The key benefits of the cloud, which includes reduced technology infrastructure spend and efficient streamlining of processes, are familiar to most experts in the IT space. No surprises then, that the Cloud World Forum discovered that 80% of IT executives are positive about cloud computing.
Yet, if the advantages of the cloud are considered to be so significant, why has it remained largely a consumer tool, not yet fully explored by B2B services? Banking is an example of an industry that has been struck by the perceived complexity of the cloud, which has resulted in the sector mainly using the cloud as virtual platform for IT Infrastructure and their employees. Yet overcoming the foggy perception of the cloud and introducing it effectively into banks could revolutionise the industry.
Embracing the cloud could provide banks with the opportunity to collaborate through a shared platform –in much the same way as consumer apps are accessed in an app store. The platform would allow banks to be more selective and work more effectively; the option to pick and choose from a variety of IT solutions and even outsource solutions to other players in the financial value chain would allow banks to concentrate on the tasks that are integral to their business – namely keeping customer happy.
What are the key benefits of embracing the open cloud banking model?
1) Ensuring that banks don’t stand in the shadow of new comers
The cloud opens up a world of opportunities to financial companies, but not just for traditional institutions. Banks may face new comers that are embracing the open cloud environment stepping on their toes, creating innovative services that previously only banks could provide. Banks need to compete with the speed and flexibility that their newer counterparts are offering to stay ahead of the game.
2) Change: an opportunity not a struggle
The financial industry faces many new regulations, and the cloud can allow banks to adhere to new rules efficiently. The recent European Payment directive, which requires banks to support a customer's request to make payments through any payments service is just one example of new regulation facing banks. Relying on standardised open APIs on a nimble cloud infrastructure offers banks the flexibility to adapt their systems to meet new regulation challenges.
3) Broadening banks’ horizons
The cloud can open up a path to innovation and new revenue opportunities. The option of outsourcing services such as payments processing to a third party, gives banks the freedom to concentrate on the key elements of their business: ensuring the customers’ needs are met. As customers’ demands evolve, banks could also use the cloud as an opportunity to create new revenue streams, offering clients innovative cloud-based solutions, rather than limited traditional products. For example, banks could offer alternative foreign exchange and investment options for businesses via the cloud, guaranteeing that the services they provide are in line with their customers’ needs.
To introduce this new business model on a large scale, a standardisation of the global IT framework has to be implemented across the IT industry. The BIAN model is based on on a service orientated architecture (SOA) that assembles pre-defined services into core IT groups and identifies the necessary links between each group. If the banking industry were to standardise its operations, banks would no longer be limited to introducing cloud just for internal purposes - they could expand the use of the cloud externally as method to connect participants in the marketplace in a similar as they do today internally
The concept of collaboration through standardisation does create the need for outlines to be set to avoid misuse. Pre-defined standardised business roles for each service domain would prevent banks from sharing information that is essential to their business - a bank would not wish to share their customer directory with a competitor for example. By introducing strict guidelines that translate across the industry, banks can work together and innovate in unison without impacting their business’s privacy.
IT professionals have seen the introduction of the cloud as an effective tool to make their business more efficient. But as the world of technology is changing and developing, banks will find that the cloud will become increasingly important when developing services that satisfy their customer’s varying needs. Introducing the cloud would mean that banks could offer low cost and scalable solutions that have the potential to transform their business models. While new companies possess the ability to employ the cloud quickly to tailor to their exact business needs, banks with their aging IT systems, currently struggle to transform as fluidly. This challenge could be overcome if the banking industry were to embrace a global IT standard. When it comes to innovating at the same pace as the newer counterparts, a united approach will ensure individual success.