Cloud Banking: How Big Banks are Taking on the FinTech Challengers

Fintechs continue to snap at the heels of big banks, eating up market share steadily at the expense of long-standing incumbents. Their strength? The ability to leverage digital to act fast, respond to customer imperatives, and re-invent themselves, often multiple times in a short timeframe. Innovation-driven mindset and nimbleness helps Fintech to quash high street banks.

In the banking sector, nearly 60% of transactions still need to be completed in person or offline. That seems crazy in the current age. It also aligns poorly with consumer attitudes to personal banking, where the majority of customers would happily churn for a better mobile experience. Fintechs have maximally leveraged their digital prowess, tapping into changing consumer preferences, technological advances, and regulatory changes. As digital disrupts the financial sector, big banks are having to rapidly assimilate the lessons their fintech competitors have already mastered: how to harness the technologies that will help them accelerate their digital transformation journey.

Harnessing cloud for the competitive edge

Despite the growth of cloud service providers and the many supporting tools and frameworks that enable banks to quickly and easily migrate to the cloud, many banks have continued to be dogged by clunky legacy systems and data siloes, operating within a culture that is frequently risk-averse. Once, their monolithic structures stood for power, solidity, and security. Now, the demands of digital effectively mean that banks need to re-architect those systems to work around their customers’ needs.

It has always seemed ironic to me that data, the lifeblood of the digital economy, and one that incumbents always have reams of, is the very tool that has been weaponized against them by nimbler digital natives. This is where cloud native engineering and delivery, with the latest intelligent data analytics techniques, can help banks make the best use of their assets. No longer just a data repository, cloud-based tools are now the drivers of digital transformation and customer-centricity. Indeed, cloud banking is fast emerging as the best route for big banks to keep pace with their digital challengers.

Cloud as a foundation for continuous innovation

Cloud banking helps banks deliver more personalized services, faster to the 3.6 billion digital banking users expected by 2024, but there are many other benefits, including better products, faster delivery, competitive differentiation, platform innovation, efficiency gains, productivity improvements and the ability to respond to market forces faster.

Recently, Apexon helped the nation’s largest financial services provider. We assisted in the  roll out of new web and mobile solutions quickly, that enabled them to stay ahead of potential competitive offerings and maintain its position as the #1 rated app in the market. We worked with the client’s delivery team from planning to execution to provide continuous integration and deployment that would deliver full-featured web and mobile solutions faster and at a reduced cost. As a result, the client cut the onboarding time of new apps from five days to 30 minutes, became 30% more efficient in their testing efforts, and reduced OPEX by $5 million in 18 months.

Culture clash

Cloud engineering often requires traditional financial institutions in incumbent positions to radically overhaul their systems and architecture in order to be able to respond to customer feedback and seize new market opportunities. This is more than a step-change or a tech upgrade; it involves a complete re-invention of who they are and how they should serve their customers. Innovation is so closely bound to digital evolution that when we talk about cloud banking, we are having more than a technology conversation. Taking on the challengers requires a mindset shift. Success hinges on a cultural transformation taking place in concert with digital transformation.

Banks need to find a way to challenge the status quo. There’s no right way to go about this. Still, recent innovative approaches have included what has become known as the greenfield approach, a process in which organizations create a designated ‘greenfield site’, a department that acts like a start-up and is independent of the rest of the business. It is often also called an innovation lab or digital studio – a startup within the bank with WeWork environment and cool culture. Others favor top-down culture change to get to where they need to be. Whatever method they choose, banks should not underestimate the importance of mindset transformation in evolving digital transformation.

When big banks become serious about leveraging cloud-based engineering, continuous innovation, and data analytics, they propel themselves into competitive differentiation. With the depth of customer knowledge that their systems house, coupled with reach and scale, big banks can switch from disrupted to disruptor. They can play the fintech at their own game, and with their unique advantages of perspective, experience, and data, they can win.

Apexon has worked with many financial institutions on their digital transformations. NelsonHall recently recognized our expertise as a leader in supporting new digital banking models. Put us to the test – give us your toughest digital challenge.