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W H I T E PA P E R

Visionary Financial Services Organizations Move Beyond Multi-Cloud to Inter-Cloud Operations

Executive Summary 3

The Key Benefits of Multi-cloud Deployments 3

Best-in-Breed 4

Availability & Reliability 4

Flexibility & Future Proofing 5

Cost Efficiency 5

Cloud-native is Key to Success 5

Cloud Agnostic: More Important Than Ever 7

What’s Driving Cloud Priorities for Financial Institutions? 8

Beyond Multi-cloud, Think Inter-cloud Operations 9

Important Considerations for Inter-cloud Deployments 10

Latency 10

Network I/O 10

Disk I/O 10

Cost 10

Flexibility 11

Complexity 11

Database Requirements 11

Regulations 12

Conclusion 13

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Executive Summary Technology innovation continues to accelerate, and a move to the cloud enables organizations of all sizes to increase efficiency and reduce costs as you modernize your IT infrastructure. From federal governments to small startups around the world, nearly every organization is a software organization, and they are relying on this innovation to continue to meet challenging changes in customer expectations.

To meet these changing customer needs and expectations, many new service offerings have emerged, such as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). These solutions lower capital expenditure costs, improve resource utilization, reduce internal personnel needs, and deliver unprecedented levels of performance and resilience. FinTech startups leverage these service offerings to further disrupt the market, offering lending, mobile payments, financing, wealth management solutions, and more. These new competitive offerings show the significant benefits of delivering banking solutions in the cloud.

While the established financial services industry is both highly regulated and risk averse, FinTechs haven’t been held back by those limitations. They’ve been able to innovate nimbly, posing a threat to traditional banking organizations. To remain competitive, established financial organizations are ready to move to the cloud and capitalize on the improved security and reliability it offers. This enables them to meet customer demands for mobile and on-demand banking, while still maintaining strictly consistent data across back-end infrastructure.

Moving mission critical applications to the cloud may already seem like a big step, but financial organizations must think ahead and build a cloud strategy that meets new regulations for inter-cloud deployments. So, what is inter-cloud? According to Gartner Research, there is a distinct difference between multi-cloud and inter-cloud operations.

Multi-cloud - A service or product runs on more than one cloud service provider infrastructure. This is important when you want to ensure that an offering works on different cloud platforms.

Inter-cloud - Inter cloud means that integration must take place between two services, each on a different cloud infrastructure. This is important when you want to integrate data and analytics workflow across different services or clouds.

Many organizations already use multiple clouds in their deployment models, but cloud strategies today must be both cloud agnostic and offer the ability to implement across multiple cloud deployments to ensure continuous availability, data sovereignty, and security in the face of inevitable planned and unplanned downtimes. In this whitepaper, we will discuss considerations for financial services organizations planning to operate in an inter-cloud deployment.

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The Key Benefits of Multi-cloud DeploymentsAccording to RightScale’s 2019 State of the Cloud Report, 84% of enterprises today have a multi-cloud strategy. This is in part to avoid potential vendor lock-in and maintain agility and flexibility within the technology stack, but multi-cloud strategies offer many additional benefits to organizations.

Best-in-BreedWhen cloud computing emerged as an option, many companies quickly moved some of their applications to public cloud infrastructure to lower costs and increase scalability, and offerings from cloud vendors were fairly similar. Essentially, one cloud “fits all” deployment needs. Today, enterprises that remain with a single cloud provider for all deployments are likely missing out. Each cloud provider offers services that make it a great fit for some customer requirements but not others. By deploying across multiple clouds, your organization can leverage the cloud provider that offers the features and capabilities needed.

Availability & ReliabilityIn an always-on world, availability is a key requirement for success. And yet high-profile outages from major cloud vendors persist. To achieve business agility, cost savings, improvements to application performance and availability, and to stay on the leading edge of emerging technologies, financial services organizations are increasingly taking advantage of

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cloud computing platforms, but it’s important to note that there will be failures—hardware, networks, and cloud providers all experience failures. What’s critical to avoid is having a single point of failure (SPOF) that results in your application going down. A deployment model that is cloud-agnostic and designed to work with multiple cloud vendors enables you to build in redundancy and significantly reduce risks inherent in an application going down.

Here are three critical capabilities you need to look for when selecting solutions, particularly a database, that is designed for resilience:

1. Distributed architecture, the foundation for any system to survive individual failure, but remain available.

2. Simple provisioning and monitoring, so your system can react to failures efficiently and orchestrate recovery processes without downtime.

3. Clear model for data replication in multiple locations and recovery capability in case of failure.

Flexibility & Future ProofingFlexibility is essential when it comes to anticipating future needs. For financial organizations developing new applications to meet new customer needs and demands, this flexibility is no longer an option, it’s a requirement. However, transitioning older applications to new architectures is equally critical. Selecting solutions that adapt to evolving demand and regulations with agility and flexibility helps organizations successfully meet customer demands while remaining compliant and prepared for future needs. By selecting solutions that allow you to move between on-premises deployments and different cloud providers, you will establish an infrastructure that remains competitive in the face of change.

Cost EfficiencyIn-house data centers require significant capital expenditures (CapEx) investment for space, equipment, software, and the workforce to run everything. While in-house models enabled organizations to ensure secure data monitoring and security, those capabilities are now available in the cloud. These newer capabilities enable organizations to move more applications to the cloud while keeping the same levels of security and taking advantage of greater flexibility and availability. By moving to the cloud, many of these expenses move to operational expenditures (OpEx), using a pay-as-you-go model for IT operating expenses, reducing costs, and improving cost efficiencies. Select best in-breed solutions for your various needs to optimize performance and further reduce spend, but make sure that your architecture has the flexibility to be deployed when and how you want—whether on-premises, in public or private clouds, or in hybrid environments.

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Cloud-native is Key to SuccessMulti-cloud deployments are prevalent in enterprise organizations in every industry, and these organizations are deploying applications using more than one cloud. But financial services organizations, who have led technology innovation and adoption in the past, have been slower to move their enterprise critical applications to the cloud. The significant disruptions caused by new digital-only banks emerging in the market has impelled traditional banks to move forward with cloud deployments for their critical banking applications.

Before financial institutions make a significant investment in cloud-native solutions, they must consider which ones allow them both choice and flexibility in how, when, and where they deploy applications. Indeed, it’s critical for decision makers at financial institutions to evaluate technology partners carefully, to ensure that those partners set them up to deliver new cloud-native applications rapidly to meet customer demands.

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Cloud Agnostic: More Important Than EverCloud-native isn’t the only consideration on the table, however. Different cloud providers offer unique services and are aware that moving data out of a particular cloud provider can be a tricky business. For them, it’s ideal for an organization to pick one cloud provider and stick with it. This scenario is unlikely, and in fact, most enterprises use nearly five different private and public cloud providers to run applications and try out new services according to the Right Scale 2019 State of the Cloud Report. The reality is that a multi-cloud deployment model necessitates a cloud-agnostic focus when selecting your technology.

In the context of IT, cloud-agnostic solutions are interoperable, and the term can refer to software, hardware, or business practices. It also means that moving from one cloud to another does not significantly impact the IT systems and business processes. To be cloud agnostic, the infrastructure, platform, and software can be moved to run successfully and comparably in any cloud platform. Essentially, selecting cloud agnostic solutions allows your organization to choose the cloud deployment model that works best for your organization—one in which the data is portable and the applications are platform agnostic. Using cloud-native and cloud-agnostic solutions allows you to deploy applications where and when you want, including across clouds as necessary.

Whether you are selecting a new core banking platform, a payments processing solution, or are simply ready to update your front-end mobile applications, you need to select solutions that offer cloud compatibility without the risk of creating a single point of failure (SPOF) or locking your applications in to a single cloud vendor. Why is this critical? Take a moment to examine the new banking solutions that keep emerging, for example. These 100% digital banking solutions, whether they’re called digital banks, neo banks, challenger banks, or something else entirely, have new requirements that present problems for traditional technology stacks. These challengers build applications that perform at the same level customers have come to expect from Netflix, Uber, and Amazon. Customers expect continuously available, responsive, and reliable applications, and significant downtimes and delays from traditional financial services providers simply aren’t acceptable to them. Using built in analytics, machine learning, and artificial intelligence (AI), digital banks are insights-driven, highly performant, and capable of rolling out updates and new applications rapidly. To achieve this new standard while complying with data compliance and sovereignty laws, these challengers use a cloud-native, cloud agnostic approach to deliver availability, reliability, flexibility, and cost efficiency.

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What’s Driving Cloud Priorities for Financial Institutions?

Temenos recently created a report in collaboration with The Economist Intelligence Unit, which showed how technology is driving the evolution of intelligent banking. According to the report, banks are looking to AI and the cloud to add new features rapidly and scale quickly—for them, 39% of digital investment is focused on cyber-security, 35% on cloud-based technologies, and 29% on developing AI-powered digital advisers and voice-assisted engagement channels. That focus on cloud continues to grow; indeed, industry analysts indicate that over 30% of banks worldwide now say that 50% of their expenditure over the next two years will be on new cloud-based applications. Also significant, the landscape of players in the banking space is changing rapidly as well.

Non-traditional entrants into retail banking are acting as disruptive change-agents, pushing

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traditional enterprise banks and other competitors to move into revolutionary technology to answer these critical requirements:

• Extensive core banking capabilities in the cloud

• Pre-packaged data and analytics

• Data migration compliant with financial crime and security regulations

• Inter-cloud deployment for compliance and fault tolerance

• Containerization capabilities and support

• Extensive API integrations

• On-demand scalability to eliminate costly pre-provisioning

Beyond Multi-cloud, Think Inter-cloud OperationsAs detailed in the previous section, most (if not all) organizations are already deploying on more than one cloud, which is why it is so important to ensure that your infrastructure is both cloud-native and cloud-agnostic. As the cloud technology landscape matures, it’s important to also think about whether your architecture supports an inter-cloud deployment model.

So, while multi-cloud means that similar applications will be deployed on multiple cloud environments, inter-cloud adds considerable complexity because it involves data transfer between clouds. As organizations increasingly need to transfer data between on-premises, public and private clouds, and between different cloud service providers, they need to be certain that the solutions they select, particularly the database, can deliver on those needs.

There are a few clear benefits to ensuring inter-cloud operability when deploying new business critical banking applications. Greater flexibility offers your financial institution more choice in how you deploy—enabling you to move more easily from one public cloud to another. It also significantly reduces reliance on any single location or cloud provider, and helps you to combat the risk of data loss and reduce potential customer impact during such instances. The flexibility and independence of an inter-cloud deployment that spans two or more clouds is important because it offers two important capabilities for business-critical applications:

• Maximizes business continuity: if a cloud service provider (CSP) fails, your application remains online with the other CSP

• Reduces vendor lock in: if one CSP increases prices or changes functionality, you can stop using that CSP without impacting customers.

While inter-cloud deployments may increase complexity, it is essential to select solutions that support this capability. Without it, each workload will be bound to its respective cloud host, and potentially lose availability, data, or both when major public cloud vendors experience an outage. In addition, new regulations in some industries—including banking—now mandate

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the use of heterogeneous public clouds. If your underlying architecture doesn’t support an inter-cloud deployment, you’ll need to find one that can when those regulations catch up to you. Before you get started on an inter-cloud deployment, make sure you plan for the complexities of such a model.

Important Considerations for Inter-cloud DeploymentsLatencyBroadly speaking, latency is the time delay data being received and a response generated and returned. While typically the goal is zero-latency for a mission critical banking application, it can never actually be zero because computers need time to process the information. A database that uses a durable distributed cache architecture improves processing time because much of the working set of data resides in memory across distributed caches, which delivers in-memory speeds. However, there are a number of other factors that add unwanted latency.

Network I/O

Most applications use the network in some way, and therefore it is important to understand that distance matters. Add multiple clouds to this, and you need to consider how close the availability zones (or regions, depending on the provider) are to each other. With greater distance, you can expect more latency issues in your applications in an inter-cloud deployment.

Disk I/O

Real-time applications, such as core banking or wealth management applications, are very data intensive. Exclusively in-memory databases make data durable by storing it to persistent storage, which can add significant latency. Selecting a distributed SQL database that decouples the performance of the database from the performance storage allows you to make optimizations to the system around storage, redundancy, and replication without having to worry about impacting your disk I/O.

CostWhile moving to the cloud can significantly reduce CapEx, it also increases complexity as organizations and businesses units use multiple clouds to deploy applications. It’s essential to track cloud spend and usage across multiple clouds so you can keep uncontrolled spending in check and learn how the resources are used. In addition to cost overruns, there may be data transfer feeds to be aware of when using inter-cloud distributed data management.

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FlexibilitySelecting solutions capable of inter-cloud deployment offers the greatest degree of flexibility for your banking applications. By nature, cloud-native solutions are built for distributed deployment using microservices, containers, and container orchestration platforms such as Kubernetes. This architecture enables deployment on-premises, in private and public clouds, in hybrid environments, and across multiple CSPs. Your applications may not require an inter-cloud deployment, but by selecting solutions that allow it, you have the flexibility to deploy your application the way you need to in order to meet local data sovereignty and regulation requirements.

ComplexityInter-cloud deployments also introduce increased complexity for data governance and integration. In addition, access control and identity management may be challenging to implement, and necessary to manage at the database or application level instead of through cloud provider services. Cloud-to-cloud network connections typically rely on the public internet for data transfer, however, only some cloud providers provide dedicated cloud-to-cloud connectivity. Complexity in modern deployments is expected, so be certain you understand the complexities of your deployment model so you can plan accordingly.

Database RequirementsAs financial services organizations embark on digital transformation projects to keep pace with the challenges coming from new digital-only banks, they must carefully evaluate the database that will support their new infrastructure. Traditional database solutions have posed a significant hurdle for many organizations moving critical banking applications to the cloud. Legacy SQL database technology required organizations to make tradeoffs in that transition to the cloud. They simply weren’t designed for distributed deployments, forcing a scale up model rather than allowing the flexibility of scaling out based on demand. NoSQL databases scale out extremely well, but developers then must write each application such that it compensates for the specifics of the availability model and so design their service with redundancy. Selecting NoSQL databases means learning a new database model, new programming languages, and rewriting existing applications, all of which incur significant delays and costs as enterprise organizations move existing banking applications to the cloud.

On the technology side, banks continue to face pervasive challenges. One is technical debt, or the lack of legacy system modernization, which is a huge impediment to transformation.

- Deloitte Insights

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When considering which database is right for your organization as you transition critical banking applications to the cloud, look for one designed to meet these essential technical capabilities:

1. Build new SQL mission-critical applications

2. Transition existing SQL mission-critical applications

3. Scale out to meet the needs of high frequency OLTP workloads

4. On demand scalability to meet peaks and drops in demand

Also consider the importance of selecting a cloud-native distributed SQL database that includes always-on configurable redundancy, is designed for modern architectures and deployments, and provides active-active multi-master operations. By selecting the right foundational technology partners for your multi-cloud deployments, you can realize multiple benefits, such as:

• On demand scale out

• Reduced operating costs

• Reduced time to market using modern architecture and deployment models

• Easy integration with complementary providers and businesses

• Risk mitigation by being cloud agnostic and cloud-to-cloud, while also supporting on-premise and hybrid implementation models

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RegulationsWhile digital banks have been able to innovate and disrupt the banking market because they have not been as highly regulated and risk-averse as traditional financial services organizations, that is likely coming to an end. With that in mind, both digital challengers and traditional financial institutions should plan cloud deployments with an eye to regulations.

In 2016, the Financial Conduct Authority (FCA) published new guidelines for cloud adoption within the sector. The regulator argued there is nothing stopping banks from implementing cloud services, including public cloud, in a way that complies with the organization’s rules. At the same time, the European Central Bank (ECB) also specifically warned fintech banks about the hazards of the cloud in a September 2017 report. Cyber security and outsourcing risks are particular problems for fintech businesses, because their disruption is driven by technology, which makes them likely to adopt cloud solutions early and often as they pursue new opportunities.

According to a recent article, following a number of high-profile IT failures and data breaches in the financial services sector, the Bank of England, Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have made it a priority to put in place a stronger regulatory framework to promote operational resilience of firms and financial market infrastructures. In short, regulations continue to change when it comes to security, privacy, and banking applications. The added complexity of different regions and countries and cloud providers expand this complexity immeasurably. Prepare for this complexity by selecting technology partners that are built using modern architectures so that if you need to make changes, you have the flexibility to do so.

ConclusionFor financial services enterprises moving mission critical applications to the cloud, there are many factors that influence your decisions. The cloud offers increased efficiency, reduced costs, and most important of all, a new ability to meet the expectations of modern customers. New challengers in the financial services space have moved quickly to the cloud, relatively unfettered by the highly regulated and risk averse environment that traditional financial services organizations operate in. To meet these disruptive forces in the market, it’s essential to move critical banking applications to the cloud using the right technologies and partners.

To meet customer demands for mobile and on-demand banking while still maintaining strictly consistent data across back-end infrastructure, financial organizations must plan beyond multi-cloud deployments and instead plan for technology consistent with inter-cloud deployments. To do this successfully, it’s essential to understand not only how each of your cloud partners and providers work, but also how and if they can work with one another. From your banking technology solution to your choice of database, it is critical to choose solutions that meet your needs now and in the future. To do that, you need to think beyond cloud-native and cloud-agnostic and plan for multi-cloud and inter-cloud deployments. When choosing solutions to power your critical banking applications, choose solutions that enable your financial services organization the flexibility and control you need to move to the cloud when, how, and where you want.

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Founded in 2010, NuoDB is a cloud-native distributed SQL database funded by market leaders, led by industry veterans, and built on the radical notion that a database should never be what holds your applications or business back.

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