Recommendations to business leaders on future of cloud computing
August 19, 2012
In the foreseeable future, cloud computing will be a part of our everyday lives. To move decisively and securely into cloud-enabled future, it is vital for banks to understand how cloud computing will impact future banking products, services and technologies.
First, customer relationships will be redefined. The most disruptive impact of cloud computing will be how it redefines the relationship between consumers and their providers of banking products and services. Cloud computing will make these services more convenient, more accessible, easier to use, and more personalized to the needs and lifestyles of individuals…
Second, cloud computing will steadily progress at all levels of the stack. As confidence grows and more banking cloud products and services emerge, usage of cloud models will continue to advance at all levels of the IT stack. Currently, many banks are focusing on IaaS and/or SaaS, having virtualized their infrastructure and started to use SaaS for undifferentiated activities.
Third, non-banking cloud-based competitors will keep up the pressure. The emerging generation of cloud-based, socially-driven money management tools are customer services and experience innovators. They will continue to ramp up efforts to win customers not just from banks, but from each other. Banks must, therefore, continue to respond to these competitive pressures in order to avoid disintermediation by investing in capabilities around social media, analytics, and targeted product and service bundling.
Fourth, collaborative cloud-based shared services will emerge between banks. In a similar way to telcos sharing network infrastructure, banks will start to collaborate to pool non-differentiated activities into joint ventures (JVs) using “private clouds” within a closed group of banks. These JVs could provide shared services that interact with customers in more engaging ways while simultaneously freeing banks from the burden of routine transactions.
Finally, cloud-enabled collaborative bundling will expand across and beyond financial services. Banks’ growing use of cloud computing to enable dynamic and responsive bundling will trigger an industry-wide drive to make third-party financial and non-financial products interoperable in the cloud. This will enable a bank to operate as an integrator and aggregator of a diverse array of products, using its differentiated cloud-based bundling capability as the “glue.”
Concerned with a potential breach of security or privacy, many banks in Korea are reluctant to move into the cloud computing. However, there are ways in which banks may deal with these issues. It is time to consider and prioritize both strategy and execution of adapting cloud computing in banking industry.