Cloud technology is transforming the banking industry, as more and more banks are adopting it to modernize their core systems, enhance their customer experience, and compete with non-traditional players. According to a recent report by Temenos and The Economist, North American banks are leading the way in cloud adoption, as they see it as a key enabler of their business priorities.
Cloud Technology: A Game-Changer for Banking
Cloud technology refers to the delivery of computing services, such as servers, storage, databases, networking, software, analytics, and intelligence, over the internet. Cloud technology offers many benefits for banks, such as:
- Scalability: Cloud technology allows banks to scale up or down their computing resources according to their needs, without having to invest in expensive hardware or infrastructure.
- Agility: Cloud technology enables banks to launch new products and services faster, as they can leverage the cloud’s ready-made platforms and tools, without having to develop them from scratch.
- Innovation: Cloud technology fosters innovation, as banks can access the latest technologies, such as artificial intelligence, machine learning, blockchain, and biometrics, and integrate them into their offerings.
- Cost-efficiency: Cloud technology reduces the operational and maintenance costs of banks, as they only pay for what they use, and rely on the cloud providers to manage the security and reliability of the services.
- Compliance: Cloud technology helps banks comply with the ever-changing regulatory and customer demands, as they can easily update their systems and processes, and ensure data privacy and security.
North American Banks: Ahead of the Curve in Cloud Adoption
According to the report by Temenos and The Economist, which surveyed 300 executives in retail, commercial, and private banking across the world, North American banks are more bullish on cloud technology than their global counterparts. Some of the key findings of the report are:
- 90% of North American banks consider technology to be the biggest trend impacting their industry over the next five years, compared to 63% of banks globally.
- 36% of North American banks are prioritizing moving domestic core banking to the cloud, compared to 26% of banks globally.
- 24% of North American banks are focusing their technology investments on agile technology delivery (DevOps), compared to 18% of banks globally.
- 42% of North American banks see their business model evolving to act as a true digital ecosystem, compared to 32% of banks globally.
- 46% of North American banks see offering banking products as a service as a strategic opportunity in the next one to three years, compared to 38% of banks globally.
- 27% of North American banks see responsible lending to the unbanked and underbanked population as a strategic opportunity in the next one to three years, compared to 21% of banks globally.
The report also reveals that North American banks are more confident in their ability to leverage cloud technology to achieve their business goals, such as improving customer satisfaction, increasing revenue, reducing costs, and enhancing security.
The Challenges and Opportunities of Cloud Technology for North American Banks
Despite the evident benefits and opportunities of cloud technology, North American banks also face some challenges and risks in adopting it, such as:
- Legacy systems: Many North American banks still rely on outdated and complex systems that are difficult to migrate to the cloud, and require significant investments and resources to do so.
- Regulatory uncertainty: The regulatory environment for cloud technology is still evolving and varies across different jurisdictions, which creates uncertainty and complexity for banks that operate across borders.
- Cybersecurity threats: Cloud technology exposes banks to new and sophisticated cybersecurity threats, such as data breaches, ransomware attacks, and denial-of-service attacks, which require constant vigilance and protection.
- Talent gap: Cloud technology requires new skills and competencies, such as cloud architecture, cloud engineering, cloud security, and cloud governance, which are in high demand and short supply in the market.
To overcome these challenges and risks, North American banks need to adopt a strategic and holistic approach to cloud technology, which involves:
- Developing a clear vision and roadmap for cloud adoption, aligned with their business objectives and customer needs.
- Choosing the right cloud model and provider, based on their specific requirements and preferences, such as public, private, hybrid, or multi-cloud, and cloud-native, cloud-enabled, or cloud-agnostic.
- Implementing a robust cloud governance framework, which covers the policies, processes, roles, and responsibilities for managing the cloud services, as well as the metrics, controls, and audits for measuring and ensuring their performance, quality, and compliance.
- Building a strong cloud culture and capability, which involves training and upskilling their existing staff, hiring and retaining new talent, and fostering a culture of collaboration, innovation, and agility.
The Future of Cloud Technology for North American Banks
Cloud technology is not a trend, but a necessity for North American banks, as it enables them to stay relevant and competitive in the digital age. As the report by Temenos and The Economist concludes, “Cloud technology is not a silver bullet, but it is a powerful catalyst for change. Banks that embrace it will be better positioned to meet the challenges and opportunities of the future.”
