If there is one thing that we are hearing repeatedly during the pandemic it is that digitalization of financial and operational processes has moved to the forefront of project imperatives. In this circumstance, the bright, shining light of scrutiny is focused on analog shortcomings in so many ways, as BCPs are tested and businesses adapt.
This referenced Finextra article, written by an ACI senior, suggests that one result should be that banks loosen resistance to public clouds, thereby allowing for a faster move to meeting modern customer needs. The author writes:
‘COVID-19 has dramatically changed the way we shop. In lockdown, people and businesses are relying on digital payments to keep things moving. Research by ACI Worldwide has revealed a 209% increase in online retail sales during April, compared to the same month last year. However, it is not all about consumer spending; as supply chains become stretched, cashflow and processing business-to-business (B2B) payments faster is also a concern… Meanwhile, businesses are relying on banks to quickly scale up and disburse government-backed funds to keep them afloat. Figures from UK Finance show UK banks nearly doubled the number of business loans for those impacted by coronavirus in a week, but it’s not nearly enough. The pressure to quickly process loans and transactions has never been higher, and there are two things in particular can cause a hold up: controls and capacity. An effective way of addressing both lies in the public cloud.’
Mercator Advisory Group recently released member research about the advancing technologies to be used in corporate banking, for which we detailed a hierarchy of tech trends for corporate banks, one of which was cloud technology. As the report detailed:
“Many of the largest banks have their own private clouds, a business model that reduces the overall potential for cost savings but provides greater control. Some utilize hybrids, with public cloud for development agility and private versions for systems operations. Mercator believes that thanks to expansion of the open banking environment, digital bank competitors, speed of change, and need for cost efficiencies, smaller institutions will begin to migrate more quickly to public clouds. Cloud technology also best supports the growing platform environment. We have already seen BBVA go to market with a banking-as-a-service (BaaS) platform. Others in the space include Bankable, Cambr, Cross River Bank, and Solaris Bank.”
Substantial challenges remain ahead in the short term as economies struggle to overcome the immediate and lagging damage that COVID-19 and subsequent policy choices have wrought. However, the longer-term impact will be faster movement away from inefficient and risky manual processes and toward the use of advanced digital capabilities. Banks and fintechs that are prepared for this change should be able to capitalize on the opportunity. So the article is a good read for those seeking a logical argument.
‘While COVID-19 has created an abundance of new challenges, it has also highlighted issues that have long needed fixing. In supporting efforts to save businesses and individuals from financial ruin, banks have discovered their limitations. Perhaps there is a silver lining. Cloud gives you, at its simplest, a clearer focus on customers and the ability to be more scientific in how you target them and win business. It also ensures organisations have the time required to think about and focus on customers, as opposed to all the other distractions they have in running their infrastructure. The biggest benefit of the Cloud is that it allows you to get closer to customers and focus on what matters.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group