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Straight Talk Technology

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With the end of 2018 now firmly in sight, it’s good to step back and think about the topics and themes that will drive the agenda for the coming year. Without a doubt, one of the biggest themes for 2019 will be the use of the cloud, and in particular, the public cloud, moving into the mainstream for retail and corporate banking.

The retail and corporate banking sectors have grown increasingly comfortable with the cloud over time, with institutions of all sizes already consuming core horizontal applications such as HCM and ERP on a SaaS basis, and many also running some line-of-business applications in private clouds or via SaaS. At the same time, processing-intensive workloads, such as risk modeling and advanced analytics, are among a long list that have also been shifted more directly into public cloud environments.

However, the second half of 2018 has seen the cloud becoming one of the most widely discussed topics in the industry. Unlike in 2014, when the cloud was also prominent in industry debate, the banks themselves are now doing as much of the talking as the vendor ecosystem.

Taking payments as an example, there has been a rapid uptick in the proportion of banks considering consuming core payment applications via SaaS. In Ovum’s 2018/19 ICT Enterprise Insights study, 64% of banks globally report that they are either planning or trialing SaaS-based payment orchestration or payment hub applications, up from 44% in 2017. For payment switches, 56% of banks are looking for SaaS offerings in 2019, up from 37% a year ago. At the same time, the level of serious discussion about putting mission-critical workloads into the public cloud has never been greater.

While these examples are just one small part of a much larger picture, it illustrates the speed with which banks are looking to the cloud as the default location for many of their future enhancement and renovation plans.

There are many drivers of this change, and arguably the most influential has been the impact that cloud-native market entrants (neo-banks and new application vendors) are beginning to have on the market. While opinion is divided on the degree to which these new players will account for a large proportion of future market share, what has been undeniable has been the impact this shift in the market has had on the way in which incumbent institutions conceive and deliver technology-driven innovation.

A growing emphasis on the need to deliver rolling innovation and updates, particularly when it comes to the customer-facing layer, has resulted in many banks embracing cultural change within the IT function. This focus on delivering rapid change, and the resulting adoption of modern development and architectural principles, has led to public cloud infrastructure in particular being the location of choice for institutions looking to develop and test new offerings.

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