Change is an integral part of progress. However, it is not human nature to readily accept it. And changes in technology are no different.
Computers were introduced to the banking sector sometime in the mid-1950’s, although they were more terminals than fully-functional computers. Shortly after the introduction of the world wide web, banks found they could not afford to be left behind.
But banks have been very skeptical about moving to the cloud, which is nothing but an evolutionary step in the internet’s development. However, contrary to what you may have been led to believe, the banking sector is in reality already making use of cloud technology. Yes, cloud-based banking really is a thing.
Why Is The Banking Industry Being Quiet About Their Cloud-Based Operations?
Banks are using already Amazon AWS and other renowned cloud vendors to perform functions such as email management, human resources, software development and testing, customer relationship management and other administrative tasks. According to bbvaresearch, more than 88% of the surveyed banks are already using the cloud for the above services.
While these may not be the core functions of a bank, the fact that they are using it for a variety of other reasons suggests that it may not be too long before most if not all banks begin to use the cloud for core services.
The banking sector is well aware of the advantages that come with moving to the cloud, but James O’Neill from Calent is of the opinion that banks probably want to stay away from the questions thrown at them by auditors and regulators on how the cloud environment was planned.
And no one bank wishes to be the first one to go through that exam. This certainly explains why no bank is willing to come forward to announce that they are already in the cloud.
Why Do Banks Need Cloud Computing?
The consumers have gone digital. The only people you see in line in a bank to withdraw money are the ones who need cash beyond the prescribed limit of the ATM.
According to a forecast by Statista, worldwide e-commerce sales are expected to reach 2.48 trillion U.S. dollars by 2018. That is the amount of money that will be spent transacting online. More people will have debit and credit cards.
In addition to these, banks also see huge spikes 2 – 3 times every year, especially during Black Friday. Cloud computing can very easily scale available resources without any intervention required from the banks.
However, in the case of an in-house IT environment, banks may need to be prepared in advance to ensure the resources are able to sustain the performance in demand. This becomes as tricky a situation as it is unpredictable, as it is not always possible to predict or even assume demand.
Banks play a crucial role in contributing to the economic growth of a country. The sum total of the cost savings incurred as a part of deploying cloud computing will be a significant amount. The cloud will curtail banks’ expenses for both hardware and software IT infrastructure.
When using an in-house IT environment, banks need to segregate and distribute resources for testing and development of applications. Banks cannot use the same resources dedicated to performing their core duties. However, they do not need to worry about it in a scalable cloud environment.
It is irrelevant whether other banks want to come aboard because the shift is already taking place. In fact, global banks like Goldman Sachs and Bank of America are now using public cloud models to test their software and it won’t be too long before the actual transition takes place.
Feature Image Credit – DepositPhotos