Banks in The Cloud

The backbone of finance is going to change.  Who really likes the user experience of their bank?  Most of the websites are clunky and hard to use.  Banks have a hard time adding features.  I was speaking with a banker once that saw a photo check deposit app and it took them over a year to add it into their system.

That’s not exactly nimble.

One of the tough things about banking besides the obvious, security, is that banks tech systems cannot go down.  They need to operate 24/7.  The other tough thing is incumbent tech providers get artificial network effects created by government regulators.  If the bank uses the same tech every other bank uses, the regulator checks a box.  If they don’t, it’s time for a deep dive.  No one wants a deep dive from a regulator.

That’s why JP Morgan announcing that they are finally moving some operations to the public cloud is a big deal.  Other banks will almost certainly follow suit.  5000 developers are starting to develop apps for JP Morgan’s private cloud.

Banks used to see back-end operations as strategic.  They are starting to look at them differently.  They also saw their IT departments as strategic and proprietary.  That’s also changing.  IT departments are starting to transition to deciding which technology to buy and use rather than building it internally.