How the cloud helps banking and finance companies tackle core modernization challenges

Two decades of technology-driven transformation has left many financial services firms with significant complexity and technical debt. While banking and finance organizations have aggressively moved workloads and apps to the cloud to meet changing customer needs, some remain hesitant to tackle modernization of core infrastructure and systems, fearing a disruption to the business.

In a rapidly changing environment, IT leaders can no longer put off the critical modernization decisions required to ensure secure and resilient operations, which enables rapid innovation and growth.

“There is no option for banks to ignore the increasing complexity and technical debt,” says Nick Drouet, CTO and Distinguished Engineer, Kyndryl UK and Ireland. “They need to move quickly, and at scale.”

Modernization efforts, if not planned and managed carefully, can conflict with compliance demands. With the added challenge for IT leaders in the highly regulated financial services industry is that data security and business resiliency are unassailable business objectives.

“You know you can’t get things wrong,” says Drouet. “You have to be innovative, but in a secure way. That approach applies to all industries, but it’s a heavier burden in financial services.”

Extending modernization across the business

Modernizing core banking systems, some of which still run on on-premises mainframes, is a complex operation, one that Drouet compares to an archeological expedition.  

“You need to understand which applications are talking to others, what infrastructure is supporting those applications, where data is being stored, and what condition it is in,” he explains.

A migration strategy must demonstrate an understanding of core business processes to assure that the infrastructure will remain resilient and customer interactions won’t be impacted. For many banks, the end state may be a hybrid environment, where certain workloads and applications move to the cloud to increase agility and scale and other systems and data remain under the organization’s control on-premises, for regulatory reasons. In those instances, instead of moving workloads to the cloud, organizations can move cloud-like capabilities into the data center. For example, AWS Outposts runs on customers’ premises or edge locations using the same infrastructure, APIs, and tools as the AWS public cloud.

A modernization effort is often scheduled and carried out in waves. For example, one phase might include migrating VMware environments; another would address SAP applications. Kyndryl and AWS offer migration tools and services to plan and execute these steps at scale. These include a jointly established Cloud Center of Excellence and AWS Migration Hub, Database Migration Service, and Server Migration Service.

Cloud-enabled innovation

The benefits of cloud migration extend well beyond cost optimization and scalability. The cloud gives banking organizations the ability to take core processes to the next level, to build and customize new services and monetize data.

For example, a bank can use artificial intelligence and machine learning algorithms in an AWS data lake to study the way customers use a mobile banking app, why they visit branch offices, and when they make deposits. They can use those insights to create a highly personalized, multi-channel customer experience that increases both business volume and customer satisfaction. 

IT leaders at financial services companies recognize that cloud-driven modernization and innovation require an ecosystem of strategic partners and service providers, who bring a variety of skills and expertise. Since becoming an independent customer in 2021, Kyndryl has expanded its extensive knowledge of the needs of financial services organizations across on-premises and cloud environments. As a premier tier partner with over 8,000 AWS certifications, Kyndryl’s expertise with AWS solutions places Kyndryl as a leader in managing mission-critical, complex systems on AWS.

For its part, AWS has tuned its services to provide the security and resiliency that financial firms require, under the leadership of 500 AWS Professional Services (ProServe) financial industry experts.

Cloud-driven transformation can be daunting in highly regulated industries such as financial services. Working with Kyndryl and AWS can help IT teams execute a seamless migration without disrupting the business or its customers, while delivering the agility and scale to ensure innovation and growth.

Learn more about how Kyndryl and AWS are innovating to achieve transformational business outcomes for customers.