Banking on cloud

There is this telling anecdote of how an e-commerce giant discovered that most of the banks in a particular market did not have the infrastructure to handle the estimated transaction volumes of a one-day only ‘Big Billion’ sale. Now, it is hard to think of a provisioning strategy that could solve that problem without leveraging the potential of the cloud.
For banks, the key question when it comes to cloud adoption is not ‘why’, but ‘how’. Based on our experience with our financial services partners, we believe that banks should follow a simple three-step strategy to transition smoothly into a cloud-first model. The first step is to shift non-critical environments, like development and testing, to the cloud. This should be followed by a focus on leveraging cloud techniques to optimize infrastructure investments and performance. The third step is to move the production environment to the cloud and take a cloud-first approach to all future technology-sourcing decisions.
In our view, banks betting on digital leadership should at least have progressed to the second phase of this three-step program. There are already some early examples of cloud-first banking. Robeco Direct N.V., a Dutch bank, has moved its retail banking platform to the cloud, following the country’s banking regulator authorizing the use of Amazon Web Services. Bankinter, a leading Spanish bank, is using the cloud to run its credit risks simulation. In fact, it has been able to do these simulations in just 20 minutes, compared to the 23 hours it took earlier.
Banks need to view the cloud as an enabler of new business model rather than a technology, and evaluate its utility based on the value it delivers to all stakeholders. Granted, there are still some security concerns and regulatory grey areas that need to be addressed. But a coherent cloud strategy will be a critical component of any successful digital banking strategy.
Found this perspective interesting? Checkout our point-of-view on key strategic and technology trends that are transforming banking here. And do let us know what you think.

Automation in the Truly Digital Bank

The banking back-end is no stranger to automation. However, in a digital banking model, automation will play a more prominent role both in terms of scale and sophistication.

There are three reasons why large-scale automation is absolutely essential to digital banking.
First, it will be critical in enabling banks to cope with the exponential increase in transaction volumes in the digital era without compromising cost, efficiency or accuracy. Without a centralized and automated solution, even something as fundamental as reconciliation will be prone to expensive delays or inadequacies in compliance reporting. Automation enables banks to centralize reconciliation across channels, reduce costs and enhance productivity, efficiency and accuracy.
Second, large-scale automation across all enterprise systems and processes will be required to deliver a differentiated no-break service experience to customers at various front-ends. For instance, as banking increasingly becomes mobile-only, banks will have to enhance the functionality of their mobile apps to go beyond merely enabling transactions. This means that even account origination, which currently requires a significant degree of manual intervention in most banks, will have to be completely digitized. So the level of automation across the enterprise ecosystem will have an impact on the banking experience at the customer interfaces.
And third, digital banking is shifting the focus away from the branch. This presents a huge opportunity for banks to release valuable human resources from mundane repetitive tasks and reassign them to more value generating activities. Large-scale automation, driven by business rules, algorithms and machine learning, can help banks standardize recurring tasks and enhance the overall productivity of the workforce.
Automated investment platforms or robo-advisors are already making a substantial impact on a specialized function such as wealth management. Even incumbent banks are experimenting with robots to cognitive computing to automate and streamline the digital banking experience. But without a concerted and comprehensive effort to automate banking, banks will find it challenging to achieve any tangible improvement in efficiency or experience. In a world where many consumer devices are becoming more autonomous and smart, a significant degree of automation will be required for banks to engage well with all these entities.
Found this perspective interesting? Checkout our point-of-view on key strategic and technology trends that are transforming banking here. And do let us know what you think.