The financial services industry is on a journey of transformation and modernization.

The industry has always been an early adopter of technology and innovation. Today, it’s exploring how to embrace disruption and fend off competition from more agile, cloud native challenger banks.

To do this, financial services firms need to connect their cloud strategy to digital transformation initiatives, to resolve pain points like cost transparency, visibility, budgeting and predictability.

During a panel at Finextra, the financial cloud summit hosted in London, Siki Giunta, Executive Vice President, CloudSMART Offerings Strategy, Industry Cloud Consulting at HCLTech and Sonia Greenberg, Associate Director, Cloud and Managed Services at FactSet, explored how financial services can do this and embrace a continuous modernization journey.

The cloud-enabled transformation drivers in financial services

According to Greenberg, there are several pressures that influence an organization’s view of transformation.

She said: “There are challenges with data and growing data sets moving from gigabytes to megabytes and then petabytes.”

In addition, the demands from users wanting access to data and applications quickly, as well as “cost pressures” are shaping firms’ digital transformation objectives.

To cope with these pressures and instigate an effective and accepted transformation strategy, Giunta explained that financial services organizations need to change their mindset when it comes to digital transformation.

“Digital transformation and cloud modernization are the same concept. They’re two sides of the same coin. Transformation takes care of the business, with the intent to digitize assets and ways of working, while the cloud is the method and the journey that clients need to take to implement digital transformation,” she said.

The cloud enables continuous digital modernization, which is essential as organizations and end users are continuously changing their requirements.

“The appetite for speed and agility is growing. Organizations must develop new processes and adopt new technology to deliver on the rapidly changing requirements presented by customers and regulators,” explained Giunta.

She added: “The most important constant is the collaboration between the technologists and the business. Adopting cloud as a business platform is proving its ability to accelerate business priorities. This agility and speed will enable traditional financial services firms to keep pace with the born in the cloud banks.”

Greenberg continued: “We need to build things in the right way and understand the value proposition of what we’re trying to provide. This will lead to a breeding ground for innovation.”

The sustainability focus

With any digital initiative, sustainability and other ESG considerations are now a business priority for the financial services industry.

Giunta said: “Sustainability is a great, new dimension that we need to take into consideration when we digitally modernize. It’s an opportunity to seriously consider the data, and for the first time understand the digital footprint of cloud implementations and the impact on sustainability goals.

“Financial services have led this conversation, but the utilities and healthcare industries are also starting the journey to understand their footprint. The data informs decisions to rewrite plans.”

Working in an agile, hybrid future

Both Giunta and Greenberg agreed that when it comes to cloud and transformation, the future is hybrid and agile.

This way of working is dictated by clients’ priorities, according to Greenberg.

“Digital transformation and non-agile is an oxymoron. Organizations need to apply agile techniques with any move to the cloud. They need to take a step back, build the foundation for modernization, understand how they’re going to use the cloud and at the same time change their operating model,” said Giunta.

A culture of change

With any transformation, the biggest challenge is people. That’s nothing new.

“The challenge with cloud adoption is that it’s generational. It’s easier for younger people in the industry to leverage cloud capabilities and think of projects in cloud native terms,” said Giunta.

To ensure that everyone is brought on the cloud journey, financial services firms need to build a culture of change.

This is crucial and Greenberg believes that this should come from the top down. “[They need] to encourage people to learn and develop new skills,” she said.

Giunta agreed and emphasized the importance of reskilling people on automation and machine learning technologies.

“We need these because the quality of service is much better and innovation at scale won’t happen without them,” she said.

Explaining the role of technology service providers, like HCLTech, in driving change, Giunta added: “We believe our greatest impact will be to enable the transformation of the people to embrace agile thinking and collaboration. This requires a new operating model and move to product-centric IT, where products and services are delivered in an agile manner with a sustainable foundation.”

Budgeting for cloud projects: Bring in the finance team

“A big bang approach to change never works,” said Greenberg.

Organizations must accept that initially “budgets will ramp up, as there needs to be an intermediary period to test resilience,” she continued.

Concluding the panel, Giunta said that her advice to CIOs entertaining the cloud is to sit down with the finance team, educate them on the new cost/benefit equation and the roadmap to optimizing cloud as a business platform.

“You need to build finance into cloud project because effective use of cloud, as the enabling technology, will change the balance sheets,” she said.