Banks Look At Cloud Computing To Optimise IT Infrastructure

“As the technology matures, banks are looking to increasingly adopt cloud to promote mobility-driven self-service solutions,” shares Aubrey Corda, Director, FSS, IBM India and South Asia, in conversation with Biztech2.com.

Does cloud computing really work for the banking sector considering there are so many risks involved?

Banks have begun to explore the cloud as a means to optimise IT infrastructure and where permitted, leverage external public cloud services based on requirements. Many banks are still in the early phase of experimenting with cloud in the application test and development phase.

As the technology grows and matures, banks are looking to increasingly adopt cloud to promote mobility-driven self-service solutions, such as e-mail. The good news is that sophisticated technologies such as SOA, NextGen Web, Mobility, and Predictive Analytics are creating increased demand for cloud-based solutions. They are solutions ushering in a new era of banking that will deliver a much enhanced customer experience, provide greater insight to banks about its customers and create new channels to reach out and influence customers. Lastly, cloud computing is providing CIOs with new and effective ways of sourcing IT infrastructure and application solutions.

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How can CIOs improve business processes using insights from analytics?

Advanced analytics today is making it easier for CIOs to demonstrate quantifiable RoI, as the basic use of analytics provides actionable insights into key business challenges and growth strategies. The key in generating direct RoI for analytics is taking action once a path or paths are discovered. Analytics technologies allows financial services companies to predict, spot and understand important trends and behaviour patterns from data, so that they can better manage their businesses.

Having a strong information management platform is critical because companies need new analytical and business modeling tools that can be used to understand the implications of application-generated data in real-time on company operations and customer-facing services.

In an increasingly connected and global financial services industry, where data sets can yield new insights about a business, and where business events in different regions can affect one another, this capability will become not only more important but more challenging than in the past.

For example, IBM recently announced that Deutsche Postbank is deploying IBM SPSS Smart Analytics, to integrate the management of structured and unstructured data to perform real-time scoring of data records, as well as visual analysis of data mining results. The deployment, which largely covers CRE lending in the UK, replaces the manual collection of economic and performance data from disparate sources. Automating the process provides a single-view of business information, which is updated more regularly and performed in minutes, versus hours. The bank also plans to expand the system to its finance operations, to analyse loan and interest data, as well as performing ‘what if’ scenarios using graphical data.

The First Tennessee Bank, one of the top commercial banks in the US, increased its RoI by 600 percent by applying the use of analytics technologies towards its direct marketing campaigns. Similarly, Banco Espirito Santo improved retention of high net worth customers, resulting in a 10-12 percent increase in the bank’s overall profits.

Why is risk management critical in banking transformation?

The global financial crisis has brought risk management squarely back into the radar. Currently, there are thousands of new regulations being considered worldwide across 200 countries. And if each one of those regulations were implemented discretely, financial institutions will end up spending close to a trillion dollars on compliance. This shows that the need to think about risk in an integrated fashion is really upon us right now.

Historically, banks’ risk management techniques have been implemented in silos aligned along individual lines of business or regions of operations. These silos hinder an essential enterprise-wide view of risk. Banks should move toward an integrated risk management framework that transcends silos and cohesively addresses financial risk, compliance and governance, and fraud and financial crimes.

At the same time, banks must work with regulators to create a financial architecture that improves stability and allows insight into systemic risk. To get into shape and maintain fitness, banks must make a significant transformation to redefine business models, restore client relationships and reform the risk management culture. The banks must redefine business models, rebuild customer trust and understanding, and reform the risk management culture.

How do you envisage the future of banking?

The future of banking is largely dependent on how effectively intelligence is infused into the value chain. There is a huge opportunity for turning data into profit – by drawing new insights and acting on them faster and better than the competition. The conventional approach with analytics has been focused on collecting data, storing data in a database, and doing data mining. While that’s worked well in the past, this approach is becoming less and less effective as the volume of data explodes and the pace of change accelerates financial markets.

The real challenge and opportunity is about turning real-time information into insight on a real-time basis, bringing all the disparate information together to make smarter decisions whether it be for pricing or risk or for achieving greater transparency. IBM is helping banks reduce complexity, increase accessibility, strengthened data mining capability and cost savings. By working toward improved fitness in their business models and renewed focus on customer insight and risk management, banks can help secure a strong and healthy future.