Will Traditional Banks Be Able to Win at Cloud?

Bank

Now that the banking cloud is quickly developing, traditional banks are realizing they have to improve their digital stance if they don’t want to see a mass exodus of their customers.

  • Better Security Perception & a Changing Market
  • Digital the Way to Bank Quickly
  • Essential to Continuing Retail Success
  • Diving into Digital
  • Immediacy without Sacrificing Service
  • Cloud as a General Path Forward
  • Conclusion

Better Security Perception & a Changing Market

Now that cloud-centered, digital bank startups are on the rise, traditional firms are assessing the extent to which they might want to invest in newer technologies. Public cloud was previously feared as a general security concern, but that perception has largely changed: security was listed as the top challenge with cloud in last year’s State of the Cloud survey, but in 2016 the top issue is talent and resources.

Banks are becoming more open to cloud in terms of security but also from a business standpoint, recognizing that they are losing market share to emerging businesses such as Starling, Mondo, and Atom. Traditional banks have had to move elements of their businesses beyond their own datacenters in order to effectively respond to the changing financial landscape.

Digital the Way to Bank Quickly

Every bank wants both rapid and safe mobile banking delivered via a coherent and well-coordinated application. There is massive disruption in the finance industry: as some people start transitioning to 100% home banking, these applications are becoming increasingly popular, notes Steven Boyle of ITProPortal. “More and more, the bank is becoming a virtual concept rather than a high street or call center entity,” he says, “though many still want the peace-of-mind that accompanies talking directly to experienced banking staff.”

It’s very important that banks meet that need for speed with any cloud systems they adopt. After all, that is the point. The cloud services they choose should be well-designed and use enterprise-grade equipment. For instance, at Superb Internet, we use distributed storage (offering no single point of failure and no bottlenecks) and InfiniBand (with practically no jitter and always-zero packet loss).

Essential to Continuing Retail Success

Brick-and-mortar banks are part of the larger retail sector that isn’t keeping up with cloud. Retail businesses are in many cases unaware how they are falling behind. Stores that do not transition substantially to digital may see as much as 35% of their net profits disappear, according to a McKinsey report from 2015. Meanwhile, organizations that optimize their cloud use could see their profits go up 40% or more.

Companies that haven’t yet transitioned to digital are only painting themselves into a corner. They are falling behind in terms of the immediate-access, user-experience expectation that is gaining traction among consumers.

Diving into Digital

Banks are basically now beyond the point of toe-dipping in terms of the cloud’s rise, explains Boyle. “[T]he old guard is now facing a crossroads: adapt and invest now, or cling to outdated core systems that could eventually prove catastrophic,” he says. “The latter course risks a situation where banks fade along with their older client base.”

Everything is becoming more mobile throughout our society. That level of convenience is now becoming not an extra perk but an expectation. Traditional banks will need to keep pace in the digital era if they are to remain relevant, particularly among the younger demographics. Startups are setting the bar high, hoping to create a service that outdoes what the traditional banks can provide. The agility with which startups are able to maneuver can make it challenging for the major industry players to compete.

Immediacy without Sacrificing Service

Digital is efficient for all parties. However, service can suffer. That’s a major issue in terms of engagement. You can keep the more tech-savvy customers engaged, but you could lose customers who become frustrated within a system they don’t understand – and with lack of face-to-face assistance.

Part of that comfort issue can be solved by patterning your cloud environments after the familiar world of a physical bank. Essentially, the human element cannot be forgotten. “Digital convenience must be matched by engaging customer service at every step of the process,” says Boyle.

Cloud as a General Path Forward

More traditional banks are realizing that it makes sense to adopt cloud services. Basically cloud allows banks direct access to virtually unlimited high-speed resources on-demand. That means it’s possible to crunch big data, speed up transactions, lower budgets, and keep customers happy.

Cloud allows companies to have extraordinary agility since they are able to add or remove services on-the-fly. It also has a better reputation in terms of security, now that banks and other institutions have realized strong cloud providers must have security expertise in order to protect their systems and credibility 24/7.

The major cloud strong-point that is particularly attractive to banks is the reliability of cloud systems, since redundancies are built so fundamentally into legitimate cloud architecture.

Banks have also realized they can use cloud to any extent, in conjunction with their legacy systems as desired.

Conclusion

For banks, digital is a key differentiator in the industry that is impossible to ignore. In response, many banks will transition to the cloud faster than expected.

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