This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.
Cloud-based technologies are gaining prevalence quickly throughout the business world.The cloud software market is expected to be worth more than $100 billion by 2018 (IDC, 2014), or a compound annual growth rate of more than 21 per cent, about five times faster than traditional packaged software.
The banking sector is no exception, with cloud computing fast becoming a cornerstone of banks' digital strategies. The move toward cloud is one that should be seen as strategic to banks given how cloud technology is also an enabler of innovation, allowing banks to maximise opportunities presented in the cloud era.
A temperature check of the financial services industry's attitude to cloud banking revealed that banks recognise the strategic benefits and are receptive and open to the idea of adopting cloud technologies.
Cost-savings are an obvious driver for banks in developing a cloud-based IT strategy. According to Temenos'Cloud-banking Heat Map survey conducted in April this year, banks rank "reducing overall IT costs" as the number one benefit sought from applying cloud solutions.
Cloud computing is also recognised as a means to support banks in implementing new technology, adding new business functionality and enhancing the customer experience.A cloud-based model allows banks to offera greater choice of channels while ensuring a consistent and integrated user experience for banking customers across all platforms.Upgrades and maintenance can take place quickly in the background without the customer even knowing of the complex operations being executed behind the scenes.New product development cycles are also shortened, allowing for more efficient responses to customer needs, which provides banks and financial institutions the nimbleness to compete with current and emerging competitors.
Through achieving cost savings, accelerating processes and increasing efficiency, cloud banking frees up CIOs and IT decision makers from being caught up in the complexities of the technology infrastructure, allowing them to focus on more strategic plans.
As cloud becomes a must-have rather than a nice-to-have, banks need to channel their investment to the cloud or risk falling behind the curve.The journey however is not always easy.
Barriers standing in the way
Although banks recognise the benefits of cloud computing, the banking industry has been relatively slower than other industries in embracing the cloud. Our survey found that the top barriers to banks adopting cloud services are concerns over data security (55%) and reliability and availability (47%) - common challenges for financial institutions that are used to managing and maintaining their own IT.
Concerns over regulatory compliance and the uncertainty about the position regulators will take on cloud technologies also pose challenges for cloud banking, as cited by 45% of the respondents in our survey, which is no surprise in such a heavily regulated sector.
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