Cloud computing is hardly a new concept, but it’s one that the banking industry has always regarded with a degree of suspicion, especially when it comes to the use of public deployments.
In some ways this is understandable. Given the number of regulations they are required to follow when it comes to areas such as data protection – and the high consequences that security breaches can lead to – in past years, many banks may have felt that moving operations to cloud tools would have constituted too high a risk.
But things are changing. Cloud is no longer the new kid on the block, but a fully mature, mainstream part of everyday business. Over the past few years, it has become a proven solution and many early worries about security have not come to fruition.
Therefore, if banks haven’t investigated this before, 2017 is the time for every financial institution to be investigating what the cloud can offer them.
A cloud-first approach
It’s important to recognise that when it comes to migrating services to cloud, there’s no such thing as a standard solution. But for many banks, if they want to reap the true benefits of cloud, they need to put it at the heart of all their operations, not just use it as an addition to legacy tools.
BBVA Research noted in 2016 that while many banks may have already adopted some cloud tools, their use in core, mission-critical services remains uncommon – and this is what’s likely to change in the coming years. Banks are under pressure to upgrade these applications to respond to growing customer needs, so cloud should be on the agenda right from the start of these discussions.
What this means in practice is more banks will be adopting a ‘cloud-first’ mindset, where the cloud will be their primary consideration whenever they are considering technology upgrades. When working on the assumption that a new solution will be cloud-focused from the start, banks can pay closer attention to how they will best utilize the technology, rather than getting held up by questions about viability.
Last year, researchers at Deutsche Bank predicted that cloud technologies could make up between 20 and 30 percent of some banks’ operations by 2019, and 2017 will be when many companies make their moves.
A key driver for this will be that FIs look at the experience of early adopters and seek to emulate their success. At the moment, the pace of adoption varies widely between providers. While many leading banks are investing in cloud, smaller community banks often lag behind. But as they see the results generated by other providers, their doubts will recede.
For instance, Capital One has been one of the highest-profile names to fully embrace public cloud computing, agreeing a deal with Amazon Web Services in 2016 to migrate many of its core business processes to the platform.
Chief information officer at the bank Rob Alexander said: “Technology is going to play a central role in the future of banking as we move toward an experience that is real-time, digital-first, and that anticipates customer needs.”
The scalability, flexibility and reliability of the cloud will therefore be essential in meeting these demands, so if banks are still on the fence about the benefits of the cloud, they may well get left behind as the technology becomes the norm in 2017.