explanations of their roles and responsibilities. A well-rounded migration team will help ensure that the necessary skills and resources are in place to ensure a successful migration while limiting impact to day-to-day operations.

Most importantly, the cloud migration plan should accurately capture the cloud architecture and the sequential steps required for complete cloud deployment and eventual cloud-based business operations. This detailed part of the plan should include proposed servers, storage requirements, networks, and content delivery methods, as well as address any security and important industry compliance requirements, including SOC2, PCI DSS and ISO 27001.

4. Plan Ahead

The sequential steps should be reinforced with a list of deadline-driven key milestone achievements. It may be beneficial to break a cloud migration into smaller phases, as well, allowing the migration team to focus on and celebrate important key achievements along the way.

In addition to providing a framework for phasing out internal hardware systems, one of the most important elements of creating a cloud migration plan is developing a clear strategy for core system modernization. Moving to the cloud is a foundational step toward digital transformation, so it’s important to understand how a cloud migration moves the institution forward and contributes to its overall digital transformation strategy. Migration teams should identify exactly how legacy systems will be containerized and transitioned to the cloud and what role they will play in the institution’s both near-term and long-term business strategies.

The Challenge of Addressing Core Modernization in a Cloud Migration Plan

Although some institutions will opt for a cloud-native approach to legacy software modernization, that may be an unrealistic short-term expectation. Financial institutions may take a number of different approaches to cloud migration, which may include rehosting, re-platforming, or refactoring systems.

Modernizing core banking legacy systems in order to make them cloud-native is a considerable undertaking in its own right, often requiring the refactoring or re-coding of aging, monolithic core solutions for deployment alongside modular microservices. One of the biggest problems with refactoring core banking legacy solutions is that those system are generally designed as single, autonomous units. In addition to being a significant expense and undertaking, it can be challenging to find developers with the right skillsets to recode aging systems.

Whether an institution opts for a cloud-native strategy or a rehosting strategy, external partnerships may be required. A core software vendor and a specialized cloud delivery partner can work together to provide the resources and technology necessary to help a financial institution realize its cloud migration and core system modernization strategy. In some cases, larger banks may find that a combination of software containerization paired with a modern API-based open banking strategy may provide the right balance of risk and opportunity for the near future. In these cases, a core modernization strategy may be treated as a separate project once the cloud migration is complete. Ultimately, it’s critical to include these details in the cloud migration plan.

With a solid cloud migration plan in place, financial institutions are better prepared to make a successful transition to the cloud and meet their digital transformation goals. The right plan will help mitigate risk, set expectations, align resources with deadlines, and ultimately set the stage for modernization.

And for those overprotective types, it might also help calm some nerves.

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