Cloud Strategy That Safeguards the Future
Time is running out. Trailblazers have taken giant leaps in cloudification, and competitive advantage is being redistributed. We are seeing ‘earthquake-level’ disruptions in other industries. What’s your organization’s position in the race?
The European banking ecosystem includes around 20 large-scale financial institutions dominating the market, and 200-300 small-to-medium-sized banks operating in a fragmented landscape. Despite their differences, a universal imperative exists among them: the necessity for modernization. Even the European Central Bank (ECB) acknowledges this, advocating for the rationalization of core banking platforms.
Banks have awoken to the urgent need to modernize their IT. Many have solutions that date back to the sixties. In some cases, critical systems run on a patchwork of legacy elements that is just too heavy and slow to respond to the needs of modern business and society. Financial institutions consider the high operational costs and lack of flexibility of their IT hinders innovation. And they are absolutely correct.
A bank stands or falls with its IT
In banking, we have seen many large-scale IT initiatives fail dramatically. So-called ‘big bang’ projects may have been massively delayed or they never delivered any of the expected business outcomes. That’s the downside you get with all or nothing transformations.
The first wave of cloud transformation saw its share of failed projects, with delivery times double the intention and a severe load to the organization. The importance of IT in banking is reflected in the CxO redundancies handed out because of unsuccessful projects.
The critical thing for a bank to understand about digital transformation is that all or nothing doesn’t have to – and doesn’t – apply. Big bang is a potentially lethal risk and costly. In a waterfall approach, the investment return odds are very, very low.
The upside is that digital transformation can offer great opportunities to create instant value through smart progressive modernization. It is necessary for banks to modernize their IT systems, but considering the current economic climate, it mustn’t be detrimental to the financial results.
The formula for success is straightforward: assemble a skilled team and tackle manageable challenges to ensure the transformation remains within control.
Cloud is calling
Leading banks have done a complete U-turn in their attitude towards the cloud. Most forward-leaning, traditional banks have already achieved well above 70% utilization, and understood that cloud transformation isn’t about a waterfall big bang.
Instead, they know the modular and progressive approach offers crucial benefits to boost competitiveness. It creates immediate value for the business and is technologically feasible, meaning that updating parts of the IT environment doesn’t cause massive downtime or discontinuities elsewhere in the environment.
It is also organizationally manageable and cost-effective. Keeping people on board throughout the transformation is much easier. And more bang for the buck will make everybody in the executive team and the boardroom happy.
A modular approach is a secure way for an IT leader to modernize without jeopardizing the cost-income ratio. More importantly, it sets the foundation for future innovations. Artificial Intelligence will irreversibly change the banking sector. The essence of digital transformation lies in understanding the data you have. The cloud is the enabler here, giving initial access to the latest AI technologies.
Ecosystem is everything
At Samlink, in collaboration with our parent company, Kyndryl, we emphasize simplicity in our approach. Kyndryl is a significant IT infrastructure provider with extensive experience serving many of the world’s banks. Together, our focus is on nurturing accountable and inclusive teams that prioritize quality in service delivery.
Given the challenges in today’s operational environment, our aim is to guide our customers by forging meaningful partnerships. Recently, I’ve had discussions with several Nordic banks and observed a shared sentiment: there’s a rush to evolve, but they’re cautious about large-scale transformations. These banks are in search of reliable partners for application modernization and cloud transformation.
Our network in the tech industry brings forward innovative and intelligent solutions, enabling our customers to integrate top-notch technologies seamlessly. Kyndryl Bridge, an open integration platform, was developed to give companies visibility across their technological landscape. Banks can have hundreds of systems, but understanding the entire technological environment creates the ability to predict potential issues and prioritize areas for modular transformation.
We’ve built relationships with many forward-thinking operators in the industry and are open to collaboration with more. With Kyndryl’s expertise and resources, we’re well positioned to support such ventures. If you’d like to delve deeper into this, feel free to reach out. I’m always open to discussing potential partnerships and ideas.
Arto Sorvoja
Vice President & Senior Partner
Samlink – A Kyndryl Company
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