Cloud technology: permanent climate shift?

• Author: Weissman, Rich

The buzz is that the cloud will help level the playing field for community and regional banks. But is this simply a foggy and overhyped notion? Here's what you need to know.

WHAT WILL THE FUTURE OF BANKING LOOK LIKE IN THE DECADES AHEAD? How will things change, and what new methods will we be using to manage our banks? These are important questions that every bank management team should be asking, as we try to understand and plan for the next significant industry trend.

A leading trend is the growing use of cloud technology. It is already important and will become central to how we operate in the coming decades. Understanding and effectively using cloud technology will be key to ensuring future bank performance.

It's not about the hottest new gizmo. No, cloud technology is not a flash in the pan. It is a serious new business methodology that is changing industries--including ours--globally. Embracing cloud technology, and not fearing it, will be important in bringing about a bright future for banking.

First, it's important to clarify what the term cloud technology means. Cloud technology is the use of external providers that, through the Internet, deliver networked computer database processing and modeling services. Data for cloud technology is sourced from a multitude of databases. The processing and modeling occur outside of the bank's internal information technology (IT), even though data can be sourced from internal data files. Cloud technology allows for multiple users within the bank to access information through external providers. These external providers can deliver the information in far more efficient and expansive ways than otherwise would occur if the bank were dependent on its own internal resources.

Cloud technology expands the world of the bank's IT infrastructure well beyond its internal capacities and expertise. It allows the bank to significantly add capabilities and competencies without commensurate infrastructure and human resources expenses. It moves the burden from internal resources constraints to external solutions.

Complex analytic tools

Why is cloud technology now getting so much attention? It's simple. Banks are coming to the understanding that they must harness the data within their systems, and most banks do not have the internal resources to develop, house, process and provide access tools for its bankers in a way that meets today's sophistication requirements for many different types of database applications...