It has been more than two years since the outbreaking day of the COVID-19 and its variants to the whole world. Half a century on from that first cash machine, we are starting to move towards a cashless society. During the pandemic, many shops accepted only card payments to minimize physical contact as much as possible, and in 2020 cash payments reduced by 35 percent. Since the pandemic, things have not really recuperated. Hence, operational resilience has always been a priority for financial-sector institutions (FSIs).
The surprising consequence of this is an increased dependence on those online systems. Cold cash is something that can be reliably carried and used, whether or not we have online access to working digital banks. Mobile banking debit cards and credit cards all rely to a greater or lesser extent on online services. In this world, when services fail people can be left extremely vulnerable. It is essential that banks protect themselves and their customers against this risk. When banks assess the relative reliability of the cloud and on-premises IT, they must be aware that the stakes are getting higher. As a data center service provider, USDC Technology fully understands the situation and is still in progress of supporting our customers, especially in Banking and Finance sectors to well organize their IT systems.
Back to the date when the global financial crisis occurred in 2008. It was regarded as a major possibility for the real beginning of in-house data centers’ recession at banks. When the banks lost the trust of the general public. In response, they began to work more closely with FinTech companies on new approaches. Online banking had arrived, and mobile banking was available – increasingly capable smartphones put the two together so people could handle money on the move without branch visits. In the wake of the financial crisis, regulations were adding additional hurdles, increasing their workloads and the complexity of functioning in an attempt to reduce risk. This huge burden forced banks to renovate. They welcomed in technology companies and moved faster in offering more flexible services. As an inevitable result, banks also need to internally review their own infrastructure, and questioned whether their internal digital infrastructure was up to the job. The on-premise data center began to look like a liability, rather than an asset. Banks moved their servers from their own back-offices into shared spaces such as colocation data centers.
More than 10 years later from the financial crisis, we had the cataclysmic incident of a global pandemic which hastened digitization in many ways. The demand for working from home dramatically increased since 2020. This led to a boom in the data center industry – but a boom primarily reflected in spending on cloud-based services, not on on-premises systems.
However, any change comes with risks. Banks cannot be assured when all their data is putting on cloud. Therefore, they choose hybrid model as a resolution with keeping their own on-premise infrastructure alive alongside new applications in the cloud.
By all means, building your own facility from scratch would trigger a lot of additional costs. But in the banking sector, we are often not talking about building new data centers, but upgrading within an already functioning on-premise facility, or moving resources from that facility to colocation or cloud. This kind of process is in itself costly, but it can ultimately save money in the long run, if it is done right. The real solution comes from planning and understanding what data and computing need to be in the cloud and what should remain behind.
Whether bankers decide to go with on-prem, cloud or hybrid, USDC Technology is always willing to be a strategic partner with our enthusiastic consulting and professional services.