Home Coming Soon to a Bank Near You: Cloud Computing

Coming Soon to a Bank Near You: Cloud Computing

The financial services industry is warming up to the idea of using the cloud for some of its critical computing needs. More than half of bank transactions will be supported by cloud-based infrastructure and software by 2015, according to a recent report from Gartner.

That is the expectation of about 39% of financial services CIOs worldwide, according to the survey. In Europe, the Middle East and Africa, 44% of CIOs for banking firms expect that more than half of their institutions’ transactions will take place via infrastructure that lives in the cloud, and 33% expect most of them will be processed using some type of SaaS application.

For banks, the cloud can offer far greater computing power and scalability. Migrating critical operations there won’t be without its risks, however. Security and stability are always a concern when moving to the cloud, and that’s especially true when highly sensitive data like financial transactions are involved. It simply requires that systems are architected in a secure and fail-proof way.

Let the Machines Do What They Do Best, So People Can Focus Elsewhere

Another key value the cloud offers to financial firms is increased efficiency. As Gartner points out, banks are increasingly going to be replacing people with machines to perform certain tasks, leaving humans to do things the human mind is good at.

“As banks progressively replace people in the value chain with algorithmic operations (AOs) to run processes and make decisions, their intellectual property increasingly resides in these algorithms,” reads a post on Gartner’s blog. “The value of people is not in running operations but in improving the AOs.”

It’s this type of efficiency and operational enhancement that can drive what Gartner calls “creative destruction” within the banking industry.

As Gartner Managing Vice President Peter Redshaw summed it up, “Successful new cloud services can displace the existing and dominant process for design, distribution or transacting in a disruptive way, rather than just incrementally improving them.”

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