Why Cloud? Optimisers, innovators and disruptors rely on it to leapfrog the competition.
Regulatory, geopolitical risks and complexity are multiplying. Bankers need agility. Skilled non-bank competitors are moving very quickly. Banks must move much faster. Cloud is driving digital banking’s business-model transformation and revenue, not just cost savings.
Dramatic changes are creating ripples across the financial services industry which require institutions to adopt new approaches to maximise profitability and remain relevant. The pressures on margins, emboldened customers and increasing compliance demands are driving the disaggregation of the vertically integrated model which predominated the industry until recently.
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The prevalence of smart devices and easily accessible investment information has increasingly placed consumers in the driver’s seat to create banking relationships with a variety of providers outside the standard list of banks that customers think of today. In response, banks are introducing cloud-based solutions that offer integrated risk management, predictive real-time analytics, core banking transformation, mobile money systems and more. Most are relying on private clouds and hybrid clouds to help drive efficiency, standardisation and best practices, and to retain greater customisation and control than public clouds would permit.
Based on the success of these cloud-based solutions, financial services firms are turning to the cloud even more in their search to find a dynamic platform to develop, test and offer the innovative services being demanded by consumers.
Speed Matters – Moving from 45 days to 20 minutes and 60% faster
For example, a top North American financial services organisation wanted to use cloud to optimise their business and dramatically reduce the development cycles for the company’s more than 20,000 internal application developers who were typically forced to wait up to 45 days for server resources to be provisioned.
The bank built an internal cloud to enable self-service requests, automated provisioning and internal chargeback capabilities, boosting utilisation rates and improving efficiencies for the developers. This cloud based approach allowed them to slash server provisioning times from 45 days to less than 20 minutes. The result was faster development cycles and putting new enhancements into the hands of customers more quickly.
Cloud is driving business model transformation, not just cost savings. Some innovators are using the cloud to understand their customers better, extend their value proposition or change their role within a market. A global European bank executed a massive volume of transactions daily, millions of customer interactions carried out through more than 10 distinct channels, from ATMs and mobile devices to online retail banking. Cloud-based analytics are helping this bank gain new insight into their channels and get results 60 percent faster.
Capturing, reporting on and analysing data relating to each transaction is critical to identifying customer behaviour patterns but the bank didn’t have a standard process in place. By creating a cloud-based centralised hub for processing and analysing traffic data across all channels, this bank now analyses several thousand log files per hour. Previously it took five days just to collect all the report data. They now have a timely count of how many customers are using each channel and how they’re using it.
The shift to cloud computing is seen by many in the financial industry as the key to unlocking competitive advantages. This view has been reinforced by the institutions that have already embraced the cloud and surpassed the competition thanks to their ability to rapidly introduce new services. Financial institutions are also unique in that – unlike many other industries – the high level of industry standardisation in payments and securities processing eases their migration to the cloud.
An international bank that saw cloud as a major disruptive force needed to create a consolidated risk strategy to adapt to rapidly-changing regulatory and compliance requirements. By implementing a cloud-based solution with easy access to more than 11,000 operational risk loss events, the bank was able to accelerate their regulatory compliance, while driving process and control improvements.
Cloud is a big opportunity. But to make it a game-changer for their business, banks need to first think big about what they can do with cloud and understand how cloud fits into their strategy, ecosystem and roadmap. Whether they start small with a specific pilot application or business process, or dive into the cloud feet first, speed is critical in today’s competitive marketplace.
The bottom line is the banking industry faces key challenges in this new era of demanding, digitally-connected consumers and that is further magnified via a changing economic and regulatory landscape. Dramatic forces across the industry require new approaches and cloud computing is already delivering game-changing results.