Why multicloud is the future of payments

The demand for always-on, 24/7/365 banking has led to many financial institutions migrating their services to the cloud. While the cost and complexity of doing this has been considerable, it has also come with undoubted benefits. It’s reduced the burden on legacy infrastructure and increased the resiliency of mission-critical systems, enabling banks to deliver a much better service for customers.

Casting our minds back, many of us will remember how in the past much of the debate around cloud migrations centred on public vs private, but things have moved on a great deal since then. Now, the most important conversation banks should be having is about embracing not just the cloud, but multiple clouds.

The multi-cloud approach means rather than banks making the decision to use perhaps just Google, Amazon or Microsoft’s cloud platforms, they use two, or even all three. In theory, this means the risk of outages is reduced, increasing resiliency and enabling banks to better serve their customers.

Why should banks invest in multi-cloud?

While regulators tend not to prescribe how banks manage risk, they have been dropping hints that the multi-cloud approach is worthy of consideration. Over in the US, FINRA (Financial Industry Regulation Authority) warned of the dangers of “vendor lock-in”, while the Bank of England’s Prudential Regulation Authority said it expects institutions to reduce “concentration risks”. The European Banking Authority also recently stressed the importance of there being “no single point of failure” in banks’ cloud computing strategies.

Of course, moving from single-cloud to multi-cloud comes at a cost. And the benefits of investing in a multi-cloud approach depend on exactly which multi-cloud strategy you adopt. In its simplest form, multi-cloud could mean having a second cloud provider on hand just so you could migrate everything from one to the other in the event of an outage.

Why resiliency is the key strength of multi-cloud

A more complex multi-cloud arrangement would involve two (or more) cloud providers, with all processes taking place simultaneously across each cloud. This means that the bank spreads its risk and can balance its workload. In the event of an outage at one cloud provider, the bank can keep its services online and end customers will be unaffected. This way, it can achieve the highest possible levels of resiliency.

Looking at each cloud provider in isolation, their levels of downtime are statistically insignificant. They are specialists in what they do. They invest in their infrastructure and their virtual and physical security systems to ensure that they can offer their customers a high level of service. They wouldn’t be in business if they didn’t do a good job of resiliency.

However, there is always a risk if you put all your eggs in one basket. And the best way of minimizing that risk is to ensure that there can be no single point of failure. Therefore, the multi-cloud approach is worth investing in.

The key benefit, then, for banks looking to embark on a multi-cloud journey, is the increased resiliency. However, not every function within a bank necessarily needs to be protected in this way. If, for example, the bank’s internal Human Resources platform were to be out of action for 24 hours, it’s unlikely there would be any long-term financial impact on the organization. When it comes to mission-critical processes such as payments, though, an outage of even a few minutes could have severe implications.

Multi-cloud is the best strategy for mission-critical services

Payment systems are the one service that all customers use every day; therefore, both resilience and security are paramount. They cannot be out of action for 24 hours. Payments are connected to everything. They affect everyone, whether it’s a retail customer, a corporate customer, or your treasury department. If you can’t move money, you’re not really a bank anymore.

I’ve spoken to banks that are looking to achieve 99.999% availability. That’s how robust banks are expecting their payment systems to be, and in order to make them that robust, you really need to have a multi-cloud approach.

Wider benefits of multi-cloud

There are further advantages of a multi-cloud approach, too. At busy times such as the end of the month—when salaries are paid and large bills are settled—or just before a major holiday like Christmas, a multi-cloud approach allows banks to load balance payments traffic, so their systems aren’t overwhelmed.

On top of this, a multi-cloud approach offers banks real flexibility in terms of developing future services. It’s much easier to build and deploy new services in the cloud and then connect them to other cloud-based services than to host them within your core infrastructure. Cloud-native services and applications deployed across multiple clouds will not only benefit from the resiliency of the multi-cloud approach but be highly scalable too in order to meet customer demand.

What banks should look for in a tech provider offering a multi-cloud approach

Taking a multi-cloud approach will involve a certain amount of cost and complexity, so banks opting to go down this path should choose their partners carefully. One key area where they will need help is in ensuring data consistency across multiple cloud providers. This is vital for making sure payments made in one cloud can instantaneously be monitored in the other. It combines the highest degree of availability with reduced cloud provider concentration risk.

Banks are always looking to do things better, faster, and more cost-effectively, and more securely. Customers are demanding. They want to keep their money safe. They want to transact securely. But at the same time, they want new and innovative products. The multi-cloud approach gives banks the best chance of satisfying their customers on all fronts.

The future of multi-cloud

Once banks have realized the benefits of the multi-cloud approach in areas such as payments, I believe that it will then become the central pillar around which all new services are built. In 10 years’ time, the majority of a bank’s estate will consist of cloud-native apps deployed across multiple clouds, accessible to customers on a 24/7/365 basis, with 99.999%—or greater—uptime.

Being operationally resilient is not just good business sense – it’s critical to survival. There are costs involved in taking a multi-cloud approach, but spending on preparation now is far better than paying the price of being unprepared. Banks that adopt this approach now will find the return on investment will grow as time goes on.

Michael Mueller

Michael Mueller,CEO, Form3

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