5 ways cloud banking can boost efficiency
Fewer IT costs, better data storage and greater resilience—moving to the cloud is no small feat, but the potential benefits to a community bank’s bottom line can be hard to ignore. We spoke to experts to get an overview of the savings that could be in store for banks.
Moving a community bank’s operations to the cloud can be labor intensive, but the benefits can be substantial. Below, experts share some of the potential cost benefits of adopting cloud banking services over the long run.
1. Reduced internal IT costs
Software-as-a-service (SaaS) applications, whether a service bureau/cloud-based core or other cloud-based solutions, eliminate server costs, upgrades, supporting software and other application maintenance costs, says Ben Reeser, senior solutions architect at CSI Managed Services in Paducah, Ky. “It also can reduce the footprint of onsite IT resources, which also reduces HVAC and power costs onsite,” Reeser says. “It also eases moves to new locations, new branches or more streamlined locations that may not have the space or supporting power or infrastructure for a large IT footprint.”
2. Reduced labor costs
Community banks can off-load system maintenance and upgrades to the cloud services provider, so they don’t have to allocate their own limited IT resources, says Jonathan Baltzell, senior director for private cloud services at Jack Henry & Associates Inc. in Monett, Mo. “Also, moving a community bank’s operations to the cloud might not be as labor intensive as many bankers might think,” Baltzell says. “We have moved about 20 customers to the cloud per year, on average, in the past decade, and the process has been pretty streamlined.”“Moving to the cloud allows for more efficient use of capital, instead of investing a bunch of capital into on-premises hardware that then can’t be deployed elsewhere.”
Jonathan Baltzell
Jack Henry & Associates Inc.
3. Accelerated time to market
“Moving to the cloud allows for more efficient use of capital, instead of investing a bunch of capital into on-premises hardware that then can’t be deployed elsewhere,” Baltzell says. “By moving to the cloud, it gives banks more agility to act on opportunities as they arise and be quicker to market.” Having cloud-based systems enables community banks to get answers faster or sell new products and services faster, says Matt Beecher, CEO of Neocova in Austin, Texas. “The industry is going through a digital banking transformation, and the next move is real-time banking,” Beecher says. “It’s all about cloud computing and advanced technologies, [and] banks are starting to really recognize this and take hold of.”
4. Enhanced data storage
By moving servers to the cloud, community banks can then change or update those services to use cloud-native functions, such as database-as-a-service and cloud-based storage accounts, Reeser says. Adds Beecher: “It’s all about speed and agility—accessing data faster on the cloud than from on-premises data storage devices.” Banks can work from a single source of data, he says, rather than siloed data storage, which also expedites reporting information that is more up-to-date, versus longer lag times typically associated with manually creating reports using Excel sheets or BI tools. “This also allows a lower cost of ownership, as cloud storage is a lot less expensive and more secure,” Beecher adds. “It also drives efficiencies of scale.”