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Eco-FSI: Sustainable Digitisation Is the Future of Financial Services

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By Walter Heck, CTO of HeleCloud 

By 2025, the technology sector will consume 20% of the world’s total electricity, according to a recent report by Greenpeace. That is the equivalent of having another America on the planet, which at a time when sustainability and environemtnal policies are attracting increasing levels of concern and support, does not bode well. 

Corporate environmental initiatives are gaining traction across all industry sectors, including the financial services industry. At the same time, financial firms are  battling with an ever increasing variety and volume of data. So, the pressure is on to preserve, monitor, and analyse this data, to remain compliant, with the added complexit to do all of this in a sustainable way. Firms have to deliver on new commitments, such as carbon reduction and responsible innovation. Historically, the financial industry has driven financial, security, and agility benefits through the cloud, but sustainability is becoming an imperative for continuity, growth and profitability.  The time is ripe for a sustainable “Green Cloud”.

Transparency in Financial Institutions Drives Environmental Awareness

Environmental, Social and Goververnance (ESG)c refers to a set of standards that socially concious investors use to screen their investments. Regulators, oversight authorities and policymakers are relentless in their drive for greater adoption of ESG initiatives. This is particularly true for those in the financial sector where the increased transparency that technology has brought makes it possible for stakeholders to pressure organisations and for investors to evaluate companies on their ESG performance. Cloud infrastructure has become a powerful tool to enable firms to meet ESG targets. 

ESG standards should be regarded as engineering guidelines. Take Environmental sustainability as as example: Each piece of code developped has a carbon impact each time it is deployed. Cloud engineers can optimise coding with speed and scalability in mind. Most code can be improved to reduce as organisation’s carbon footprint. The cloud enables many tools to be deployed to enable this.  

There are are many reasons that ESG is so important for financial services specifically. First of all,  Investors always want to ensure they can continue to earn a return on their investment. Recent data shows that ESG-related funds outperformed the markets over the first quarter of the year. Equally, financial services firms are are under pressure from customers who want a firm that reflects their views and beliefs. Many younger investors claim they are choose their banks based on their ESG credentials. 

The truth is that many financial services sector buinsesses already have of a company-wide sustainability strategy. Those who don’t face  regulatory and public scrutiny which will impair business growth. In short, financial services can no longer afford to ignore ESG.  

Move to Cloud to cut Carbon and Save Money

Moving to the cloud provides financial sector organisations with opportunities to go green in multiple ways, significantly reducing carbon emissions and save money . When financial institutions migrate to the Cloud from on-premises infrastructure, they reduce carbon emissions by 88% because data centres can offer environmental economies of scale. Organisations that give up their own data centres amnd move to the cloud tend to use 77% fewer servers, 84% less power, and tap into a 28% cleaner mix of solar and wind. Large UK companies that use cloud computing could achieve annual energy savings of £1.2 billion and carbon reductions equivalent to the annual emissions of over 4 million passenger vehicles, according to a recent study conducted by the Carbon Disclosure Project. Of growing importance to the wider financial world, climate change and its effects are directing more attention to resource efficiency as a key part of sustainability and corporate responsibility.

It’s well known that cloud data centres create an optimised environment, reducing the amount of energy needed to cool those servers. The aggregation of discrete enterprise data centres to larger-scale facilities are a main reason for the reduction of CO2 emissions. Optiomising the use of energy, efficient cooling, higher quality servers and better utilisation rates all add up to make a big difference to the carbon footprint of managing all of those transactions within a financial institution.

Accordind to a recent IDC report , if all operating data centres were designed for sustainability by 2024, then 1.6 billion metric tons of carbon could be saved. So whilst customers, regulators, and investors are beginning to take notice of the impact of hyper-scale computing can have on CO2 emissions, and it’s starting to factor into buying decisions, and the technoilogy is now available to make the difference. 

Green Clouds mean Growth 

Establishing ESG requirements is a powerful way for business leaders to ensure minimal environmental impact. Ultimately, cloud computing is more energy-efficient than any alternative and facilitates environmentally beneficial services and economic growth.  

The more efficient cloud usage is the less it will cost businesses. Reducing unnecessary dependencies that consume extra storage or computer resources, FSI business leaders can optimise automation and coding to cut process time and increase efficiency. This helps reduce costs, reduce energy usage and makes CTOs’ Iives easier so that they can focus on delivering value.  

And it’s not just investors and customers who care about this stuff. Employees do also. Research found that around 70% of employees said they were more likely to work at a company with a strong environmental agenda, and more likely to stay there long term. Those in the tech sector have been fighting for greater action from their companies on climate change. Thousands of companies showed their support for the 2019 Global Climate Strikes and almost one-fifth of Fortune 500 companies had committed to the Paris Climate Agreement emissions reductions targets in 2018. 

Financial organisations should shift to the cloud to satisfy customers, employees,  and regulatory standards. Those that do will  capitalise on the sustainability benefits of cloud solutions and the significant cost savings. Those that don’t, risk being left behind.  

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