Did Banking sector embrace Cloud or Digital Transformation?

Technical analysts always show great interest in predicting the technologies that will dominate in the upcoming years. Some of the major predictions that were made for past few years were about industry wide adoption of Cloud and Digital transformation. Let’s look at the status of those predictions, especially from the perspective of banking sector.

Despite the predictions stating that for the past few years banks are just a heartbeat away from adopting cloud technology, there are many reports which points to reluctance in the banking sector to run their core banking applications in the Cloud. The initiatives associated with running core processing in the Cloud seem to hit the roadblock due to security, privacy risks, and regulation concerns. Rather, financial institutions seem to focus on adopting Cloud solutions in their supporting areas like: messaging platform, customer relationship management (CRM), knowledge sharing platform, marketing and data storage.

While Cloud adoption predictions were not so encouraging, the predictions related to digital transformation turned out to be more promising.

In recent years, banks feared that their biggest competitive threats would come not from other traditional financial sectors, but by the entry of non-financial companies such as Google (with Google Wallet offerings) and Apple (with Apple Pay offerings). These new entrants, who owe much of their success to their extreme agility in adopting emerging technology, have forced the traditional banks to rethink their business models and even the customers they serve. 

With new entrants fielding themselves in between the customers and the bank and making inroad into lucrative parts of banks’ relationships with their customers, banks are fighting back by focusing on digital transformation initiatives such as enhanced digital marketing, improved customer on-boarding process,  offering digital channel, improved Omni channel customer experience and analytics based customer segmentation.

Let us look at few banks on how they have reinvented themselves through their digital transformation initiatives to meet the challenges.

 US Bank, a Minneapolis-based bank as part of their digital transformation initiatives offered a best in class digital channel experience to their customer by completely redesigning their online self-servicing platform.

National mortgage bank of France, Crédit Foncier de France as part of their digital transformation initiatives extended well beyond their traditional boundaries by orchestrating the entire customer experience of buying a property by augmenting their strong B2B capabilities by partnering with other firms.

ICICI, an Indian bank as part of their digital transformation initiatives made substantial reduction in the turn-around-time (from few days to few hours) for their bank’s account opening process by deploying a tablet based application which allowed their sales officers to capture all KYC documents and complete the account opening formalities at the customer’s door-step.

 Lloyds Banking Group one of the largest bank in U.K reinvented by double-down on digital banking, closing branches and cutting costs.

 BBVA Compass, one of the largest bank in U.S as part of leading the modernization of the payment process entered into an agreement with startup Dwolla to offer real-time payment facilities to customers.

Bank of Ireland, a banking & insurance group overcame some of their key business challenges of sustaining relationships with customers and targeting customers in timely manner to maximize engagement through digital marketing initiative combined with analytics.

Unstoppable forces: Cloud and Mobile computing

The increased use of Web for day to day tasks is making accessing web-based services an essential part of everyone’s life. The demand for accessing the services through mobile devices is also rapidly increasing. This is due to factors like ubiquitous Internet access, advancement in wireless technology and widespread availability of low cost mobile devices.

This is show cased when Apple's iPhone sparked an explosion in consumer awareness of mobile application’s usage. New applications are proliferating and "application stores" are springing up. But these applications need mobile devices with robust computing power, limiting their potential use.  In a few years time we can expect a major shift from traditional mobile application technology to mobile cloud computing.

Mobile Apps powered by Cloud

Cloud computing will bring unprecedented sophistication to mobile applications. Cloud network services are quickly becoming a tremendous force in the mobile ecosystem, offering almost unlimited storage and processing power. The number of mobile apps based on Cloud is growing at exponential rates, and industry analysts predict enormous growth for this sector. 

The cloud brought with it a couple of interesting dimensions. First, it required everyone to get used to internet. Anyone who wanted to make use of cloud has to accept computer networks. One of the downsides of cloud computing is that it's dependent on connectivity.    No connectivity, no cloud. 

Fortunately, these days, connectivity issues are few and far between.  However, one have to consider the risks involved in leveraging networked computing model, inclusive of cloud computing.    When, you manage the risks systematically,   there is nothing to worry about.

Future outlook

Joshua Jewett, CIO Family Dollar Stores chain predicts "Either you consciously build cloud and mobile systems or you're reacting to forces of the world which will surely push you down that path,”