A major shift is taking place in banking right now. It’s a shift many banks have been pretty hush-hush about until now, and that naysayers said would never happen.
Banks are rapidly testing and moving to the cloud.
What happened in the past two years that changed how the banking industry approaches the cloud? Two words: Capital One. In October 2015, Capital One’s CIO, Rob Alexander, revealed that the bank was all-in on AWS. They were one of the very first U.S. banks to not only commit to the cloud in a big way, but also to announce it loudly and proudly.
Around the same time, World Bank, made a bold move. With Stephanie von Friedeberg, World Bank’s CIO, at the helm, the company quickly shifted from risk-averse, anti-cloud to pro-cloud and the company quickly shifted.
The cloud has since transformed from a frowned-upon technology in the banking sector because of security and regulatory concerns to an area of growth and opportunity. While many banks today are still leery of the cloud, many more are starting to see the cloud as the future of banking.
1. Cost Cutting
When von Friedeberg made her case for the cloud at World Bank, one of her points was how much they could reduce their cost footprint. In fact, by migrating from Lotus Notes to Microsoft 365 for email, they experienced a cost reduction of $7 to 8 million, as well as a reduction in the amount of IT staff time needed to manage it.
Capital One is also benefitting from cost reductions enabled by the cloud. The company went from managing and paying for eight data centers to 2014 to a planned three by 2018.
Cost savings, coupled with the rapid improvements the cloud can bring to an organization, means IT organizations within banks are quickly shifting from being seen as a cost center to an innovation center.
And because cloud applications are accessible from any location, organizations like World Bank find that their employees are now more productive. A connected workforce means employers get more for their investment in each employee.
2. Rapid Deployment and Innovation
Banking is a crowded and highly competitive industry. And with customers more connected and demanding than ever, banks have to continuously innovate to keep customers engaged. Many have responded with mobile apps, gamified experiences, and streamlined online user interfaces.
On premise, however, to build a new or improved application, a team would have to present a spec to IT, IT would have to allocate expensive hardware resources, and then the wheels would slowly start to turn. Twelve to 18 months later, a prototype would be available to test, and chances are it would already be obsolete compared with the latest cloud-based applications.
But in the cloud, developers can spin up a server in a matter of minutes and get an app ready for testing in a matter of weeks. This allows banks like Capital One to create new and better applications far faster than their competitors who are still using on-premise development practices. Today, Capital One is considered a cloud-first bank, and that’s very appealing to customers who value speed, innovation, and accessibility.
3. The Cloud Is as Secure as On-Premise
The fact is, the cloud is no less secure than on-premise infrastructure. It’s simply a matter of leveraging the right tools — those built for the cloud.
But what companies have tried to do instead is apply their on-premise security tools — the ones they’ve heavily invested in and become comfortable with — to their new cloud environments. Since these tools aren’t built for the cloud, they simply can’t catch everything.
Unlike in an on-premise world where there is a defined perimeter to protect, in the cloud, there is no perimeter. That means the threat landscape becomes unbounded, so the best way to add security is by leveraging continuous security monitoring. With continuous monitoring, no anomalous behavior goes unnoticed, giving banks the same level of visibility and protection (if not more) as they had on premise.