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Attitudes shifting on cloud in corporate banking
by Paul Davenport Paul Davenport on

Earlier this month, Microsoft announced it would launch its own Financial Services Cloud, joining IBM, who announced their finance cloud a year earlier, in an attempt to meaningfully bring cloud transformation to an industry that’s historically been averse to change.

Retail banking has already been a fruitful frontier for cloud computing and tech disruption, what with Venmo and Zelle leaving traditional banks in a scramble to update their digital presence and offer a wealth of new mobile and digital services to customers. But corporate banking, which is the area of the business focused on credit management, asset management, cash management, and various other financial services tailored toward a corporate clientele, has been much slower.

The reasons for the apprehension make sense when you consider the stakes: A disruption to corporate banking has the power to be felt across the economy, and with industries across the globe in a state of pandemic-induced flux, rushing forward on a transformation may be more problematic in the short term than it’s worth.

Corporate banking is also awash in security and compliance measures that they can’t risk violating, lest they suffer significant client churn and potential legal penalties. But with virtually every business making a step toward digital transformation, corporate banks are starting to move faster than ever before towards embracing the cloud.

This is supported by the findings from Celent’s inaugural Corporate Banking Public Cloud Survey, which highlights that corporate banks hope to use cloud to increase agility and innovation, while finding ways to free up their budgets and move away from capital expenditures. Most importantly, however, it’s essential to helping banks keep pace with client expectations for digital engagement as we all continue to get comfortable with a digital-first approach to virtually every transaction.

Top factors driving corporate banks to cloud

According to the Survey, cloud migration used to be sold to business leaders as a cost saving strategy first and foremost. What’s driving banks to go to the cloud today is a much deeper understanding of what banks will miss out on if they don’t migrate to cloud. These include increased agility, which aids in the acceleration of development and innovation, and the ability to spend a greater percentage of the IT budget on innovation.

The report also found that top drivers cited by at least half of all of the respondents include:

  • More flexibility provided by moving away from CapEx to OpEx
  • Improved customer experience
  • Even better compliance (compared to in-house managed systems)
  • Better interoperability with the fintech ecosystem

While security and compliance are still cited by 63 percent of respondents as potential barriers to cloud success, they are no longer high enough concerns to dissuade respondents from pursuing more cloud solutions to improve their banking: 90% disagreed with the statement that “cloud technologies are not secure enough for bank workloads” and half believe that cloud can contribute to improved cybersecurity.

But another major concern (that is perhaps less commonly discussed) include a lack of internal expertise in navigating these kinds of cloud transformations.

The reality is that teams need to move fast in adopting the latest and greatest cloud tech, not just to improve their customer relations but even to ensure they meet the high standards for security and compliance that the banking industry abides by. Not transforming may actually be a security threat down the line, and waiting to deploy the latest and greatest tech to firm up data and infrastructure (which, today, is cloud-based by and large) will leave the door open to vulnerabilities.

When it comes to bridging a skills or expertise gap where the cloud is concerned, it’s more than just hiring staff with experience: It requires IT to deploy new tools and solutions that can help them navigate the new tech landscape intuitively.

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Filed Under: industry insights

Tags: network management, network performance monitoring, network monitoring, enterprise transformation, digital transformation, cloud migration, cloud, cloud transformation, cloud computing, banking, corporate banking, finance cloud, financial services, finance

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