Cloud computing is the foundation of the technologies that enable digital transformation. Cloud offers the flexibility, speed and ability to experiment with reduced risk to make digital transformation successful. Although banks have traditionally been slow adopters of cloud, it is increasingly gaining more prominence and acceptance as banks embark on their digital transformation journeys. Cloud computing helps in faster deployment that will help banks address needs for new and unique customer experiences, increase collaboration and improve speed to market. Per PwC, by 2020, core service areas in banks such as credit scoring, statements, consumer payments, and billings for basic account functions will be using the cloud to scale1.
Cloud and digital transformation are closely linked. The early adopters of cloud will get a leg up on the competition in terms of digital experience for their customers and employees. On the other hand, enterprises that still haven’t implemented cloud technologies will be impeded in their digital transformation journey because of issues with legacy systems, slower change adaptability, longer speed to market and an inability to adapt to fast-changing customer expectations. Per the State of Digital Transformation, 2018 by Forbes, public/private cloud is among the top five technologies implemented by enterprises for Digital transformation2. Business and technology leaders see cloud as a key element of their digital transformation journey.
The role of cloud in digital transformation
Financial organizations, though, are aware that simply moving legacy applications to cloud will not enable digital transformation by itself. In fact, it may end up making the IT landscape more complex and costlier than before, thereby slowing down digital transformation rather than actually accelerating it. Banks need to see cloud as a part of their overall digital transformation journey. Moving to cloud can be an important enabler in accelerating this journey and should be considered as an integral part of the holistic digital transformation strategy.
Any digital transformation journey goes through different phases including setting goals that the transformation is expected to achieve, creating a plan for the transformation journey, execution of the plan and taking measures to manage risk.
Cloud has an important role to play in all of these phases and the decisions that need to be taken for successful digital transformation. Cloud technologies provide the speed and tools for data and analysis for a review of market and business during the discovery phase. It also captures fast-changing needs and uses analytics to predict future trends.
Cloud provides the agility and environment for testing future models and hypotheses in the design phase. Additionally, it provides an ecosystem of relatively cost-effective and plentiful resources from technologies to platforms to vendors. It increases the interoperability between different resources, which in turn provides more options to digital transformation leaders during the design phase. Cloud technologies can be used to continuously re-caliber the transformation strategy based on frequent feedback and ability to adapt and deliver changes faster.
Similarly, cloud plays a central role in the delivery and execution of digital transformation strategy. Cloud technologies mean faster speed to market, agility, ability to scale up and down with varying demands, and faster adaptation to customer and market demands. Finally, cloud helps digital transformation leaders de-risk investments as opex instead of capex, faster uncoupling of resources if required, as well as the ability to make quick changes.
In a nutshell, cloud has become omnipresent like the Internet and is no longer an option for the banking industry. It has become a precondition to succeed in the digital era and an important cog in the fast-churning wheel of digital transformation. Both technology and business leaders would be well-advised to make it a part of their digital strategy to maximize chances of a successful digital transformation.
References:
[1] https://www.pwc.com/gx/en/financial-services/assets/pdf/technology2020-and-beyond.pdf
[2] https://www.forbes.com/sites/louiscolumbus/2018/04/22/the-state-of-digital-business-transformation-2018/#4e4407ec5883
