Iran fires air defence batteries in provinces as sound of explosions heard near Isfahan
Iran fired air defence batteries early Friday morning after reports of explosions near the city of Isfahan, the state-run IRNA news agency reported.
TORONTO -- Canada's big banks are undergoing a migration.
Faced with rising competition from startups, higher expectations from consumers and the increased digital demands of COVID-19, experts say banks are speeding up a monumental shift of operations to the cloud from legacy computer systems.
The move had started before the pandemic, but the sudden closure of branches and offices in March 2020 forced banks to rely even more on online systems and prompted the acceleration, said Robert Vokes, managing director of financial services for Canada at Accenture.
"What happened was in March of last year, all of a sudden people realized, 'Oh my gosh, I've got to go a lot faster.' That was the big wake-up call."
Cloud-based systems, sometimes run privately by banks and more commonly by third-party tech giants, allows data to move faster and more freely, and gives banks the potential for more customization for each customer, more automation, as well as potential cost savings.
Such promises have been around since the dot-com bubble, said Vokes, but the hardware has only in recent years been up to the task.
"We didn't really have the scalable technologies, and now those technologies have caught up."
Several banks made major cloud commitments in recent months, including CIBC's deal with Microsoft's Azure, Scotiabank reaching a deal with Google Cloud, and BMO partnering with Amazon Web Services as they all push for "cloud-first" strategies.
BMO recently completed its first major system shift since the Amazon partnership by moving its entire transportation finance operations to the cloud, which involved shifting about a thousand servers' worth of data.
The bank made the move because it was finally convinced the cloud infrastructure was established and reliable enough, said Sid Deloatch, chief information and operations officer for North American commercial banking at BMO.
"We had to reach that threshold of expectation, and we feel it exists and we're very confident that it exists now, and that's why we're moving forward."
The shift creates the ability for BMO to offer automatic loan decisions in many cases, as well as save upwards of 30 per cent on operating costs, he said.
Along with waiting to be confident in new systems, banks have also been held backby the patchwork of legacy systems built up over decades, said Sanjay Pathak, head of technology strategy and digital transformation services at KPMG Canada.
"Untangling current operations from some old technology is very, very complex and it can be very risky and disruptive to business."
He said getting executives to the right mindset alone has been a challenge, since it means letting go of the control of the underlying infrastructure built up over decades.
But banks can no longer delay since they're feeling both consumer pressures, as well as expectations from employees for more seamless processes, said Pathak.
Smaller banks without extensive legacy systems have been able to move faster, such as EQ Bank shifting its entire system to the cloud in 2019, while new startup financial companies have the advantage of starting out on the cloud and forcing banks to respond.
"There's this great pressure being exerted on financial services from fintechs, and fintechs are often born on the cloud. They move quite quickly, they're doing fully digital capabilities," said Hillery Hunter, chief technology officer at IBM Cloud.
She said banks are moving more core systems on to the cloud because so many data sources need to be integrated and readily available to be able to make things like instant loan decisions happen.
"(Consumers have) all become quite impatient and we expect things to be instantly available."
However, the increasing reliance on third parties to host so much of the bank's operations, including personal financial data, is raising concerns from regulators.
The Bank of England said in October that additional policy measures are likely needed to "mitigate the financial stability risks stemming from concentration in the provision of some third-party services."
Canada's banking regulator released draft guidelines on tech and cyber risks earlier this month that said banks should plan exit strategies from third-party cloud providers, and make sure they can switch data from one cloud provider to another. It plans to release more specific third-party guidelines early next year.
But while the main concerns now are about data security and making sure big tech companies don't have too much power in dictating terms of service, competition may emerge as a threat as well, said Pathak, because the big tech companies have both the scale and the speed to become a threat.
"There's an increasing tension, I think, around cloud providers also becoming competitors ... that's a real threat to the banks."
This report by The Canadian Press was first published Nov. 28, 2021.
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