Banking in the Cloud

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Cloud computing is enabling agility, speed, and simplicity for some leading banks that are using it to aggregate data, manage customer lifecycle journeys, and create collaborative employee environments.
Customer Experience

For years, 'the cloud' has been an elusive concept, hard to grasp because of its intangible nature. But, as once hesitant consumers begin to embrace personal cloud technologies in their everyday life, companies across industries now have the chance to integrate similar tools with minimal risk to long-term loyalty and trust. Financial services organizations, in particular, have the opportunity to engage customers in real time without breaking the strict rules and regulations of the industry.

Because compliance has always been top of mind for financial advisors, bankers, and insurers, the cloud proved tricky, as these institutions were wary of the security behind such tools. However, these institutions can no longer deny that the cloud offers solutions that enable firms of any size to scale accordingly and affordably, as such technologies require less maintenance than traditional systems. Ultimately, they empower the industry to innovate at a quicker pace than it was used to in the past.

While many financial institutions were overcome by the fear of failing first, as is typical with the adoption of any new technology, the savings were also not yet compelling enough to offset the perceived risk. But, as Robby Powell, cloud product manager at SAS, explains, organizations now recognize that cloud computing provides a business model that allows for IT infrastructure to be made available quickly and affordably. They also offer the agility necessary to drive creativity and innovation with greater ease. Ultimately, the value an organization derives from the cloud comes from leveraging this business model to better understand the things that are most critical to their success.

According to Powell, online banking transactions surpassed bricks-and-mortar transactions recently, and this year mobile transactions are projected to surpass online transactions.. "Customers expect to be known by the companies they do business with, including their bank, and it's always been the hallmark of quality customer experience for the teller to know you by name," he says. "With online and mobile transactions, more information can be assembled on the customer based on banking habits and social activity to form a picture of her that goes beyond deposits and withdrawals. This allows banks to engage in ways that are personal and relevant."

For example, Powell notes, banks can detect where customers are through location information delivered via mobile device and push appropriate promotions and messaging to such individuals. For traveling customers, financial institution may prioritize account security by asking customers to log in and verify that they want their credit cards to remain active, or even offer to extend their credit limits. By tapping into these behaviors, banks can enhance real-time engagement, while also reinforcing the trust so many firms worried cloud technology would compromise.

"Cloud computing plays a disruptive role in today's banking landscape mainly because of the agility, speed, simplicity, security, reliability, and ability to scale that it offers in addition to the cost aspect," says Senthil Kumar, vice president of Oracle Financial Services. "Cloud services like SaaS, PaaS, and IaaS allow both business and IT groups within financial firms to adopt cloud computing to their specific needs. Financial firms should look at cloud solutions that are pre-integrated and tested to work across the entire stack, whether in your data center or in the cloud. This way they will have a single, complete, and integrated platform to serve the needs of different groups within the business."

Smaller banks find cloud technologies more affordable than traditional systems, giving them access to the same tools as larger institutions. Waqar Ahmad, chief compliance officer at Elixir Technologies, explains that small companies often have the advantage of being more agile, enabling them to adapt and integrate technology quicker. They're also used to working on tight budgets, meaning their already lower operational costs can give them a significant competitive edge almost immediately. Larger institutions, however, have more resources to pull from and a deep technology bench, boosting their expertise and allowing them to proceed quickly once they decide to implement. After all, the cloud is fast becoming the technology standard for business systems, as it enables organizations to transfer data and pool workloads, while giving IT the flexible environment needed to align costs, resources, and scale on demand.

Cloud technologies provide benefits outside the scope of the IT group that aren't possible from legacy systems. Older systems require a high degree of maintenance by trained IT professionals, while many cloud applications are largely self-service operations. Because businesses can access the software from any Internet-connected device, Ahmad says, banks can eliminate the traditional maintenance required with locally installed applications. Browsers serve as the new user interface, capable of adapting in real time to the needs of the user and their tasks. Permissions and security controls are even tighter, managed from a centralized location, integrating with existing access protocols. These tools are essentially capable of streamlining operations from internal business processes out to customer engagement, extending cloud benefits directly to the consumer via omnichannel experiences.

While most financial institutions are still in the early stages of cloud adoption, many have begun to integrate the tools that give them an advantage within the industry. For instance, Hampden & Co., the first new U.K. private bank in 30 years, uses a cloud-based system as its core banking platform, lowering start-up and operational costs. Hampden & Co. can deliver enhanced, personalized products and services because the cloud enables the bank to aggregate and manage data from multiple sources to better understand customer requirements.

Western Union leverages the cloud to transform the way it engages with customers by managing the entire lifecycle of more than 500,000 third-party agents worldwide-from prospecting and onboarding, to ongoing relationship management. Cloud adoption has led to 40 percent faster agent onboarding, cutting costs and accelerating revenue growth, while also helping company leaders identify and react to trends in operational effectiveness.

United Capital also employs cloud technologies to support its 400 employees as they serve more than 12,000 clients. As the wealth management firm grew during a series of acquisitions, leaders recognized that the company's homegrown CRM solution presented too many limitations. The cloud, conversely, provided the flexibility needed to bring all 47 offices under one primary, on-premise server. Through its partnership with Salesforce, United Capital was also able to develop a unique system for getting to know clients so advisers can offer more personalized counseling and financial plans.

"We wanted to change the client experience from a painstaking and opaque 'yellow pad' experience to a collaborative and transparent 'iPad' experience," says Mike Capelle, chief strategy officer for United Capital. Now, potential clients begin their journeys by taking an online quiz that helps advisers determine their financial mindset. Advisers also have access to an internal social network, which allows the entire team to collaborate, share ideas, and strategize best practices in an effort to find the right solution for each individual client in real time. Such tools enable United Capital to essentially shrink the company by keeping all offices connected and aligned.

"Improved technology frees advisors from administrative tasks and allows them to build deeper relationships with a richer understanding of their clients' needs and goals," says Rohit Mahna, vice president of financial services at Salesforce. "As technology continues to improve, we can expect it to be more intelligent, allowing software to complete tedious nuisances, such as filling out client information or running financial reports. Advisers will be enabled and empowered to get away from depending on screens of data, and instead focus on their clients."

Firms that embrace the cloud are positioned for business agility, Ahmad says, as they'll be able to leverage a wider range of services than those that continue to operate under their legacy systems. The longer a company delays, the more time and expense they will likely incur once they finally choose to transition. However, Ahmad warns that many providers only offer cloud-based solutions that have adapted older desktop applications, which doesn't guarantee true cloud architecture. Banks must verify that their chosen vendor has designed the solution from the ground up to ensure it can fully leverage and integrate with cloud services in the future.

Powell emphasizes that companies will continue to move workloads to the cloud at increasing rates as they continue to see the benefits and as their legacy systems reach end of life. Planning remains critical before making the move to the cloud, however, as banks must perform due diligence to make sure processes and security measures are in place. Each organization must build security into the computing environment they choose. Some cloud providers offer security capabilities that exceed those of most corporate data centers, Powell adds, but these systems need to be configured properly and managed correctly by well-trained IT staff at all times to maximize success. Only then will financial companies be able to close the loop and bring their foray into the cloud full circle.

EXPERT OPINION
EXPERT OPINION