Accenture: Banks transfer a significant part of their operations to the cloud

Banks are reducing their decades-old reliance on outdated mainframe technology and plan to move a significant portion of their core business to the cloud to quickly launch new products and stay competitive, according to a new Accenture study.

This study entitled “The great cloud mainframe migration: what banks need to knowis based on a global survey of 150 bank executives whose organizations are planning or have already begun transferring their mainframes to the cloud.

The study shows that 82% of executives plan to ship more than 50% of the mainframe workload to the cloud – including 22% aiming to ship more than 75% – while the vast majority plan to do so within the next two up to five years.

Most banks have begun porting some applications to the cloud, but still rely on older mainframe technology for most key features, including client files, payments, investments, risk and compliance.

“While many banks use Cloud infrastructure for channels such as mobile and internet banking but also for collaboration and teleworking applications, they still rely on older technologies for basic banking systems. As a result, core products rely on code written before decades, which affects their flexibility for new services offered and maintenance costs, “said Agamemnon Kakanelis, Accenture Financial Services Director. “Having invested heavily in their digital transformation in recent years, it now seems necessary to integrate innovation into major banking applications as well, where the Cloud is a way out of this.”

The study notes that these banks see solid ground for the transition of mainframes to the cloud – with speed / flexibility, security and the ability to add new features as the strongest incentives, according to 43%, 41% and 37% of respondents, respectively. In fact, 62% expect an IRR (internal rate of return on investment) of more than 10%, while 77% expect to ‘amortize’ the relevant investment within 18 months.

Among the main challenges or obstacles related to the transition of mainframes to the cloud are the risk of problems in the operation of the bank, the lack of understanding of how the code works, the ability to attract and retain the appropriate technological talent and regulate security and compliance risks.

“Banks are capable of hiring and investing in young talent, but maintaining them remains a difficult equation,” said Alexandros Lyrigos, Accenture Financial Services Director. “Successful banks are transforming their culture by creating roadmaps for the skills they will need in the future and developing strategies to attract talent from new pools, while enhancing the skills of their existing potential. “They are open to utilizing human resources working remotely. Meeting the challenges of talent will be vital for banks to achieve their mainframes transition goals in the coming years.”

Among other key findings:
-Banks see the cloud as an opportunity to boost their efficiency as the cost of mainframes increases. 91% of banks report that the cost of maintaining mainframes has increased in recent years.

The needs for talent are specific. Bankers surveyed see the greatest demand for cybersecurity-related skills (47%), cloud solutions (46%), including the ability to design virtual infrastructures, platforms and cloud-based applications for greater speed and flexibility.

Most mainframes are between 5 and 20 years old. 58% of respondents said that the mainframe is 5-10 years old, 27% 11-20 years old and 9% 21-30 years old.

-Public cloud is the preferred choice for switching mainframes. 63% of banks plan to use public cloud, which can offer additional cost-effectiveness, flexibility and ease of compliance, 31% plan to use a hybrid cloud model and only 6% turn to private cloud.