The desire of being able to access content quickly, simply and on multiple devices has fuelled the use of the cloud for consumers, with Gartner estimating that by 2016, consumers will store over a third of their digital content via the cloud.
However, are the possibilities of the cloud yet to be fully explored by B2B services? The complexity of such an undertaking has meant that the adoption of cloud services in B2B enterprises has been slow. Banking is a key example of this - the need to provide
a variety of services to multiple users while working with complex transactions has meant that the industry perceives the introduction of the cloud as a significant challenge. This may explain the industry’s current use of the cloud as largely a virtual platform
for their employees or consuming Software as a Service (SaaS). This only touches the surface of what the cloud could contribute to their organization.
If the cloud was to be fully embraced, there is the opportunity for a shared platform to be created across the banking industry, resembling an app store for banks. The platform could provide banks with the option of picking from a variety of IT solutions
that suit the bank’s needs and even enable them to outsource solutions to other banks that could perform the tasks more (cost) effectively.
Why embrace an open cloud banking model?
1) Banks can stay a step ahead
The cloud has created opportunities for newcomers to tread on the banks’ toes. Technology players are taking advantage of the open cloud environment to provide services that previously only banks could provide. To keep a step ahead of the challenger companies,
banks need to provide the speed and flexibility that their new competitors offer by stronger collaboration.
2) Smoothly reacting to new banking regulations
The cloud can allow banks to adapt and adhere to the continuous change of regulation within the industry. Reacting to new regulations, such as the recent European Payment directive, which requires banks to support a customer’s request to make payments through
any payments service, would be less complicated for banks relying on a flexible cloud IT infrastructure by the usage of - standardized – open API’s .
3) Unearthing new revenue opportunities
The process of outsourcing certain capabilities, such as payments processing to a third party, would allow financial institutions to concentrate on integral elements of their business; providing an efficient service and high quality products. Embracing the
cloud would allow banks to look further than their current traditional products and services and provide cloud-based business solutions to their customers. For example, banks could offer alternative cash flow, foreign exchange and investment options to businesses
via the cloud - allowing them to satisfy their customer’s needs.
To allow for this new business model to take off, there is a need for a standardisation of the global IT framework within the IT industry. The BIAN model relies on a service orientated architecture (SOA) that separates pre-defined services into core IT building
blocks and identifies the necessary links between them. If a standardisation of banking operations is introduced, banks could move on from using the cloud purely for internal purposes and employ the cloud as a means to connect participants in the marketplace.
To ensure that this shared network works efficiently, it is important to identify outlines to avoid misuse. A bank would not want to share sensitive information such as a customer directory with a competitor, so there is a need for banks to first pre-define
standardised business roles for each service domain, limiting access by creating specific guidelines that translate across the industry. Financial institutions’ IT systems are aging, making potential innovation that could improve their businesses a challenge.
Collaboration between banks to develop a global IT standard would ensure that the whole industry is able to keep on top of the banking challenges of today and prepare for those of tomorrow.