Part III: Public Cloud Serves as a Catalyst for Modernization in Financial Services Industry
This is the third and final installment in a three-part series that explores Cloud Technology and the Financial Services Industry. In the previous entries, we addressed the slow cloud adoption within the industry and how perceptions have shifted and the particular benefits of cloud technology and cloud-based solutions.
As we explored in the second installment of our cloud technology series, cloud-based solutions modernize and simplify IT infrastructure and enable digital transformation, making it easy to pivot and scale services as needed.
In the past, firms embraced cloud technology via the private cloud due to its inherent security features and service and support model. Now, with technological advancements enhancing security, investment management firms are embracing the public cloud model.
For many industries, the public cloud serves as a catalyst for driving continuous modernization and innovation.
The financial services industry is no different, but due to the rigid nature of the regulations, it has been a slow adopter of new technologies and the private cloud was seen as a more appealing option compared to the public cloud.
Today’s financial services organizations are no longer timid to move mission-critical workloads to the public cloud. These cloud-based solutions are changing both business-critical and front-end operations to enable a more efficient and adaptable organization.
Private Cloud vs Public Cloud
A private cloud is an infrastructure dedicated to a single user organization, so access is limited rather than being available to multiple subscribers. Potential drawbacks from a private cloud include the higher cost of renting dedicated servers or the responsibilities and risks that come with owning and managing infrastructure. In addition, firms are more limited in the number of resources they can quickly access.
By contrast, public cloud is an IT model in which on-demand computing services and infrastructure are managed by a third-party provider and shared with multiple organizations using the public Internet. The cloud provider hosts and operates the physical servers and locates them in multiple locations to provide improved resiliency capabilities.
A hybrid cloud combines private and public cloud capabilities, typically in an interoperable and orchestrated way. Financial institutions might pursue a hybrid model if they elect to hold more sensitive data within a private environment while allowing less-sensitive data to be hosted on a public cloud.
Hybrid cloud is also commonly used as a transition strategy while moving on-site private cloud systems and data to the public cloud. However, the management of multiple cloud arrangements can create greater complexity and diseconomies of scale from managing multiple environments and potentially lead to redundancies between systems.
With financial institutions facing more and more costs, operational synergies need to be identified. Public cloud service models simplify operations and eliminate overlap while providing system elasticity for an organization’s technology.
Public Cloud Service Models
Firms that pursue public cloud technologies generally can pursue three different models depending on their needs: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Each type entails a different level of service provided by the cloud service provider.
Infrastructure as a Service (IaaS)
Infrastructure as a Service (IaaS) refers to a self-service model for accessing basic IT services such as data storage, compute, and networking. These services are typically delivered over the internet via virtualization technology and are highly scalable.
The user does not manage the underlying IT infrastructure but does control the layers of technology that run on top, such as the operating system and applications. IaaS essentially provides a flexible hardware resource that can scale rapidly and elastically in response to expanded storage and processing needs.
Platform as a Service (PaaS)
Platform as a Service (PaaS) builds upon IaaS, in which the cloud provider provides an on-demand environment of tools (such as programming languages and libraries) and software for application testing and development. PaaS is also delivered over the internet, thus enabling a virtual product development platform that exists on top of the IaaS layer.
In this service model, like IaaS, the user does not control the underlying infrastructural services nor some of the additional layers, such as the operating system and application tools, but retains control over the applications that are being developed and deployed.
Software as a Service (SaaS)
Software as a Service (SaaS) is a full-service model that grants firms the advantage of the full stack of cloud services to distribute software on-demand to end users over the internet. SaaS builds upon PaaS by completing the final step after application development to launch the final product straight to users.
In a SaaS model, the cloud provider manages all the levels of software and hardware needed to host, develop, and launch new applications. Firms have the least control of the underlying services and infrastructure and essentially rent a full IT stack from the cloud provider.
Preeminence of the Public Cloud
As the financial services industry undergoes its major digital transformation, the public cloud is not only reaching massive scale but is also the preferred central deployment model.
This reimagined, flexible way of working with cloud-based solutions helps create new proactive business models that allow organizations to not only survive but thrive in the digital era and respond to constantly evolving environments and circumstances.
Contact Delta Data to learn how cloud-based solutions can provide opportunities to enhance agility, efficiency, resiliency, and security within an organization’s technology.