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The banking sector has already been taking giant leaps toward modern digitization by integrating various tech solutions. By leveraging these innovative tools in operational routines, banks and other financial institutions have been industry leaders for tech implementation.
A report by MarketsandMarkets revealed that the platform market size in global digital banking will rise to 13.9 billion US dollars in 2026, with a CAGR of 11.3%. The report claims that the sudden expansion is because of the banks’ increased demand to guarantee improved customer experience through various cloud technology solutions.
With the continuous shift of banks from traditional to digital approaches, it’s imperative to understand how this transformation can improve the lives of customers and banking institutions.
In this blog, we discuss digital transformation in banking, its key factors, and its benefits. We’ll also cover the right approach to shifting from on-premise to cloud migration.
Digital Transformation for Banks: On-Premise to Cloud Migration
Digital transformation may also mean switching from on-premise and traditional data storage and sharing to a cloud-based solution for improved security and data exchange.
The proper execution of migrating from on-premise to the cloud involves establishing thorough research about cloud migration and how to get started. Plus, it also helps when you know the differences between the two.
| On-Premise | Cloud |
| Have complete control over updates and upgrades | Automatic updates |
| Regulatory compliance is a must | Maintenance is hassle-free |
| Increased security | Improved scalability and accessibility |
| Data recoverability is self-managed | The information you need is always available |
| Increased overhead and operating costs | Almost no IT overhead costs |
What Is Cloud Migration in Banking?
Cloud migration involves moving your bank’s services, digital assets, applications, databases, and IT resources into a secure cloud. It can also include moving all your valuable data from one cloud to another.
The main reason behind cloud migration is to update and move on from traditional and outdated legacy infrastructures. These can include unreliable firewall software or aging servers.
Cloud migration in banking is valuable in achieving three main things:
- Real-time performance
- Updated modernized solutions
- Overall efficiency
This is why it also requires your utmost attention and careful analysis for successful execution. Remember that the right cloud migration strategy must be compatible with your bank’s requirements.
The Benefits of Cloud Migration
When done right, cloud migration can have a massive impact on your digital transformation strategy.
For starters, it significantly reduces your total cost of ownership (TCO). Not to mention faster delivery time and better opportunities because of the cloud’s innovative solutions. Cloud migration also means better flexibility and agility, which are essential to keep up with your customer’s changing needs and market demands.
Cloud migration has been widely used by most banks, especially those in hybrid work setups. It helps banks deal with remote working and increasing customer demand for online banking solutions.
Other benefits of cloud migration include:
- Faster innovations
- Deal with increasing resource demands faster
- Delivering better and quicker business results
- Improved overall performance
- Cloud scalability
- Mitigate data breaches and fraud
- Better consumption management
What Does Cloud Migration Look Like?
Cloud migration serves as a transformative shift for your bank. A proper understanding of what cloud migration does for your company should exist. Plus, you must also be prepared for the risks of relying on all your data in the cloud.
A Detailed Roadmap
Cloud migration serves as a detailed roadmap to track the success of your digital transformation. The roadmap outlines your bank’s cloud transition strategy, ensuring your company meets your business goals.
Because it’s a roadmap, your migration must include all action items, steps, and deliverables for the success of your cloud adoption journey. There should be a straightforward step-by-step process between three main things:
- Cloud provider evaluation
- Migration implementation
- Continuous optimization
An Identified Cloud Service Provider
Cloud migration also involves utilizing an outstanding IT architecture that fully integrates into your tech stack. Your cloud service provider must be able to blend well with your existing architecture, allowing cloud migration tools to operate smoothly and streamline processes.
This is why knowing what infrastructure works for your bank matters. It serves as your blueprint for accessing the best possible course of action for the success of your data migration. Furthermore, the right service provider will reduce the risks of developing inconsistencies that can affect customer retention and loyalty.
Disruptive Competitive Force in the Industry
Cloud migration screams reliability and scalability. Remember that combining these two aspects is a competitive force in the banking industry.
Reliability refers to improved redundancy controls with bigger data selection centers, keeping smooth processes of your bank’s essential systems. Public cloud providers offer a wide selection of regions and availability zones to increase reliability.
Current Infrastructure and Industry-Specific Challenges
While on the way to establishing the best cloud migration strategy for your bank, encountering industry-specific and infrastructure challenges are inevitable. Your company must not feel overwhelmed by these issues. Instead, take advantage of these challenges to improve your bank for your customers.
One of the most common challenges is migrating large databases. The cloud’s complete functionality will only work when you simultaneously move specific databases across the same platforms. But doing this might not be easy if the database contains significant amounts of data.
This is why you’ll often encounter cloud providers offering different methods of transferring physical data, including using a hardware appliance for loading data and transporting that appliance to them. It significantly reduces the amount of time spent transferring files over the Internet.
Data integrity is also a challenge you must face during cloud migration. You must always ensure your data is kept secure and intact during the transfer process.
Finally, you must also ensure all your systems are running and operational during the entire cloud migration. It’s best to have a secure overlap between cloud and on-premise for continuous service.
The Identified Cloud Migration Leader and Migration Team
To carry out the cloud migration process, you must have a reliable team. The members must have the appropriate skills and experience for success and proper collaboration. The table below summarizes significant members of the migration team and the skills they need.
| Team Member | Necessary Skills |
| Cloud Architect |
|
| Cloud Engineer |
|
| Systems Administrator |
|
| Security Manager |
|
| Compliance Specialist |
|
| Executive Sponsor |
|
Proposed Cloud-based Architecture
Cloud-based architecture serves as the backbone of your cloud migration. It includes the interaction of the following:
- Virtual resources
- Hardware
- Virtual network systems
- Software capabilities
These aspects are critical in creating an established cloud-computing environment. Your proposed cloud-based architecture should allow a strategic combination of resources to meet your company’s specific business needs.
These three key components should also be included:
- Frontend and backend platforms
- Cloud-based delivery model
- Network – intercloud, internet, or intranet
Meet Security and Compliance Requirements
Cloud migration also has necessary compliance requirements and regulations that organizations must follow to prevent miscommunications and data issues.
These security requirements also involve ensuring data privacy essential for meeting stringent industry requirements, including government agencies, finance, and healthcare.
Deadline-Driven Key Milestones
Deadlines are critical in the financial industry, especially in banking. Following deadline-driven metrics can help your bank run scalable servers and establish proper infrastructure for your cloud platform.
Complying with these key milestones can help you follow fixed deadlines, especially when your time and resources are limited.
Core Modernization
Core modernization is also important in cloud migration. It involves upgrading and updating your IT infrastructure and applications in the cloud or on-premise. This enables improved delivery of business strategies and digital applications for your company’s better agility.
The primary benefits of core modernization include:
- Deploy smooth cloud migration and integrate it with your bank’s digital transformation journey
- Make experiences more personalized through agile digital services and infrastructure
- Deliver better business outcomes for cost optimization and predictability
- Migrate legacies for complete functionality
Where to Begin With a Cloud Migration Strategy in Banking?
Shifting to an entirely different ecosystem needs a proper step-by-step approach for your bank. The process also requires your trust and confidence in your established team to ensure success..
Let’s go over a couple of the key steps to take to begin a cloud migration strategy in banking:
- Lay the Foundation for Cloud Migration
You must have a clear picture of your migration plan. There must be an established foundation, especially with your legacy system. This involves focusing on daily machine data you can utilize, which are the results of your bank’s routine operations.
It’s also imperative to know your current problems and issues so that you can easily compare them with the results of your migration.
- Pay Attention to Your Competiton
Your competition always matters. You should include tracking and monitoring compeittors in your business performance strategy, so you can compare the data with your company’s overall performance.
- Group Applications in Packages by Theme and Migrate in Waves
Grouping sets of data and applications together and migrating them in chunks provides more flexibility to take quick action in case problems arise.
To migrate data effectively, based on your strategized cloud migration, determine your company’s business capability, specific technology, and possible scenarios. Ensure that your approach is repeatable, generating efficiency within your project team.
Moreover, this step also means understanding the 6Rs of cloud migration:
- Rehost
- Replatform
- Refactor
- Repurchase
- Retire
- Retain
- Design and Review the Cloud Architecture
The next step involves leveraging an experienced cloud migration team or partner. These professionals can help you create a more personalized and tailored cloud architecture consistent with your company’s migration strategy.
You can also utilize the expertise from these professionals to create a gap analysis for identifying risk, governance, and compliance issues.
- Develop the Application Migration Plan
The application migration plan involves confirming your strategy through processes and approaches established in previous steps. You must also look for your current tech stack’s elements that require modernizing. It’s a cloud migration prerequisite you need for your bank to succeed.
- Modernize and Migrate
After completing all the previous steps, it’s time to implement your cloud migration plan for data management in the cloud. Monitor and document the process to look for possible loopholes where you can improve for your future projects.
To ensure that everyone within your organization can access data, even when you’re using multi-cloud systems, then consider implementing a data marketplace solution. Revelate offers a customizable data marketplace that enables self-service, on-demand data access while ensuring effective security. Because Revelate is platform agnostic, data can be extracted and delivered from any source to any target. Automations ensure that the entire end-to-end process can be conducted with no involvement from IT teams needed.
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Revelate provides a suite of capabilities for data sharing and data commercialization for our customers to fully realize the value of their data. Harness the power of your data today!
What is Digital Transformation for Banking?
Digital transformation integrates various computer technologies to meet business objectives and goals. This approach results in several benefits, including the following:
- Increased competitiveness between team members within your company
- Improved customer and employee engagement
- Better services
Digital transformation in the banking industry means migrating from traditional services to online and digital. Changes are normally done in backend operations and processes for digitization and data automation. Digitization allows more advanced end-to-end customer experience and integrates various technologies to automate previously manual tasks.
Digital transformation also involves implementing various changes to facilitate the following key processes:
- Optimization of business operations
- Increase data safety
- Adapting to modernization
But while we all know that digital transformation is nothing without technology, it’s not an island. Digital transformation in banking can only be successful when the right strategies are employed.
This means banks must be smart in choosing the right technologies and ensuring their proper deployment. As a business leader, you must also consider different mindsets and cultural challenges that can limit your company’s ability to adapt to modern tech solutions.
Key Factors Driving Digital Bank Transformation
Certain factors are critical for a successful digital transformation for banks. Considering these factors, you can gain a competitive advantage and achieve your primary goals in digitization. Here’s a more thorough breakdown of these key factors and why they’re so critical.
Importance of Customers
The importance of customers doesn’t change with the industry. They are a crucial source of feedback to ensure seamless experiences, delivery, and operations. As a team leader, it’s your responsibility to keep them engaged.
Knowing the importance of customers includes analyzing and understanding what your customers want.
- Is the level of service delivery in alignment with their expectations?
- Are they expecting a higher-level user experience than what you currently provide?
- Do they want personalized sales and marketing experiences?
When there’s transparency between you and your customers, there’s a higher chance that you can achieve their overall satisfaction. This is essential, especially since the financial industry is fast-changing.
As an industry that caters to a wide variety of clients, it’s imperative to follow the “customer-first” approach. This helps your bank achieve success over your competitors. So, what can you do?
- Change your operating procedures.
- Improve your service offerings by introducing digital platforms
- Enhance procedures that involve customer interaction.
Your bank’s digital transformation must align with your customer’s needs for its success against your competitors. That’s why it’s essential always to redefine your current processes, ensuring you keep up with the demands and preferences of your clients.
Operating Model
After prioritizing your customers, the next thing to consider is a hybrid experience. This combines a product’s personal feel and look and a unique digital experience featuring convenience and speed.
You can only achieve a hybrid experience with an ideal operating model. Digital banking transformation technologies typically come in three different models:
- Digital as New Line of Business: at the next level, a separate digital division takes care of the new digital activities
- Digital as Business: at the level of the management
- Digital Native: fresh set-up with a different tech stack that focuses on customers
Deciding which operating model to pursue depends on your team’s expertise and due diligence.
Modernized Infrastructure
Beyond technologies, the platform’s infrastructure also matters. It serves as your solution in creating an established flow of information for a seamless bank digital transformation journey from front to end. Infrastructure modernization is critical for the success of your digital transformation strategy.
Now that change is inevitable, it’s even more critical to modernizing your infrastructure underneath your chosen digitization. This helps you cope with your clients’ changing demands and your competitors.
The Power of Data
Whether it is data exchange or data sharing, data plays a critical role in banking institutions. You must always consider data analytics and implement your findings to understand customer thinking patterns better. Doing this drives you to determine what your customer needs.
Data sharing is also relevant in gaining market insights that can help you monitor your bank’s success. This can aid in improving your product offerings for your customers’ overall experience. Moreover, it can also help with establishing deeper customer relationships.
As a data marketplace solution, Revelate facilitates easy data sharing and exchange through centralized security for managing data governance, user access, and customizable storefronts for different data consumers. Easily provide datasets to internal and external stakeholders while ensuring that the right people can access the right data.
Unlock Your Data's Potential with Revelate
Revelate provides a suite of capabilities for data sharing and data commercialization for our customers to fully realize the value of their data. Harness the power of your data today!
Complete Digitally-Driven Market
Digital transformation in banking is a never-ending cycle of improving your banking strategies to meet customer demands. This means your company should be open to changes and adaptations brought forward by modernized technology. It also means staying up-to-date with an entirely digitally-driven market.
A digitally-driven market involves customers’ ongoing demands to access their desired financial solutions using their mobile devices. And if you want to remain competitive, you must meet these evolving needs.
Internet of Things (IoT)
Collecting Internet of Things data is valuable for gaining a better understanding of your customers to better map their buying journey. . You can also leverage their personal info to make targeted and personalized advertisements.
Moreover, you can also utilize the Internet of Things to make further analyses that can help you determine customer behavior patterns and ensure security within your banking systems. For instance, the efficacy of fraud detection can be improved by analyzing customer behavior with navigating your online banking website and application.
Artificial Intelligence (AI) and Machine Learning (ML)
Artificial Intelligence might just become your best friend in digitally transforming your banks. You can incorporate chatbots and digital assistance using AI-based tools, providing better experiences for customers by giving them the information they need to address basic concerns and questions without needing to involve a customer service rep.
Artificial intelligence is also useful in data management and security. You can also utilize AI-based tools to detect recurring patterns and quickly identify anomalies that need further investigation.
On the other hand, machine learning is a significant concept for banks to store, compare, and collect real-time customer data. The main advantage of ML is fraud detection. Machine learning solutions can detect sudden user behavioral changes and perform preventative action.
Blockchain
Digital transformation essentially always involves blockchain, especially in the banking industry. It ensures accurate, secure data transactions.
Bank customers can trust blockchain technology to enable convenient yet secure banking transactions.
Cloud Computing and APIs
Another popular technology used in finance and banking is cloud computing. The main benefits of cloud-based services include increased productivity, operations, services, and product deliveries. On top of that, securing data in the cloud helps reduce risk.
Cloud computing also involves various integrations for banks to utilize APIs. Application programming interfaces are helpful for facilitating better data-sharing with the applications and programs in your company.
Big Data Analytics
Big data analytics have immensely changed how banks monitor their performance and track customer expenditures. Technology has also helped banks identify risks and manage feedback that can help increase their clients’ loyalty.
Additionally, big data analytics are also helpful in driving new prospects to keep up with growing market demands.
Benefits of Bank Digital Transformation
When digital transformation is utilized properly in banking, you can enjoy more benefits than expected. Aside from having an established reputation, there are a couple of key advantages to know about, including building trustworthiness and gaining new customers.
Trustworthiness is Gained Online
Digital transformation has already been regulated long before, and adapting to these changes will make your bank’s customer base more substantial. It also consists of fewer limitations on user data processing and collecting.
Moreover, digital bank transformation provides a more solid foundation for your company. This can establish trust within your team, increasing the chance of your customers building loyalty and trusting your company. And this can be good for your image.
Acquisition of New Customers is Cheaper and Easier
Banks need customers the same way these people need your services. And when your company is vocal about your services, it’s easier and cheaper to acquire new customers and stay loyal. Moreover, this also becomes easier for other sectors of the financial industry.
Personalized Offering
Customers are not fond of receiving offers or advertisements they cannot resonate with. They need positive and timely offers they know they can utilize to address their needs. The right analytical software with proper data mining can help you customize offers and create targeted ads for your clients.
Enables Innovation & Adaptability
Digital transformation in banking involves leveraging shopping portals, mobile banking applications, and social channels. These aspects can open more opportunities so you can reach out to your customers easily.
Moreover, digital transformation allows the development of new business innovations you can rely on to improve your banking services.
Investment Banking on Digital Platforms
Digital banking significantly reduces intermediate processes and data transparency. This led to a positive impact on operational costs, allowing faster and easier transactions. Digital banking has also replaced investment banking, especially those with small investors.
Digital transformation also allowed investment banks to prioritize short-term goals. And this is good news for businesses and digital enterprises.
Compliance
Modern digital banking will enable banks to stay compliant easily because of innovative features like auto auditing to hasten streamlining processes for your customers. The transformation also helps standardize digital data, allowing sharing across different platforms with reduced errors.
Enhanced security
Customer data security is critical in banking. It’s a serious issue most financial institutions take forever to struggle with and overcome. Thanks to digital transformation, it’s easier to protect your customers’ sensitive data to protect your accounts from hacker attacks, scammers, and phishing.
Key Concepts to Inform Migration for Digital Transformation Banking
Certain vital concepts are critical when integrating your cloud migration into your digital transformation. These aspects can help your company keep up with the constantly-changing disruptive market and simplify the processes you need for your business’s growth and success.
A Master Migration Schedule and Execution Structure Are Table Stakes
One essential concept is setting up a master migration schedule. Set hard deadlines on critical processes to align with your short-term and long-term business goals.
Additionally, a well-established execution structure must also be in place. There should be a proper organization of strategically executing your cloud migration plan without compromising your current systems.
Application Bundling is an Art—and A Science
Integrating your cloud migration with your digital banking transformation is art and science in mind. It’s an application bundle that must allow your bank to constantly foster a culture of growth and a learning mindset for better adaptation to the changes.
Understand the Migration Risks and Practice for Failure
Cloud migration also comes with risks you must be aware of to know how to address them. When not properly solved, these risks can be the reason for your transformation’s failure.
The most common migration risks and their corresponding solutions include the following:
- Data governance regulations: maintain compliance with HIPAA or GDPR.
- Existing architecture’s incompatibility: perform an audit report of your current infrastructure to look for improvement.
- Data loss: always have a secure backup of all your files
- Wasted expenses on cloud migration: set up a team that can control all costs
- Security: rely on third-party vendors or establish a better internal team
Don’t Forget About the End User
Beyond your team, you must always incorporate your customers in decision-making. They are your end-users, and knowing their thoughts can help you generate better digital transformation methods.
Look at negative interest rates, increasing competition, regulatory challenges, and changing customer behaviors. All these are relevant factors to help you identify potential threats and opportunities during your cloud migration.
Remember that banking processes are improved to give substantial and valuable customer experiences.
Understand Your Technology Estate Before You Move It
Before you start your digital transformation in banking strategy, you’ve got to actually understand your tech estate. This involves analyzing capacity and compatibility to ensure that the cloud migration is a success.
Additionally, you’ll need to understand any costs that are associated with migrating your tech estate. Cloud migration can be more affordable in the long run, but there could be upfront costs associated with migrating your current systems. Be aware of these to ensure that you’re able to fully complete the migration.
Conclusion
The sooner your company realizes the advantages of digitization, the faster you can incorporate digital transformation for your bank’s success.
Digital transformation can help you remain competitive and valuable, and when you can integrate an efficient cloud migration plan into it, you can guarantee better customer experiences.
Relying on a third-party provider like Revelate is an intelligent move for your data sharing and storing needs. Revelate is an innovative internal sharing, data discovery, and monetization platform.
Schedule a demo with Revealte today to learn more about how we can help facilitate data democratization via a robust data marketplace solution.
Unlock Your Data's Potential with Revelate
Revelate provides a suite of capabilities for data sharing and data commercialization for our customers to fully realize the value of their data. Harness the power of your data today!
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