By Ben Fishbune, Solutions Architect
Almost since the inception of cloud technology, banks have touted their efforts to create and implement cloud strategies to become more resilient, scalable and profitable. The reality, however, is that most banks still find themselves in “aspirational mode,” citing security concerns, a lack of cloud security talent and perceived limited benefits as points of hesitation for moving forward.
In an industry that rarely strays from legacy systems and incumbent technology, some bank executives will likely continue to oppose the move to the cloud because they view it as “outside the industry standard.” But the more innovative institutions among us have recognized that the emergence of AI, fintech partnerships, mobility and reduced IT costs will soon require them to leverage the cloud to continue to grow and stay competitive. Many are embracing the cloud as the foundation for that innovation and digital change. One sector of the market – de novo banks – find themselves in the enviable position of being able to adopt cloud technology from the very beginning, eliminating the obstacle of having to transition or migrate existing processes and systems.
“Cloud technology is a perfect fit for de novo institutions. The race to opening day is riddled with hurdles” explains David Saylor with Genesys Technology Group, LLC. “A de novo must juggle raising capital, responding to the various regulatory agencies, hiring key staff members at just the right time, and controlling/minimizing organizing expenses all while deploying a technology stack that must compete with mature financial institutions in their market. This makes the decision to embrace a cloud strategy a cornerstone in the foundation of a de novo’s overall technology plan.”
De novos see the cloud as a business asset to shape operating models, improve the customer experience, and drive the development and delivery of products and services.
Build Your Foundation With The Cloud In Mind
From the start, de novo banks would do well to adopt a leading cloud e-mail and collaboration platform, such as Microsoft Office 365. Because it is ubiquitous and easy to use, it allows the infrastructure to be built in a hybrid private or public cloud, which perfectly positions the institution to leverage current and future benefits.
The cloud is more than just an operational technology. When leveraged properly, it can form a bank’s entire business model, optimizing operations and driving future strategies. It provides better, actionable insights and analytics that help deepen customer relationships and improve retention and acquisition.
For de novos committed to providing modern digital experience, cloud technology can “help banks implement business and operating models to improve revenue generation, increase customer insights, contain costs, deliver market-relevant products quickly and efficiently, and help monetize enterprise data assets,” according to Deloitte.
A Cloud-Based Environment Is A Secure Environment
The most common misconceptions around the cloud are tied to security and compliance. As with any technology infrastructure, various types of attacks can be perpetrated against cloud deployments, but they can be easily mitigated with proper controls in place. In fact, most private and public clouds are more secure and have higher compliance requirements than the traditional on-premise deployment. The key is in having proper policies, procedures and a technical staff in place with the ability to secure, monitor and report on the environment. Most small and mid-sized financial institutions will benefit from the simplification of compliance and security that a cloud environment supports.
Amplify Your Cloud Strategy
Through a well-executed cloud deployment, increased operational security, long-term flexibility and preparedness – coupled with a reduction in IT staffing costs – de novo banks are positioned for continued success from a technology standpoint. Because de novos can partner directly with a managed service provider or technology consultant to develop the policy, procedures and network designs for various cloud options, the bank gains an infrastructure and workforce tailored to its specific needs.
Leveraging a managed service provider also provides expertise in configuring, securing, documenting and managing a hybrid or full cloud deployment – simplifying what can be a daunting task of IT security compliance.
Cloud-supported benefits are not just conceptual, they are proven and are currently in practice. A de novo bank executive recently shared that “as a financial services start up in the process of formation, Xamin’s white glove consultative approach has been extremely helpful with not only how we structure our future technology footprint but also how we work with our other technology providers – helping us ask the right questions so that we understand how to better position with these relationships.”
Increasingly, the customer experience is driven by expectations of innovation and convenience. As more and more of the customer-financial institution relationship shifts to the digital channel, bankers will be left to find a way to deliver on this and in the war for deposits, de novos built on a cloud infrastructure will find themselves on the inside track.
Ben Fishbune is Solutions Architect at Xamin, a leading provider of managed IT services for highly regulated and reputation-sensitive companies. For more information, please visit Xamin’s website.
Founded in 1999, Xamin offers industry leading managed IT services to financial institutions as well as other highly regulated and reputation-sensitive industries. The organization provides a suite of technology solutions including infrastructure, security, cloud, data protection and professional services. Xamin specializes in transforming IT to a revenue driving capability for an organization rather than a cost and compliance challenge. Its consultative, “white glove” approach ensures its services meet the needs of the customer and auditors. Xamin has committed annually to the examination and reporting of controls in a service organization under the SOC2 Type II certification. For more information, visit www.xamin.com.