A New Era in Banking: Cloud Computing Changes the Game

Banks that want to attain high performance are facing nothing less than the challenge of reinventing themselves in the post-crisis world. Accenture believes cloud computing will be both the catalyst and the platform for much of this profound change. Based on research, we identify the trends driving cloud computing in banking, and the seven ways in which cloud computing will change future banking products, services and technologies.

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Accenture’s Banking 2015-20 study confirms that in the post-crisis world, banks will need to change their business models to restore customer trust and engagement; hold their ground with their payments businesses; and avoid commoditization. Accenture believes that at least three unique business models will emerge among smart banks:

• The “analytical multichannel” bank that engages customers frequently through various channels in line with their personal preferences.

• The “socially engaging” bank that interacts with customers based on their social media activity.

• The “digital ecosystem” bank that offers extended services by leveraging a dynamic network of partners.

These new models are underpinned by a new technology environment characterized by:

• Distributed IT, data in particular.
• Decoupled distribution to enable improved business agility.
• An explosion of metadata yielding greater insight.

This new technology environment is described more fully in the Accenture Technology Vision 2012.

Cloud computing will play a major role in helping banks adapt to these changes in their competitive and technology environments. In our view, there will be three key trends in banks’ use of cloud computing:

• Cloud-based financial services offerings will leverage social and mobile media to transform the banking experience and relationship for customers.

• Single-tenant private clouds—through virtualization—will play a pivotal role in core banking, letting banks maintain control over the location of sensitive customer data. Over time, hybrid clouds and public sovereign clouds will enter this domain.

• Public cloud and cloud-based shared services will dominate non-core and non-differentiated banking activities, from workforce collaboration to document management and even payments.

To move decisively and securely to its cloud-enabled future, it is vital for each bank to have a clear and consistent cloud strategy specifically tailored to its business, coupled with the commitment, will and resources needed to execute the strategy in full. Given the range of variables and choices involved—from public to private cloud, from IaaS to BPaaS—mapping out this journey is a complex, yet necessary task.

There are seven ways in which cloud computing will impact future banking products, services and technologies. Banks incorporating cloud computing into a larger IT and business strategy should account for the following:

• Customer relationships will be redefined. This will be one of the most disruptive affects of cloud computing, presenting banks with both a threat and an opportunity.

• Cloud computing will steadily progress at all levels of the stack. The current focus on infrastructure and software as a service will ultimately lead to business process as a service.

• Non-banking cloud-based competitors will keep up the pressure. These social media-driven money management tools will redefine customer service and experience.

• Emerging market banks will lead cloud-based innovation. The lack of legacy infrastructure will make it easier for them to adopt cloud models.

• Collaborative cloud-based shared services will emerge between banks. Banks will start to pool non-differentiating activities into joint ventures using private clouds accessible to a closed group of banks.

• Cloud-enabled collaborative bundling will expand across and beyond financial services. Growing use of cloud computing to enable dynamic and responsive bundling will trigger an industry-wide drive for interoperability between third-party financial and non-financial products.

• Payments in the cloud will be a key focus. Customer migration to digital mobile and contactless payments will affect buying habits, channels and customer service in all markets.