Updating Bank Technology Results In Rediscovery
I was recently listening to a fascinating panel discussion whose members agreed that radio as a medium is enjoying a renaissance. In our high-tech age, who would have thought that a technology as old as radio could have a resurgence?
The fact is, there is a timelessness to listening to that which is entertaining and informative. It might be more than a century since the radio was introduced, but the content has changed very little. It's the devices (from a 10-kg wooden box morphing into a 100-gram smartphone) and the business models that deliver the content that have changed. Broadcasters and producers have state-of-the-art digital editing tools. But people still enjoy listening to their favorite music and news.
This so-called resurgence and rediscovery of radio bears resemblance to the banking world today. The intent of consumers to borrow or deposit money hasn't changed in the last three centuries, but the institutions that serve them are evolving and changing constantly. Banking is necessary...but banks as they are now may not be. To remain viable, banks much make full use of all sorts of technology.
The Cloud is number one on that list. So, why are so many leading banks still apprehensive about embracing it? The answer is: Security. Banks are risk-averse institutions (theoretically, at least) that view such technology with a bit of skepticism. How can a bank vault float around in the ether and potentially be shared with rival firms? I was recently talking to a CIO of a bank in America who proudly told me he had a state-of-the-art infrastructure. Everything at his firm is virtualized. The bank's main network can scale up but updating consumer apps requires someone to work for hours to get things right, he said. These apps are like an old gearbox that doesn't want to behave, he added.
Moreover, the financial services sector is morphing into something very different. Today, you still have a bank vs.bank environment. But, very soon you will start to see a bank competing with a retailer that has a financial arm. In the United Kingdom, Sainsbury's, a grocery chain, is already leveraging a model that includes an on-sight bank. Banks need to respond very quickly to this changing environment. They either have to step up and be first movers or plan on sliding into irrelevancy in the minds of the consumers.
Moving to the Cloud is not free. My opinion is that the banking industry as a whole needs to step back and look at its budgets, 60 percent of which are locked into contracts that don't involve moving toward the Cloud. This makes it imperative for banks to be more agile about how they approach technology budgeting and purchases. A number of affordable Cloud options are available. In fact, several consumer apps don't need a Cloud interaction at all. Moreover, instead of building out an infrastructure to host Cloud, banks can subscribe to Cloud services on a pick-as-you-go basis. Reputable Cloud providers have plenty of safety and security measures in place. Essentially, there's a Cloud model and an accompanying 'zone' that's tailored for every bank's needs.
The younger consumers are gravitating towards radio. Those same types of consumers are rediscovering banks as trusted institutions of centuries. The only difference is that today, many of those banks are as technologically savvy as the millennials. If not, they should be.