Katrin Boettger: In the digital transformation of the financial services sector, the embrace of cloud technology has been one of the key developments in recent years. What exactly is happening and why?
Lu Zurawski: It is indeed one of the biggest shifts we are seeing globally. If we had suggested to one of our customers five years ago to put core payment applications in the cloud, we would have been met with utter incredulity. Today, the overwhelming majority of banks run a cloud-first strategy. Several key factors contribute toward this; cost is an important one, as well as the realization that the cloud is secure. For a lot of customers, the cloud is a pivot to do things differently; it is a new approach, it allows them to scale up and down quickly. It is a core technology for a time of unpredictability and constantly changing consumer demands and behavior.
Ciaran Chu: As Lu already pointed out, there are several key developments that contribute to that shift. Basically, banks now realize that the cloud is a key enabler of the digital transformation of their business, ensuring that they can focus on creating new services for their customers, as opposed to today where they spend far too much time on maintenance. Coupled with the understanding that it is secure, and that cloud providers have more spending power to maintain their clouds, banks are fast realizing that the cloud is a clear requirement to leveraging the digital technology required for their future success by improving time to market and enabling them to focus on the issues that really matter.
KB: How important is that shift?
Peter Hazou: We are really at an inflection point in the history of banking and payments. It’s not so much a shift in technology but a shift in banks’ business models — from a predominantly fee-based model to a new data culture. The flow of payments in real time as well as the data and the insights derived from it are now crucial to these new business models. And many cloud-first competitors are taking on the banks, so they are forced to rise to that challenge. Digital transformation really is about these underlying changes and how technology can support these changes.
KB: How can banks embrace the cloud? Clearly a full “rip and replace” of the current payments infrastructure is not an option for most?
LZ: We are not at a stage yet where all our customers embrace the cloud fully, and it is also not necessary. Modernization means different things to different people. I always compare payments modernization to that of renovating an old Victorian house. We don’t want to tear the house down but rather make sure it is resilient, that the roof isn’t falling down and that the electricity works, for example. And then we need to set up the interior according to what our priorities are in our daily life; some people may want a modern kitchen, others a large outside space. Payments modernization in the cloud will work exactly like this. We will see hybrid models where banks will run different aspects of their operations in the cloud.
KB: So where do banks start and more importantly, how do they deliver value from this transformation?
CC: According to a recent survey by ACI and Ovum, 94 percent of banks globally now have a cloud-first strategy and 84 percent of those are planning to move mission-critical systems into the cloud. The big question for most banks is how to deliver value. Yes, they want to go to the cloud, but they want to unlock the value — that’s what we are working on with our customers.
Lifting what they have from their own data center and dropping it into the cloud isn’t going to increase their agility, it isn’t going to be faster to deploy as the cloud works differently. Thus, they must train and upskill their workforce, and it’s not going to be cheaper as you must invest in training, and if you don’t architect it correctly, it will be inefficient to run.
This is where ACI plays an important role, as we are not selling the benefits of the cloud alone, but expertise and experience in helping clients make this transformation as painless as possible.
This approach helps unlock value from their adoption of cloud technology by making it easier to deploy solutions and improve time to market, gain much needed agility and realize cost efficiencies.
Watch the on-demand webinar: Payments Modernization in the Cloud
ACI Enterprise Payments Platform 
