Cloud Computing: The Logistical Race to Digital Supremacy for Banks
There is an old military axiom saying, “Amateurs talk strategy; professionals talk logistics” that’s not so out of place in today’s wars for banking supremacy with technology deployment, access, user experience and scalability being the battlefields. The equivalent of logistics in banking comes in the form of cloud computing, allowing institutions to adapt quickly to changing business needs, large volumes of data processing and global deployment for an ever-globalized world. More than 39% of banks in North America are primarily in the public cloud, with over 55% in some cloud-based hybrid environment according to BizTech Magazine (May 16, 2022). This past January, IBM’s CloudPath predicted in Forbes (January, 1 2023) that nearly one quarter of all bank budgets will be going towards public IT cloud services. The path to logistical supremacy on the digital battlefield, however, is laced with landmines and regulatory hurdles. Do the advantages outweigh the risks?
Advantages of Cloud Banking
The advantages of cloud banking can be summarized as scalability, flexibility, improved customer experience, streamlined operations and cost savings. When looking at the increased use of digitization in banking services, from AI risk mitigation to robo-advisors, the ability to scale and process data quickly, globally, 24/7 is an easy advantage. Looking further toward a bottom-up or customer centric view, the user experience in the younger more technically savvy generation means applications with ease of use and access can be the defining difference between attrition and going viral in today’s ever-connected society or fading into AOL chatroom obscurity.
Additional Considerations of Cloud Banking
The utopia of cloud technology does come with some caveats, the biggest ones being: the security of your sensitive data being managed by third-party providers; constant regulatory changes that make an alphabet soup such as GDPR and PCI DS; and the long-term costs via increased usage/storage, as well as migrations of legacy systems to cloud infrastructure. Not to gloss over the human cost. Just like legacy systems, training of “legacy” workers on a new infrastructure can often imitate a toddler who missed their nap and snack time. Layer on the newest child stars of the industry (Machine Learning, AI, and LNL chatbots) and transparency and visibility into decision making gets a whole lot murkier for regulators to audit.
Eliminate Technological Disruption
One of the most effective ways to win the war of technological disruption can be to simply hire outside the trenches. Peter Drucker said it best, “Do what you do best and outsource the rest”. No company can fully navigate the fast paced and changing digital landscape successfully 100% of the time across the face of a multi-functional organization. By partnering with outside technology suppliers as a catalyst to help accelerate innovation - to build, integrate, migrate, and deliver on the “vision” - it allows current staff to focus on the organization’s strategic initiatives while still playing an integral role in the relationship and business use cases with the outside vendor.
The Most Successful Outcome
The way to ensure a good outcome is to hire those with a vested interest in that outcome and become stakeholders in each other's success by understanding each other’s business and providing the right customized solutions with detailed metrics of success and incentives for achievements. Most importantly, those suppliers need to take into account the input of staff and training along the journey.
At the end of the day, GI Joe is still right – “Knowing is half the battle.” The other half is getting it done.