The potential of cloud-based technology to bring significant benefits to banks is already a well-established concept. To understand why, one need only think about the basic premise of cloud-based services, and how it transforms IT processes and infrastructure from something that banks must provide for themselves in-house — with the associated maintenance and resourcing — to a utility that they can access on demand.
That simple, yet profound shift, provides the foundation for increased flexibility, agility, efficiency and even possibly — that most elusive of objectives — cost reduction.
However, this is also not all a land of milk and honey, or at least not yet.
Cloud has been on the agenda for the past decade, but in many respects it remains early days for banks. Many continue to use it mostly for testing and development, rather than for live processes. Adoption has often been cautious and incremental. Banks have had legitimate reasons for caution: data security concerns, the significant upfront costs that can be involved and an uncertain regulatory backdrop are just a few. As with any transformation process there is also a learning curve in understanding how best to make this new technology work in a financial services context. This has been the case for both banks and cloud providers.
But, spurred on by the pandemic, more banks seem to be diving in with greater conviction. The shift to mass remote working and the market volatility experienced in March 2021 proved a powerful vindication in the benefits of having an IT model that can react to changing system demand quickly, and without disruption.
To ensure this next phase runs as smoothly as possible, banks will need to think about the shift to the cloud as a broad organisational project, not just a technology upgrade. To benefit from the cloud’s flexibility, organisations must be open to changing business processes and working in new ways. This is likely to involve upskilling existing staff and bringing in new people — a challenge in the short term, perhaps, but one that will ultimately increase staff engagement.
