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In the dynamic landscape of today’s financial ecosystem, cloud computing stands out among the myriad technologies, captivating the attention of both Fintechs and Incumbents. As they strive to leverage its capabilities to the fullest, these entities are keen on exploring every avenue to gain a competitive edge.
This mirrors the global trend across many other industries, which has been termed “The Race to Cloud” by recent Accenture research. The study, which aimed to establish the progress of cloud adoption from select business and IT leaders globally, records that 86% of companies reported growth in their scope of cloud initiatives between 2020 and 2022. Those categorized as “Heavy Adopters” in 2020 only accounted for 11%, but this number steadily rose to 62% by 2022.
The dash to the cloud is particularly pronounced in certain regions. In the Middle East and North Africa (MENA), for instance, 83% of financial services companies had already embraced the cloud in 2022, citing Capex optimization, scalability, and speed to market as their key goals. Research conducted by PwC and Strategy in 2023 on 420 technology and business leaders in the United Arab Emirates and Saudi Arabia indicates that:
- 32% of companies have initiated cloud adoption in at least one operational area.
- 35% are actively using cloud services across multiple domains.
- 18% have fully embraced cloud solutions in their entirety.
- Looking ahead, 68% plan to migrate most of their operations to the cloud by 2025.
- Furthermore, 76% express intentions to augment their cloud budget in 2024.
As organizations progressively shift their operations to the cloud, they can encounter various challenges that impede their progress. A significant concern revolves around diverting attention from their core business, centered on serving customers, to the intricate task of managing cloud IT infrastructure. Recognizing this challenge, financial institutions are increasingly embracing Managed Services to navigate these complexities and ensure a seamless transition for optimal benefits. This blog delves into the significance of Infrastructure Cloud Managed Services for ambitious financial institutions aiming to streamline their operations in the cloud.
What are Infrastructure Cloud Managed Services?
Understanding the Basics
Infrastructure Cloud Managed Services mean outsourcing your banking infrastructure’s operations to a third-party. This provider takes care of various IT infrastructure aspects for your organization. These services aim to streamline operations, boost efficiency, and allow institutions to focus on their main strengths, without the hassle of handling complex IT environments.
Managed Services vs. Staff Augmentation
It’s important to note that managed services and staff augmentation are similar but have a key difference. Managed services mean the vendor completely handles the resources and workforce, while staff augmentation expands your internal team by adding external personnel.
Exploring Deployment Options
Traditionally, organizations handled all aspects of their technology infrastructure on-premises. But now, there’s a shift. Financial institutions have a variety of deployment options, including on-premises, private cloud, public cloud, or hybrid models. Despite these choices, a private deployment, either on-premises or in the cloud, remains a popular choice among financial institutions.
The Evolution to “As-a-Service” Models
With the advent of “as-a-service” technology, institutions now have access to Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). The main difference among these options lies in the division of responsibilities between the technology vendor and the financial institution. These “as-a-service” models are primarily cloud-based, offering a flexible and efficient way to manage technology infrastructure.
How Infrastructure-Managed Services Work
The Core of IaaS
Infrastructure-managed services cover the essential components of IaaS (Infrastructure as a Service) that include virtualization, servers, storage, and networking. These services are backed by technology vendors equipped with the necessary resources and expertise to manage these components on behalf of your institution.
Services Offered
Providers of infrastructure-managed services deliver a wide range of operations to ensure your IT infrastructure runs smoothly:
- Platform Management: Overseeing the entire platform to ensure optimal performance.
- Quality Assurance: Ensuring all systems and applications meet the highest standards.
- Production Services: Managing the day-to-day operations of your IT environment.
- Engineering and Development: Creating and implementing new technologies and solutions.
- Customizable Application and Software Builds: Tailoring solutions to meet specific organizational needs.
- Configuration Management: Keeping systems configured correctly for reliability and security.
Exploring the Core Components of Infrastructure Cloud Managed Services
Virtualization: The Backbone of Cloud Computing
Virtualization is a pivotal process in cloud computing, facilitating the creation of virtual versions of servers, storage, and networks. This innovation maximizes hardware efficiency by running multiple virtual instances on a single physical server, boosting resource efficiency, scalability, and flexibility. For financial institutions, virtualization means being able to scale operations swiftly and affordably, avoiding the costs and logistics associated with traditional on-premises expansions.
Servers: The Workhorses Behind Your Operations
Servers, whether physical or virtual, are the lifeblood of cloud managed services, hosting essential applications, processes, and data. Managed service providers take on the responsibility of server provisioning, maintenance, and optimization. This ensures businesses enjoy uninterrupted service, scalability, and optimal resource use without the complexities of on-premises management. Financial institutions, in particular, find value in the lower total cost of ownership and the ease of infrastructure management provided by cloud experts, allowing them to prioritize product innovation and customer service.
Storage: Ensuring Data Availability and Security
Cloud managed storage offers scalable, secure, and redundant data storage solutions. Service providers manage everything from capacity planning to backups and disaster recovery, simplifying data management for organizations. This setup guarantees financial institutions nearly 100% service uptime, with multiple safety nets in place to protect against disruptions.
Networking: The Glue That Connects Everything
Effective network management is essential in a cloud environment, ensuring smooth communication between different components. Managed service providers are tasked with creating secure, high-performance virtual networks. They manage bandwidth, implement security protocols, and continuously monitor the network to maintain optimal connectivity. Strategic server placement across different regions further ensures that network speeds are optimized for users everywhere, underpinning the seamless operation of applications and services in the cloud.
Business Benefits of Infrastructure Cloud Managed Services to Financial Institutions
Cost Savings and Investment Allocation
For a long time, IT spending has been a major challenge for traditional financial institutions. According to Statista, Global enterprise IT spending on financial institutions is expected to cross $715 billion by 2025, up from $570 billion in 2021. Both incumbents and Fintechs are looking for every opportunity to cut down Capex and maintenance costs without compromising their IT performance.
Fortunately, the cloud presents an ideal opportunity. Statistics indicate that banks can save 30-50% of their costs by moving to the cloud. Delegating the cloud infrastructure responsibility to managed service providers eliminates the need for heavy upfront investments in hardware, software, and maintenance. Also, service providers operate on an on-demand model, allowing institutions to pay for only the services they consume. The shift from capital expenditure (Capex) to operational expenditure (Opex) helps financial institutions save money and reduce strain.
Additionally, economies of scale enable managed services providers to optimize resources, cutting down on overhead costs, which trickle down to corporate customers. This cost-efficient approach allows financial institutions to redirect funds towards innovation, product development, and strategic initiatives, ultimately enhancing their competitive edge in the market.
Time Efficiency and Strategic Focus
Managed services bring about significant time efficiency for financial institutions. A study by LogicMonitor indicates that institutions leveraging cloud managed services can achieve time savings of up to 25%. This time dividend is a precious resource that financial teams can redirect toward strategic initiatives for higher business output. Completing IT operations within efficient time frames not only enhances internal processes but also contributes to smoother customer experiences.
The time factor is also evident in the speed to market that financial institutions reap by taking a leap to the cloud. This is thanks to all resources being available on demand. The synergy of time savings, strategic focus, and improved operational efficiency positions financial institutions for higher competitiveness in the industry. In today’s fast-paced market, speed of innovation and time to market are core competitive advantages for any financial institution able to leverage them effectively.
Staying Ahead of Innovation
Financial institutions that adopt Infrastructure Cloud Managed Services are positioning themselves at the forefront of innovation. By partnering with top industry vendors known for their technological prowess and forward-thinking approach, these institutions gain access to the latest in cloud computing advancements. This proactive strategy ensures they stay ahead, implementing cutting-edge solutions that enhance operational efficiency and maintain competitiveness in the rapidly evolving digital landscape.
Agility and Scalability for Financial Growth
Cloud computing offers unparalleled agility and scalability, allowing financial institutions to access computing and storage resources on demand. This eliminates the need for extensive infrastructure investment, overcomes space constraints, and speeds up deployment. Managed services providers amplify this flexibility, offering expert support for the swift and efficient rollout of new products, laying the foundation for growth and innovation.
Enhancing Business Resilience
Building Strategic Partnerships
The Power of Collaboration
Tagged:
- cloud, digital banking, global
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Tamer Al Mauge, Managing Director MENA
A highly qualified Business Management Professional in the Financial Technology field with over 18 years of experience within financial technology banking, retail and IT Industries, Outsourcing Sectors including exposure to Global Markets. Tamer worked for a world leading organization “NCR Corporation” for more than 12 years in the Middle East and Africa.
