The cloud is key for financial services undergoing digital transformation

Technological advances are transforming everything from transportation and manufacturing to financial services and healthcare. These advances make digital transformation imperative for organizations to adapt to shifting marketplace realities. Nine out of 10 executives surveyed by Accenture see accelerating digital transformation as essential to success.

“Digital transformation is redefining how companies operate across all areas of a business,” says Eisar Lipkovitz, chief information officer and product line general manager of Cloud Platform Services for JPMorgan Chase, the world’s largest bank in terms of market capitalization. By transitioning architecture and operations to the cloud, Lipkovitz says, JPMorgan Chase aims to improve customer experience and products, adopt modern data practices, and discover operational efficiencies.

For many organizations, digital transformation has meant shifting to cloud-based architectures, tools, and processes. Working in the cloud and building cloud-native applications means quicker release updates, rapid scalability due to distributed compute power, optimized cost structures, and access to specialized tools that simplify tasks like testing, monitoring, and security.

JPMorgan Chase’s comprehensive digital transformation initiative uses public cloud computing to address governance, culture, and customer needs, Lipkovitz adds, and is a crucial path to stay competitive.

Drivers of change include simplification

For JPMorgan Chase, simplifying its complex IT infrastructure under cloud technology better serves its customers and clients, permits quicker innovation, and enhances security. “Our largest customers need to make trades and move money globally,” Lipkovitz says. “They’re looking for simplification.”

Alongside simplification, digital transformation is also driven by a need to provide better products for customers, while still addressing security vulnerabilities and regulatory requirements. According to Gartner’s 2022 Hype Cycle for Digital Banking Transformation, public cloud is one of four technologies likely to transform the banking sector by 2024. Other technologies include chatbots, social messaging payment apps, and banking-as-a-service, which enables non-banks or non-financial institutions to provide financial services.

A focus on the cloud and security

Like many large enterprises, some of JPMorgan Chase’s software was built in-house over decades of work. Much of this software remains robust—such as the legacy card processing systems still used globally. Digital transformation does not necessarily mean older systems will be replaced; instead, many are well-suited to be adapted, and freed from their dependence on mainframes, says Lipkovitz. Public cloud and cloud-native technology are increasingly used to renovate these systems, helping organizations eliminate technical debt, quicken development cycles, and modernize technology stacks.

The modern technology stacks of financial services companies must be highly secure. For established cloud providers, Lipkovitz notes, “security at this point is really table stakes.” Cloud services today come with robust security out of the box, giving developers of cloud-based applications a head start from a security standpoint. “Not only do we need to be secure and safe, we must be able to attest to it, to demonstrate it,” says Lipkovitz.

One way to demonstrate data security and compliance is with infrastructure as code (IaC), which provisions and manages infrastructure through code instead of through physical hardware configuration or with configuration tools. As organizations migrate to the cloud and adopt modern technologies—such as serverless cloud, containers, and Kubernetes—infrastructure must be monitored and secured at an increasingly granular level. IaC can provide the tools to accomplish this.

With IaC, developers can quickly and easily reproduce a specific version of an environment to see where changes were made (and by whom), or see the origins of a bug or flaw in the system. This transparency helps in the auditing process and with regulatory compliance, and is particularly valuable in highly regulated industries such as financial services, where customers expect their data to be secure and protected.

At JPMorgan Chase, Lipkovitz’s team employs zero-trust security frameworks that lock down data at every point, from device hardware to the cloud.

When operating in a zero-trust environment, teams must assume that their entire environment is already compromised. Every aspect of a system’s infrastructure must be assessed from a security angle, and security precautions are embedded—data must be stored safely, keys and sensitive data are protected. Zero-trust is more of a cultural mindset, an approach to developing software and infrastructure. And, according to Deloitte, it is an approach that more financial organizations are taking, considering the increase of cyberattacks as well as regulatory oversight.

Lipkovitz credits JPMorgan Chase’s “talented and large internal cyber team” and its shared accountability model, where app developers work in concert with security and cloud personnel, many of whom have experience outside the financial industry. This team, he notes, considers both the security of the software and the security of the infrastructure, and works to address them together.

People empowering people

JPMorgan Chase’s digital transformation team includes long-time employees and those, like Lipkovitz, newly arrived from other companies and industries. Lipkovitz says the company benefits from each group. “As you bring in people from the outside, they change your perspective,” Lipkovitz says. “But there also are a lot of talented people on the inside. That combination of perspectives is incredibly valuable.”

Lipkovitz stresses the importance of a diverse workforce in bringing fresh thinking to the company. “When an environment allows diversity of thought, it is incredibly helpful,” he says. There is a great deal of talent in places like Silicon Valley and Seattle, Lipkovitz says, and as industries outside these epicenters have transformed, talent is moving in new directions, particularly into finance. “The financial services industry is looking for outside talent to help drive success,” he says.

Although recruiting new talent is important, training, and upskilling existing workers is essential for successful digital transformation. “The world simply does not have enough people that know how the public cloud works, so that’s not going to be fixed by hiring,” he says.

Amidst cultural and technological changes, the firm intentionally balances speed and stability. “There’s huge value in doing things incrementally,” Lipkovitz says. His team rolls out changes through centers of excellence where, for example, developers can vet code before it goes live.

Centers of excellence can help incremental change happen in individual segments of the business gradually, or by making direct connections between experts and the employees who need to learn from them. People creating change within the company should be protected from the drive for expediency, Lipkovitz says, even if it means insulating them from deadlines.

“We have a strong obligation and important responsibility to always protect our customers’ information,” Lipkovitz says, “so the level of change management required can be daunting.” He continues, “But we’ll end up with a better world. I’m an optimist.”

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.