During the event, industry experts: Ricardo Ribelles, Director Partnership Development, Mambu, Niall Archibald, Head of Financial Services Industry Strategy, Microsoft UK and Michal Gorski, Chief & Cloud Architect, Northmill Bank, shared their insights on the challenges and opportunities associated with cloud-native technology adoption in the banking sector. To watch the full webinar discussion, click here.

Niall Archibald, Microsoft: There are three macro challenges facing the financial sector: inflation, talent, and interest rate hikes have both positive and negative implications, such as increased margins but also higher costs of funds. Inflation leads to increased costs for firms and tests credit risk models. The industry also struggles with finding the right skills, especially in digital domains.

Michal Gorski, Northmill Bank: Coming from Northmill Bank, a neobank, in our case being efficient and cloud native is important to us. It’s not about transformation and fancy toys, it’s about using the tools from a cloud provider or any other SaaS company to achieve our business goals: not just build the software. Our focus is on the customers instead of building.

Ricardo Ribelles, Mambu: On top of the turbulent and uncertain macroeconomic environment banks are facing, whether they're larger banks, global banks and smaller ones, there's a natural tension for the need to keep up with innovation and address changing customer expectations in this tough environment.

Niall Archibald, Microsoft: Large firms tend to focus on scaling transformation, innovation, and regulatory aspects. They deal with complexities in large organisations. On the other hand, smaller firms aim for sustainable growth and expansion into new customer segments and geographies. They emphasise agility, unity of purpose, and the scaling of successful business models. They typically don't even question themselves as to whether their tech stack is cloud native.

Michal Gorski, Northmill Bank: For smaller banks and fintech newcomers, being cloud-native is a survival option. It enables them to operate with fewer resources compared to traditional incumbents. Cloud adoption helps these institutions compete with larger banks and corporations. Efficiency, time-to-market, and customer experience are crucial factors for them. They focus on using cloud tools and SaaS solutions to achieve business goals and prioritise market and customer needs.

Ricardo Ribelles, Mambu: I wouldn't call it premature. I'd say it has been more reactive, to be honest. Many banks responded to market changes and customer demands, adapting to a new environment after COVID-19. However, some banks are now taking a more transformational and holistic view of cloud adoption. They are considering their operating models, talent needs, and technology in a more strategic manner. Addressing technical debt caused by legacy technology stacks is a key aspect that can be improved through a cloud-native, best-of-breed architecture.

Niall Archibald, Microsoft: There are a few points to make here. A well-architected cloud transformation program should provide a net positive business case. It can lead to efficiency dividends through the sunset of legacy applications, reduced maintenance costs, and opening of additional revenue streams.

Banks can also leverage the willingness to invest in their balance sheet when it comes to early stage costs of a long-term transformation project delivery cycle to get longer-term, mutually beneficial outcomes on both sides.

It is also really important to note the importance of maintaining investor and market confidence by demonstrating a commitment to ongoing investment and modernisation.