Infrastructure

10:51 AM
David Zimmerman, IBM
David Zimmerman, IBM
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Cloud Accelerates Competitive Advantage to Banking and Financial Markets

Five tips on how the cloud helps banks grow and innovate.

Agility isn’t a word that is often associated with some IT departments, especially in the banking industry. But cloud computing is changing that.

Banks have many reasons to like cloud computing: lower cost, standardization, consistency. But increasingly they are embracing the cloud because it makes them more agile and responsive to changing market conditions and customer needs. Cloud is becoming a way for banks to deliver new products to market faster, accelerate their growth agendas, and enter new foreign markets.

They understand that cloud is not a one-time commoditized/vendor lock-in transaction. As they invest in cloud, they will require clouds that scale for managing complex workloads and interoperability/open capabilities to integrate legacy investments. This means new environments and applications and all of this will need to be accomplished within a secure cloud framework.

[For More On The Cloud: Banking in the Cloud: Four Hot Initiatives]

Going from 45 Days to 20 Minutes

At one major multinational bank, responding to business and competitive demands required they accelerate the development and testing of new products. Provisioning their 20,000 developers to code and test a new application meant adding computer capacity, storage, database licenses and other processes. Once they had the green light from the business, IT could take 45 days to respond.

Today the bank uses a private cloud architecture for such new projects. Now within 20 minutes, developers around the world have the resources they need from one shared cloud environment. The time it takes to create and test new products has been slashed because every developer is working on a single platform from the beginning.

Accelerate Growth

Recently, IBM helped a large Scandinavian bank use the cloud to rapidly integrate a newly acquired bank, which resulted in new growth. Using a cloud environment, the bank was able to test and simulate their new systems before going live, and its pay-as-you-go pricing model – which only charges for resources deployed and consumed – allowed the bank to release processing power it no longer needed. Since the merger, the newly acquired bank has captured more than 10 percent of the country’s market share.

Banks have long been among the largest and most sophisticated consumers of technology. They have built some of the biggest and most secure networks in the world and assembled armies of programmers to write code and maintain software programs.

But this very scale sometimes bogs them down when they need to create and launch new products and services. And in the fast changing world of finance, they can’t afford that. Nimble competitors are introducing cloud-based solutions that offer integrated risk management, predictive real-time analytics, core banking transformation, mobile money systems, and more.

For example, in order to adapt to changing regulatory and compliance requirements, an international bank needed to create a consolidated risk strategy. By implementing a cloud-based solution with easy access to more than 11,000 operational risk loss events, the bank was able to accelerate their regulatory compliance, while driving process and control improvements.

Cloud is a big opportunity. But to make it a game-changer for their business, banks need to first think big about what they can do with cloud and understand “how” cloud fits into their strategic roadmap. Whether they start small with a specific pilot application or business process, or dive into the cloud feet first, speed is critical in today’s competitive marketplace.

Here are five tips to help banks get started on their cloud journey:

1. Think big, start small, and build incrementally.

2. Develop the business case. Cloud is driving new business models, not just IT savings.

3. Start with a proof-of-concept pilot project. Transform applications delivery to drive line of business (LOB) improvements.

4. Remember, not all workloads are suited for cloud.

5. Build the right team. Sure, IT plays a leading role but also include key lines of business stakeholders and even end users to help accelerate results.

Banks are being challenged to respond quickly to more demanding, digitally-connected consumers and a changing economic and regulatory landscape. Cloud computing provides a way for banks to transform the business versus run the business with greater speed and can improve the economic performance of every part of an organization, not just IT. Change is driving the future of banking. Cloud is the vehicle to take it there.

David Zimmerman is IBM’s global cloud leader for banking and financial markets.

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Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
11/27/2013 | 6:01:36 PM
re: Cloud Accelerates Competitive Advantage to Banking and Financial Markets
Cloud adoption has also been held back at some banks by a lack of necessary skills and experience with the cloud. So movement to the cloud has to be done hand-in-hand with hiring and building the right team at the bank.
Kelly22
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Kelly22,
User Rank: Author
11/26/2013 | 8:37:27 PM
re: Cloud Accelerates Competitive Advantage to Banking and Financial Markets
Last but certainly not least, I think the 5th tip is very important. The cloud has potential to transform all aspects of a bank, not just IT, and because of this it's important for everyone involved in the business to collaborate and share ideas about how it should be implemented. Introducing different perspectives can ultimately help build a more effective strategy.
JaCa
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JaCa,
User Rank: Apprentice
11/26/2013 | 11:46:23 AM
re: Cloud Accelerates Competitive Advantage to Banking and Financial Markets
This is great advice for any bank/financial institution, today integrating technology seamlessly will definitely help banks and their partners improve existing services and provide new ones. I work for McGladrey and there's a newsletter on our site that discusses a few points here that may interest readers, it offers great advice on a few topics here and on the use of technology for financial institutions.
Eight ways for your financial institution to boost performance now
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
11/25/2013 | 9:03:03 PM
re: Cloud Accelerates Competitive Advantage to Banking and Financial Markets
I'd expect that with more institutions willing to trust and invest in cloud-based solutions, we will start to see some more innovation around how banks are able to make use of that scalability that you're talking about and derive benefits.
KBurger
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KBurger,
User Rank: Strategist
11/25/2013 | 6:44:36 PM
re: Cloud Accelerates Competitive Advantage to Banking and Financial Markets
I just wrote a column for sibling brand Insurance & Technology on this very theme -- agility has been aspirational for some time, but now it really can be attained, due in large part to what the cloud enables. David -- I think the point you make about scale is very interesting. For awhile, scale was almost an end in and of itself, with the thinking that scale could provide efficiency and dominance. Now we know that scale raises a whole host of problems. Cloud provides the benefits of scale without the encumbrances.
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