5 Caveats When Cloud Shopping

By Gregg Early

This past summer I noticed that OakNorth Bank in the United Kingdom announced it was partnering with Amazon Web Services (AWS) to launch the UK’s first cloud-based bank.

Then in the past couple of weeks, I saw that AWS was expanding deals with bitcoin retailers, amping up its artificial intelligence (AI) and machine learning game—as well as its server-less database services—and landing deals with big healthcare providers.

This is big news for bank marketers because their goal is to monetize and deepen their relationships with customers. The cloud offers an array of tools built to meet the specialized needs of banks, more effectively, and in one spot.

And as this next wave of the digital age expands, so will our ability to add even more powerful tools for our clients.

The cloud is past the early adoption stage at this point. And now that it has passed muster in highly regulated and conservative industries like healthcare and financial institutions, a whole new world of opportunity is opening for banks.

Past as prologue.

It’s hard to believe that AWS launched in 2003 as the first real cloud service, and by Q3 of this year is generating $4.6 billion in quarterly revenue (up 42% YoY) with operating income of $1.1 billion. It currently controls about 30% of the cloud services market. It’s no surprise AWS is the leader in the cloud computing because it was thinking ahead, anticipating the market demand, and built a product long before anyone else made that move.

Even at its current massive size, there are plenty of other worthy competitors—Oracle, IBM, Microsoft, etc.—fighting for market share. And beyond the big names, there are scores of smaller, more focused firms also looking for your cloud business.

You need to get up to speed on cloud services.

What’s so cool about the cloud?

The cloud allows financial institutions some significant advantages over maintaining legacy IT systems:

  • Faster Innovation and Adaptability – Cloud providers and the SaaS firms that bridge these relationships are focused on building out their systems to remove latency and construct the most functional architectures they can. These teams are focused on this, rather than maintaining an entire IT department’s internal and external demands.
  • Better Compliance Oversight – As with digitalizing any process, it’s all about automation. Once the compliance standards are built in, cloud services apply them to every transaction.
  • Improved Ability to Screen Customer Usage – Cloud services are building in AI and machine learning, along with big data analytical tools, to find customer patterns and product opportunities down to the granular level.
  • Enhanced Security – Data security is paramount to cloud service providers. The best in the business work in industries that demand robust data security measures, like healthcare, transportation, utilities, and financial services.

Not all cloud services are equal.

While all these advantages are tempting and “moving to the cloud” is inevitable at this point, it’s important not to simply go with the cheapest or flashiest outfit out there. As we’ve watched FIs and cloud services transition into the next iteration of the digital age, we learned some of the advantages of going big rather than going small when it comes to cloud services.

In order to take full advantage of the cloud you must first ask yourself:

  1. What’s the risk a given cloud service may become overleveraged? Smaller cloud providers may be new to the game or straining to remain price competitive with bigger players in the space. That means they may be running at the limits of their current system, not wanting to spend more on costly upgrades.
  2. Will underperformance be an issue? It’s not just static data that gets moved to the cloud. It’s also dynamic data that has to move back and forth with as little latency as possible. If your cloud provider isn’t running a world-class system, neither are you.
  3. Will you have the tools to act on your data? Another key to having a great cloud partner is being able to have the tools to slice and dice the data you receive from your customers and turn it into actionable strategies. Just having your data available without any context for the marketing power available to your sales team is like paying for an entire hotel and sleeping in only one room.
  4. What about mobility? If your bank is committed to the mobile banking space, then finding a reliable cloud services firm is crucial. And not having a mobile strategy is a risky way to move forward in today’s marketplace.
  5. Can you set and forget? Because cloud services and their partners each have different protocols, you don’t want to keep jumping from one provider to another. All that time lost is time your competitors have to catch you.

Gregg Early is strategic content director at Geezeo, an ABA endorsed personal financial management (PFM) solutions provider dedicated entirely to financial institutions. Geezeo has been an AWS client since its BETA in 2007. As a  SaaS company, Geezeo serves as a bridge between financial institutions and the cloud to enhance the value of the digital banking experience for the customers as well as the institutions.