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Eliminating Roadblocks on the Path to the Cloud

Key steps and considerations community banks should take when migrating to the cloud

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  • Written by  Mike Horrocks, Vice President of Product Management and Doug Johnson, Director of Product Management at Baker Hill
Eliminating Roadblocks on the Path to the Cloud

Today’s banks are under immense pressure from all sides. Customer expectations are higher than ever, as consumers demand an intuitive digital experience, whether checking their account balance or applying for a loan. Regulatory requirements, including increased capital requirements and demands for greater transparency, are another source of pressure. Meanwhile, shareholders demand higher profit margins. However, legacy systems and outdated operating models hinder banks’ abilities to rise to these challenges and realize their full business potential.

As an alternative, moving to the cloud supports a flexible, agile operating environment within the bank. This brings numerous benefits, such as reduced operating and IT costs, faster product development timelines, improved knowledge sharing across departments and even increased security and controls via automation.

Although the benefits of the cloud are significant, cloud migration does not happen overnight and such an endeavor is not without its challenges. Community banks typically have lending applications, Microsoft applications and internal accounting applications, among others, hosted on in-house servers and banks require substantial infrastructure to store and manage these applications. Naturally, identifying how to best migrate these applications and in what order, all without disrupting business operations, can seem overwhelming.

While a cloud migration is undoubtedly beneficial for a bank’s long-term success, it is also known as a complex, arduous process. In an effort to eliminate roadblocks on the path to the cloud, this article will outline, step by step, the components of a successful cloud migration.

Evaluate IT Infrastructure

First and foremost, banks should evaluate their current IT infrastructure and applications in use. Assessing the infrastructure used by each application is also necessary. Understanding the storage needs, data generated and networking configuration of applications is a key step because this will inform the bank how to best migrate and if needed, optimize applications. Additionally, it is often helpful to review applications’ associated costs for physical servers and server management. This can help banks drive efficiencies when moving to the cloud by improving application performance and reducing maintenance requirements.

The ultimate goal should be to minimize the amount of IT assets hosted inside the bank while ensuring all necessary applications remain accessible and functional. Also, some applications like legacy or performance-intensive applications may not be best suited for the cloud, while others can and should be migrated, but it is important to identify them at the outset.

Determine Migration Strategy for Each Application & Order of Migration

Once a bank has identified which applications it will migrate, the bank should outline how each application will be migrated and in what order. Oftentimes, the applications that will be easiest to migrate serve as a good starting point because these will serve as quick wins for the institution, providing immediate positive reinforcement for employees working on the project. Another option is to start with applications that further entangle the customer with the institution, like a loan origination system. In other words, a cloud-based loan origination system that makes it easier and faster for a customer to apply for a loan and receive disbursement should take precedence over an application like an employee collaboration tool.

Types of Migration Strategies

Based on the bank’s assessment of its IT infrastructure and its applications’ storage needs, computing power and network configurations, the bank can determine the migration strategy most appropriate for each application. There are several approaches for migrating applications outlined below and financial institutions should select a strategy that will ensure the applications’ compatibility with the cloud.


For applications that only require minor changes, rehosting, also known as a lift-and-shift approach, will suffice. This involves redeploying existing applications on cloud infrastructure by changing an application’s code and configuration.


Some applications may need to be optimized to improve performance or reduce maintenance requirements. Or, if the bank wants to tweak the infrastructure needed to manage the application, refactoring the application may be best. This entails changing the application code and configuration for open source and then, deploying the refactored application on cloud infrastructure.


If the bank aims to add features, improve scale or performance for an application, re-architecting is an option. While this approach is often the most expensive, it can pay off in the long run. This involves reimagining how an application is developed, breaking up monolithic application functions and instead moving to more modern architecture that leverages cloud-native features.


Replacing or repurchasing existing applications with commercial SaaS platforms is another frequently used approach.

Planning the Cloud Migration to Minimize Disruption

After the bank determines the migration strategy for its applications, the next step is to plan the actual migration. When planning, the bank should consider how to conduct the migration in a way that minimizes disruption time. To do this, completing the migration in multiple phases will help. Additionally, migrating server images and data to new cloud platforms without taking original systems offline can help reduce downtime and ensure business operations run smoothly. It is also critical for financial institutions to consider how moving to the cloud will impact end-user processes, so post-migration training should be factored into the planning process.

Executing & Testing the Migration

With a plan and strategy in place, the execution of the cloud migration can begin. To ensure a successful migration, a bank must first backup its data and this step is crucial. The last thing any institution wants is to lose valuable or confidential data during a cloud migration. Existing servers and data should be backed up, safe, secure and easily retrievable.

Once all data is backed up, the bank can configure the cloud environment, deploy applications and test the connections. If all components, connections and applications are functioning properly, existing data should then be migrated to maintain business continuity. Migrating the bank’s data collection will likely be time-consuming and may need adjustments to work with the cloud setup. After the data migration is complete, all connections should be tested again. The last stage of a cloud migration involves testing and tuning the infrastructure. Financial institutions must verify that all data is present, accurate and secure and all applications should be fully functioning. If there are issues with any applications, it is during this phase that tweaks can be made to resolve problems.

Financial institutions that take care to assess their IT environment, application needs and thoughtfully plan each step in the migration process will witness significant ROI following the move to the cloud. From increased operational efficiencies, reduced IT costs and faster product development times that enable banks to quickly respond to market changes, the cloud brings major benefits for today’s financial institutions.

Beyond operational efficiencies, the cloud also empowers financial institutions to identify and act on revenue-generating opportunities due to the cloud’s computing abilities for storing and analyzing vast amounts of data. As a result, banks can more easily run and harness the power of data analytics, enabling institutions to recognize indicative patterns and ultimately, make better decisions that deliver value for customers and the bank’s bottom line.

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