Accenture Banking Blog

Throughout history, most migrations have taken place in a series of waves and banks’ migration to cloud is no exception.

The cloud journey for banking clients started a few years ago in areas such as sales and marketing, with the adoption of platforms like Salesforce and Microsoft Dynamics. The success of these applications then saw the cloud revolution spread to enterprise systems like HR and finance, using solutions such as SuccessFactors and Workday.

Now the scene is set for banks’ third wave of cloud migration: in their core applications and processes. For many banks, payments is top of the list for “cloudification”.

It isn’t hard to see why. The rapid growth of cloud-based payments providers like Stripe and Adyen has seen them gain valuations higher than many major banks and several challenger banks are using cloud to underpin their customer offerings—payments included.

All roads lead to cloud

All of this suggests that cloud is eventually the future of payments. However, given that the legacy systems still work, why should banks take the plunge into cloud payments? For several reasons.

  • Payments infrastructure upgrade: Regardless of cloud, banks are facing an imminent need to upgrade their payments infrastructure, in order to keep pace with developments like the UK’s New Payments Architecture, RTGS renewal for high value payments and rising adoption of the ISO 20022 standard. Since banks need to make this investment anyway, the question is whether they should use it to build payments platforms grounded in the past (on-premise) or the future (cloud).
  • Resilience and scalability: Another driver for cloud in payments is the need for resilience and scalability—issues that have been put in the spotlight by a number of recent systems failures. By nature, payments is a function that sees widely varying peaks and troughs in volume: think Black Friday. Cloud offers the flexibility to scale up the infrastructure for the peaks without building in costly redundant capacity.
  • Agility: A further related factor in favour of cloudifying payments, is the ability it brings to respond in agile ways to market disruptions and drive continuous improvement. Higher agility was the key factor that triggered widespread cloud migration in industries such as telecoms. And agility is equally—if not more—vital in payments.

What are the considerations?

Put together, these benefits mean the “why” for moving payments to the cloud is clear. But how about the “what”? In other words, which variant of cloud should banks choose to support this business-critical capability?

The top-line choice here is between public and private cloud. On this point, there’s no single right answer. The choice depends on the specific needs of each bank, including the desired level of trade-offs between factors like scalability and security.

If your bank hasn’t embarked on its journey to cloud payments yet, perhaps it’s high time it did.

A further consideration in choosing a cloud platform is the close degree of integration between payments and the rest of the bank. Far from being a standalone activity, payments is generally deeply embedded across all of a bank’s key systems and channels.

This means the ease and speed with which cloud solutions can be integrated with other areas that may still be on-prem can make it more complex. For example, “chatty” transactions that include checks on things like account balances, fraud indicators and sanctions lists can add to the integration effort and processing times.

Other considerations when choosing a cloud platform can include security and privacy. Migrating to public cloud may appear to increase the potential attack surface for cyber adversaries but cloud providers’ constant investments in security mean their systems can often be more secure than on-premise.

When to shift to the cloud?

Beyond the “why” and the “what”, the final question about cloud migration for payments is “when”. A bank could start the journey now or wait until an industry discontinuity makes it imperative. However, in today’s fast-changing payments market, discontinuities are happening all the time and with a new wave of investment needed in the next couple of years, banks have a golden opportunity now to grasp the nettle and build for the future.

The message is clear: While migration to the cloud opens up exciting opportunities in payments, it also brings a number of complexities to manage along the way. But once these are addressed, the benefits are substantial—not just in payments but across the bank. If your bank hasn’t embarked on its journey to cloud payments yet, perhaps it’s high time it did.