A Short History
I’m about to sound as ancient as I realize I now am.
I remember quite clearly the highly strategic and separate “computer room” from my first job as a software programmer. Do you recall those specially air conditioned rooms for the monolith computers of yesteryear?
That then evolved into a “server room” in the client-server days of yore. This was further transformed into a “data center”. All this happened over a couple of decades or more of information technology going mainstream.
The Emergence of Cloud
How times have changed because today, we have all kinds of clouds to choose from…
The following is as good a definition of cloud computing as you will find anywhere – it’s basic and clear:
the practice of using a network of remote servers hosted on the internet to store, manage, and process data, rather than a local server or personal computer.
What’s not clear from this definition is just how impactful and transformative cloud computing has been for information technology. If you are connected to the IT industry in any way, the modern verbiage you are using is actually Hybrid Cloud.
As its name suggests, hybrid cloud is an amalgamation. When a business uses hybrid cloud, all that means is that it is using computing resources that can be from any combination of public cloud (such as Amazon cloud services), private cloud (such as that owned solely by Company ABC) and its own internal data centers.
Hybrid Cloud is fast becoming the reality in organizations, large and small. And no industry is being left behind – including Financial Services, despite all of their unique security and privacy concerns.
The kinds of benefits that organizations are reaping include: flexibility, scalability, cost, and computing opacity for users (so they don’t have to care where the computing horsepower is coming from – they just consume it as they need it). All of these serve to give a company significant business benefits and competitive advantages.
Cloud Computing for Financial Institutions
Banks and credit unions have been averse to using cloud-based services given their deep concerns for security and privacy. The consequences of breached privacy or security are enormous, and sometimes earth-shattering for a financial institution.
Yet, despite these concerns, the benefits of a hybrid cloud have breached these defenses.
Now, even credit unions and banks have no choice but to figure out how to take advantage of the hybrid cloud. That’s because technology today has become such an integral and central part of the operations of any organization and it’s hard to ignore the immense benefits of using the cloud.
Ultimately, cloud computing enables speed, agility and innovation. With hybrid cloud (the new nomenclature used in the industry to describe how cloud computing is being deployed), we have entered a new era of elasticity in consuming computing power.
Yes, it’s Taking Off!
You can be sure that the Financial Services industry is not about to be left behind! Here are some of the early areas where cloud computing is winning over banks and credit unions and the reasons why:
- Core banking for small to mid-size financial institutions because they are affordable, scalable and turnkey.
- Cloud-based human resources or human capital management systems because of the availability of complete HR/HCM cloud solutions from companies such as Oracle and SAP.
- 3rd party credit card and mobile processing systems – because these (such as from Visa and MasterCard) are moving to the cloud with the 3rd parties ensuring security and privacy.
- In-house application development and testing is being done on the cloud before moving to the internal production environment because it is more cost-effective and elastic. You pay only for the infrastructure that you use.
Last but not least, innovative cloud-based marketing and CRM solutions that integrate with other banking core or application software – because they offer 24×7 digital marketing and sales tools to increase income, customers and loyalty for banks and credit unions. These are filling a huge gap in sales and marketing at these financial institutions.
A Gartner report’s prediction says that by the year 2016 over 60% of financial institutions globally will be consuming and processing most transactions in the cloud.
So, brace yourselves, whether you work for a bank or a credit union, whether you are large or not, the future looks clear – it will be cloud-filled for you too.