Nowadays, the cloud is seen more as a business asset rather than just a data workspace due to the numerous advantages it offers for leveraging data’s full potential and advancing business growth. Observing new demands from customers and shareholders, along with increasing regulatory requirements, business leaders and IT decision-makers in most modern banks have recognized the need to migrate to the cloud sooner rather than later.
In this article, you can get comprehensive information about cloud migration strategy in banking and KMS Solutions’ approach to successful cloud migration.
Types of Cloud Migration Strategy In the Banking Industry
Since each banking organization is unique, its cloud migration strategy should be customized to address its specific technical, functional, and operational requirements and to meet its business objectives.
Here are the 6 Rs of a successful cloud migration strategy that banks can use as guidelines during their migration process:
1. Rehost (Lift-and-Shift)
This approach is also known as lift-and-shift migration, involves moving applications from their current hosting environment to a different one, such as from on-premises to the cloud.
Rehosting is fast because it doesn’t require modifying the architecture, making it cost-effective for testing and other expenses. It ensures business continuity by avoiding significant application changes and provides a good ROI.
However, there are some drawbacks, such as the inability to fully utilize cloud features like scalability. Banking applications might experience performance issues, there could be an increased risk of vulnerabilities, and inaccurate mapping may lead to failures.
2. Replatform
Replatform involves making a few further adjustments to optimize your landscape for the cloud while keeping the app’s basic architecture unchanged. It ensures migration costs are low, allows organizations to start with smaller workloads and gradually scale up, and enables the use of features like auto-scaling and managed data processing.
However, financial services organizations should be aware that re-platforming necessitates a certain degree of automation.
3. Repurchase (Drop-and-Shop)
This migration strategy involves transitioning from a legacy banking application to a cloud-based Software-as-a-Service (SaaS) product to maximize value.
Although this approach can be cost-effective and straightforward to implement, it requires the IT team to be trained on the new platform and transition away from their old codebase. Moreover, the one-size-fits-all nature of the SaaS product might not always align with the specific needs of a banking institution.
4. Refactor
Refactoring, or rearchitecting, involves completely rebuilding your applications from the ground up. This approach is typically motivated by the need to take advantage of cloud capabilities unavailable in the current environment, such as auto-scaling or serverless computing. While refactoring is generally the most costly option, it offers the greatest compatibility with future versions.
5. Retain
Sometimes, BFSI organizations might have applications that cannot be migrated to the cloud due to their coding structure, stringent compliance regulations that warrant caution, or because they are functioning perfectly in their current on-premises environment. In these situations, the company may choose to ‘retain’ the application in its existing location.
6. Retire
Identifying and removing redundant applications that are no longer necessary is a wise strategy during cloud migration. BFSI organizations should perform an audit to ensure that only essential, widely used applications are moved to the cloud, avoiding the migration of obsolete or unnecessary applications.
However, when decommissioning applications, it’s crucial to verify that there are no dependencies on the applications being retired.
Benefits of a Strong Cloud Migration Strategy in Banking
Each BFSI organization is different; hence, a cloud migration strategy must be customized to address its specific technical, functional, and operational needs while achieving its business objectives.
Here are useful guidelines for organizations during their cloud migration journey:
1. Create Your Strategy Early
Banks and financial institutions need to develop strategies tailored to their specific business needs, such as the speed and agility required for handling customer-facing financial transactions while ensuring compliance with regulations.
To achieve this, conduct a portfolio analysis to review current systems, applications, and processes, and gain a comprehensive understanding of the IT environment and workloads. Utilize tools that collect information in a standardized format to avoid incomplete analyses.
2. Identify the Banking Applications Suitable for Cloud Migration
Before migrating banking software, identify which ones are suitable for the cloud. Cloud-ready apps typically include standardized applications, self-contained workloads, and those developed with a service-oriented architecture.
So, the optimal strategy here is conducting a thorough assessment of the organization’s entire financial services portfolio to determine the appropriate target environment. For apps that cannot be migrated or modernized—such as those requiring extensive customization—place them into a software lifecycle management process, where their continued use must be periodically justified. Ideally, establish a timeline for replacing or retiring these apps in the future.
3. Get the Necessary Skills and Resources
Whereas cloud migration previously focused on merely moving infrastructure to save costs, it now involves many sophisticated steps such as adapting and modernizing apps to operate effectively in a hybrid or multi-cloud environment.
One true thing is the primary expertise of a financial services organization lies in its financial operations, not in cloud migration. Therefore, it is advisable to partner with a trusted IT service provider, who specializes in cloud and data migration.
KMS Solutions excels in providing comprehensive cloud migration services, leveraging its strategic partnership with AWS to deliver top-tier solutions. The company’s expertise in cloud migration ensures a seamless transition to cloud environments, optimizing infrastructure and applications for enhanced performance and scalability.
Read more: Essential Strategies for Banking Data Migration in 2024
With deep knowledge in the banking industry, it also provides tools, accelerators, cognitive capabilities, and industry best practices, supported by a delivery methodology built on extensive experience in cloud migration consulting.
4. Ensure Data Integrity
The BFSI sector handles a wealth of sensitive personal and financial data, making data integrity crucial in these highly regulated environments. Data integrity breaches in highly regulated environments can lead to severe consequences. However, employing suitable file-transfer tools and adhering to platform-specific best practices can significantly reduce this risk.
Beyond preventing data loss, it is essential to establish methods to validate your business processes and ensure that the cloud migration has maintained business value and operations. Having reliable backups for comparison in the event of data corruption is critical. Additionally, ensure that your chosen service provider possesses expertise in validation processes.
Read more: Open Banking Implementation Checklist: What You Need to Prepare for 2025
Currently, there are various cloud service providers such as Alibaba Cloud, IBM Cloud, Amazon Web Services (AWS) and Salesforce.
5. Adopt an End-to-End Migration Approach
Once the banking apps are migrated to the cloud, you will need a way to manage its new ecosystem, streamline it in terms of support and costs, and control risks and security. A comprehensive solution covering the entire cloud adoption lifecycle, from strategy to implementation, and offering an integrated view of applications, infrastructure, and operations, is essential.
6. Get Different Cloud Migration Offerings
It’s essential for cloud architects and engineers to offer expert guidance and support throughout the entire migration process, from planning to execution.
When looking for an IT service provider, banks should consider those who can provide a broad spectrum of migration services that can adapt to your specific needs. Here’s a list of comprehensive end-to-end services that KMS Solutions can provide:
- Assessment & Planning: Evaluate the banking existing IT infrastructure to identify the best cloud solutions for your business needs
- Data Migration: Focus on securely transferring data from on-premises systems to the cloud
- Cloud Integration: Ensure seamless connectivity between cloud-based applications and existing on-premises systems
- Application Migration: We help move existing applications to the cloud, optimizing them for performance and scalability.
- Post-Migration Support: Ensure the smooth operation of cloud-based systems with ongoing maintenance, monitoring, and troubleshooting.
Read more: Simplified Migration, Minimal Downtime
Compliance Needs for Cloud Migration in Banking
The banking industry is governed by stringent regulations designed to safeguard the security, privacy, and integrity of financial data and transactions. Some common regulations include:
- Payment Card Industry Data Security Standard (PCI DSS): This standard outlines the security measures required for processing, storing, and transmitting cardholder data.
- General Data Protection Regulation (GDPR): This regulation governs the collection, processing, and transfer of personal data for EU citizens.
- SOC2 Type II: A cybersecurity compliance framework designed to ensure that third-party service providers manage and safeguard client data securely.
- ISO27001: This framework focuses on managing information security.
KMS Solutions’ Approach to Cloud Migration
Our skilled cloud architects and engineers focus on providing a comprehensive and tailored strategy to ensure a seamless transition to the cloud.
1. Strategic Roadmap
We evaluate your organization’s current architecture, workloads, and dependencies to identify potential challenges and specific cloud migration and adoption requirements. Based on this assessment, we develop a detailed roadmap that outlines the steps, timelines, and resources needed for a successful migration process.
2. Resource Alignment
After understanding your unique requirements, KMS Solutions will determine the best approach for cloud migration and align our teams to fill your resource gaps. This process considers factors such as cost optimization, team members’ capabilities, security, and industry compliance.
3. Implement & Execute
KMS Solutions employs a phased approach to migration, ensuring minimal disruption to the bank operations. We utilize automated tools and proven methodologies to efficiently migrate applications and data to the cloud, whether it involves rehosting, replatforming, or refactoring.
By leveraging the capabilities of AWS, we provide clients with robust and scalable cloud solutions.
4. Post-Migration Maintenance
After migration, KMS Solutions continues to support BFSI by optimizing cloud resources and ensuring cloud infrastructure continues to scale as you grow. We provide ongoing monitoring, management, and support to address any issues and help clients fully leverage the benefits of the cloud.
Are You Ready to Migrate to Cloud?
Gartner indicates that more than 40% of companies are overspending on cloud services, and this trend is on the rise. Partnering with a cloud migration expert can streamline the process, as they possess the necessary knowledge and skills to manage the complexities of cloud migration and provide personalized migration services based on your unique requirements.
Our skilled cloud architects and engineers offer expert guidance and support throughout the entire migration process, from planning to execution. Contact us today for seamless cloud migration, especially for the banking and financial services sector.
