Just a decade ago, financial institutions were struggling with the idea of moving platforms and data to the public cloud. At the time, what won the argument was the need to cut costs after the global financial crisis and subsequent mounting regulatory reporting requirements.

That conversation has since evolved. While not easy, firms are moving beyond simplistic web and data hosting needs, to more alpha-driven ambitions, such as for portfolio management, trade order management, and data analysis. But a recent survey conducted by Google and Coalition Greenwich found that while 90% of the buy side is consuming cloud-deployed data in some way, only 67% of sell-side firms currently use cloud for any data.

Beyond that, only 13% of sell-side respondents reported using cloud for trade execution, while 25% reported using cloud to support data-intensive functions such as back-testing and quantitative strategies. Even while the planning process is speeding up, when it comes to actually migrating to the cloud, many firms are talking a big game, but the shift has been a slow one.

Lawrence Wan has worked in technology for nearly 30 years, and almost half that time has been spent at the Bank of Montreal. In his career, he has built trading, risk, portfolio management, and analytics systems and tools. He’s also seen the industry’s move to the cloud first hand. But for BMO, serious conversations about migrating to the public cloud began about five years ago. Wan says the bank has recognized the need to move forward using a cloud-first, cloud-native mantra. The reason for this is the understanding that the company needs to be quicker and more efficient when it comes to releasing new tools and services.

“I think people will start to see it’s not about the costs—sometimes it could be even more expensive, depending on how you manage the workload—it’s about speed and functionality,” says Wan, who serves as BMO’s chief architect and innovation officer. “[Cost cutting] was never a top three priority for us going into cloud; it’s always been about innovations, speed to market, and the agility we can create.”

In June, the bank announced it had chosen Amazon Web Services (AWS) as its preferred cloud provider, but it has taken a multi-cloud strategy approach that also utilizes Microsoft Azure. With these partnerships in place, BMO has been methodically working its way through a three-stage migration plan. “BMO is coming out of stage one and moving into stage two,” he says.

In some ways, the Canadian bank’s cloud strategy is similar to those of Wall Street’s biggest investment banks. Goldman Sachs, for example, is looking to build natively in the cloud for platforms like its Marquee offering, as it wants to further embrace open APIs and open-source tools.

“Moving to the cloud is a multi-year investment for us,” Goldman Sachs managing director Anne Marie Darling told WatersTechnology last year. As part of the strategy, the bank is exploring the idea of creating a “financial cloud” managed services offering for users that would address needs around data management and analytics, pricing and risk services, and trading automation. 

Additionally, this year, BlackRock announced it’s partnering with Snowflake to make the “Aladdin Data Cloud.” And in December, State Street unveiled the cloud-native Alpha Data Platform. Additionally, vendors are in a race to overhaul legacy platforms so they can deliver their services via the cloud.

BMO, though, appears to be taking a more calculated approach for its cloud rollout than some others in the industry. While the bank is navigating to the cloud in three phases, it doesn’t see itself being 100% on the cloud.

“We will always have an on-prem presence and capability,” Wan says. He estimates that in three years, BMO will have 30% of workloads in the cloud, 50% on premises, and 20% on an external service provider.

Virginie O’Shea, founder and CEO of Firebrand Research, says preexisting investment into on-premises technology can deter the 100% on-cloud approach. “Firms have sunk a lot of costs into on-premises deployed technology and it’s challenging for C-suite executives to move from a capital expenditures (Capex) to an operating expenses (Opex) approach when technology is still viable for use,” she says, noting the difference between short-term operational costs, and long-term transformational costs. “The move is generally gradual rather than sudden.”

Still, these moves are happening faster today than just a few years ago. In May, Firebrand released a report showing some of the linkages between major banks around the world and the major cloud providers. For example, HSBC and Standard Chartered have partnered with AWS; Societe Generale, Bank of America, and BNY Mellon have gone with Microsoft Azure; Deutsche Bank and Commerzbank have chosen Google Cloud; and BNP Paribas tapped IBM Cloud. Bank of America, BNY Mellon, and Standard Chartered also have multi-cloud strategies.

O’Shea writes that the Covid-19 pandemic “has reinforced the benefits of cloud-native technologies that can easily enable remote access and can scale up and down as required without major redundancy.”

As noted previously, phase one was about putting in place a foundation that allows the bank to move more quickly with future cloud-migration projects. Phase two encompasses an audit of workflows that could potentially be moved to the cloud. Phase three will see BMO looking at other capabilities like edge computing that can tie into the bank’s digital transformation.

“We follow a methodical and disciplined approach to be cloud-first and cloud-native,” Wan says. “The third phase will focus on evolving and continuing to innovate our core cloud capability, while optimizing our investment and driving speed-to-market.”

BMO’s “30% in three years” target is part of a larger transformation the bank is focused on. Ambition 2025 encompasses targets laid out by BMO CEO Darryl White. Wan says that outside of cloud capabilities, there is an overall effort to digitize BMO’s capabilities. Under a concept referred to as Digital First, data analytic capabilities—from data gathering to predictive analytics—are also being examined.