BANKS need to go digital. Failing to do so will make it difficult to retain customers and market share.
However, the problem isn’t that banks aren’t trying. Most are making the time and finding the resources needed to make the investments into the digital solutions that customers and regulators expect.
The challenge is that they’ve already got a lot of systems and IT solutions that power different business functions, many of which have been created in-house or customised extensively.
None of them, however, talk to each other, and most won’t be able to communicate with the new-age solutions that the banks are buying off-the-shelf these days — at least to meet the needs of front-end, customer-facing executives.
The way to overcome the challenge of legacy IT systems is to “engineer” a move of the bank’s entire technology infrastructure to the cloud.
According to a new study by Accenture, the cloud offers a way for banks to quickly develop new applications, add new online services, and improve customer experience.
In fact, moving to the cloud is the best way to create a (banking) business that’s prepared for the disruptive digital age.
Offerings such as mobile banking and digital payments, for example, are impossible without the cloud — but most customers think of them as necessary services — something that challenger banks born in the digital age find easy to deliver on seamlessly, to attract new customers.
The study also points out that data-intensive applications such as artificial intelligence (AI) and complex data analytics that are increasingly important to banks, are typically cloud-based and indeed some of the most advanced AI technology available is now embedded in public cloud platforms.
Hence, 53 percent of respondents to an Accenture and Oxford Economics survey within the retail banking industry believe cloud-based technologies are having the biggest impact on improving the operational efficiency of their industry.
About 40 percent of the respondents said they believe cloud-based technologies generate business value for their industry.
From the findings, it seems as though banks understand that moving to the cloud is important for their business, but they struggle to make the transition — which could ultimately spell doom for them.
However, it’s clear that many banks still lack a comprehensive cloud strategy to help them make a rapid shift to the cloud, and very few have defined an enterprise-level operating model for transferring existing applications to the cloud and systematically adding cloud-based applications and capacity.
According to Accenture, many banks risk falling behind their competition because they have not laid the foundation for a rapid and orderly transition to flexible cloud-based systems.
In order for banks to really compete effectively in the digital age, banks need to swiftly develop a cloud strategy aimed at scaling cloud usage throughout the enterprise and creating detailed plans and timetables for cloud implementations.
They must also focus on building capabilities to manage cloud-based systems—including managing security and remaining compliant with regulation.
Many bankers find it an uncomfortable decision to make because of the various regulatory implications of moving legacy IT systems to the cloud — some even go so far as to say “don’t fix what isn’t broken,” but the truth is, change is necessary. Now more than ever before.
This article originally appeared on our sister site Tech Wire Asia.