How the Financial Services sector is moving to the cloud, and what it means for monitoring

Financial Services insights

Redgate recently published the 2024 State of the Database Landscape report, which explores how the challenges for data professionals now encompass a lot more than managing and monitoring their database estates for high availability and optimum performance. Database DevOps, multiple database platforms, the cloud, AI, and making data available for development and testing have now also become part of the daily conversation.

Nearly 3,800 database professionals from a range of sectors in organizations of every size around the globe participated in the survey behind the report, providing an opportunity to dive deeper into the data and find out how different business sectors compare and what their particular challenges and opportunities are.

Financial Services comes out ahead of the pack in many areas. 58% have adopted Database DevOps across some or all projects, for example, compared with 48% across other sectors, and a further 20% are planning to do so. 65% also deploy database changes in one week or less and 36% deploy changes in one business day or less, compared with 53% and 31% in other sectors. When it comes to the cloud, however, a more nuanced picture emerges.

Where and why the cloud outlook for Financial Services is different

Despite Financial Services being ahead of the curve in many ways, it appears to be lagging behind when it comes to cloud adoption. In the Landscape report, 36% of all organizations now host their production databases mostly or all in the cloud, for example, but this falls to 29% in Financial Services. Similarly, 36% plan a hybrid approach in the future compared with 42% for those in finance.

Looking more closely at the data, however, those in Financial Services are moving to the cloud in a different way rather than simply a slower way. When including those now using a combination of cloud and on-premises, for example, cloud adoption is 69% across all sectors, and 67% for Financial Services. Among those who host all of their production databases in the cloud, the sector is slightly ahead, coming in at 21% compared with 18% elsewhere. When asked about future adoption plans, 11% of those in Financial Services have also fully migrated to the cloud compared with 6% across other sectors. In other words, many of those in Financial Services who can move to the cloud have already done so.

For those who are moving at a slower pace, or plan to remain hybrid, there are good reasons for doing so. Financial Services is an established and longstanding sector, and organizations are commonly burdened with legacy systems and internal processes which are seen as the biggest hurdle to swift and straightforward digital transformations.

Alongside the traditional difficulties of managing large estates containing a lot of Personally Identifiable Information (PII), there are also heightened security concerns and many regulations businesses are obliged to comply with. As Chris Yates, Senior VP at Republic Bank, notes:

The cloud presents its own challenges for financial organizations, especially those that have heavy regulations and InfoSec teams in place. Migrating and integrating effectively takes partnering and collaborating with many teams to achieve the ultimate goal of data governance as well as process protection.

What’s driving the migration to the cloud in Financial Services?

Organizations in Financial Services must continually strive to stay relevant in a tech-centric world or they risk being left behind. There is also the fact that adopting cloud-based solutions can help relieve some of the challenges that come with digital transformation on a larger scale. But decisions to move to the cloud are not just driven by IT concerns about where best to house data. The three main drivers across every sector are that it offers scalability and flexibility, high availability and reliability, and cost efficiency.

As a result, migrating to the cloud is a common feature of many digital transformation plans in Financial Services and integrating with the cloud can, in itself, facilitate the fruition of other digital initiatives.

Perhaps unsurprisingly, this is prompting those in Financial Services to catch up in their move to the cloud. In its Worldwide Software and Public Cloud Services Spending Guide, IDC predicts that the Banking, Software and Information Services sectors will be the three largest spenders by 2027, together representing $326 billion in public cloud services expenditure.

Capgemini is just as optimistic in its 2023 World Cloud Report for Financial Services which found that 91% of executives in the sector view a cloud-first approach as important for growth. It did add, however, that cloud investments are more common in customer-facing applications, and that 50% of executives have not started migrating core business applications to the cloud.

This caution is replicated in the 2023 State of Financial Services in the Cloud from the Cloud Security Alliance. While there is a big appetite for cloud adoption and significant growth, only 32% of Financial Services businesses have a majority of business-critical workloads in the cloud.

How does this effect monitoring?

When planning a move from on-premises systems to the cloud, there are some additional factors to consider when it comes to effective database monitoring. While many in Financial Services use third party monitoring tools for their databases and applications, monitoring databases in the cloud or across hybrid environments brings new and unique requirements which traditional monitoring tools may not be suitable for.

Ensure different metrics are accommodated

A key difference with monitoring in the cloud, as opposed to on-premises, is that organizations are likely to be monitoring a database on a machine over which they have no underlying responsibility or access to. This means that some metrics they may be accustomed to are not available, or are no longer relevant. They therefore need to find a monitoring solution that is compatible with all of their databases, whether on-premises or in the cloud, yet which also provides a view of their entire estate with a consistent interface. A lot of the metrics and overview will be consistent regardless of where servers are hosted, while others will be unique to the location of the server with, for example, metrics on disk usage only relevant for on-premises systems.

Look for support for large and growing estates with cloud storage

Cloud integration can complement growing estates by providing more cost-effective alternatives to hosting everything on-premises. There are lower capital costs due to the reduced infrastructure overhead, as well as the unlimited and relatively simple options for scalability. And with the right monitoring solution in place, no matter where organizations are on their cloud migration journey, they can still get all the answers they need about the health of their estate, whether their databases are hosted on-premises, in the cloud, or a mixture of both.

Expect to be able to monitor everything, everywhere, from anywhere

The move to the cloud also complements remote monitoring, which is something the world today is finding to be more important. Visibility into on-premises databases, for example, doesn’t need to be compromised by people not being physically in the office. A modern monitoring tool should be able to monitor on-premises servers as easily as those in the cloud – and provide a single, web-based pane of glass view of every server and every instance, wherever they are.

Financial Services summary

Financial Services businesses are likely to have third-party monitoring solutions already embedded into their data management and deployment processes. It’s now imperative they ensure those solutions remain fit for purpose as they continue to scale, retain a competitive edge, and migrate to the cloud.

To find out more about how the database landscape is changing for Financial Services and organizations, discover the in-depth sector insights from The State of the Database Landscape report 2024.