How a Chief Digital Officer in financial services can use the cloud to drive digital transformation

According to a report by Juniper Research, by 2021, one out of every two adults in the world will use a smartphone, tablet, PC or smartwatch to access financial services. This shift in how consumers are interacting with financial services is driving a significant change in how financial service organisations deliver services to their customers, with an increased focus on mobile and digital platforms. This shift is often refereed to as digital transformation, the fourth industrial revolution. With figures like this it is not surprising that Digital Transformation is front and centre of the conversations we are having with our customers in Financial Services.

The shift in the way that consumers leverage financial services is fundamentally changing the landscape of the global market. Research conducted by the Bank of England in 2016 states that UK banks are seeing the number of customers seen in a branch decrease by 10% a year, and according to an article from the Business Insider in North America 11% customers switched providers in 2015, and 19% of those went to a bank with no brick-and-mortar branches.

Consumer behaviour alone is not only the only factor driving digital transformation in financial services, for example regulation in banking such as the EU’s Second Payment Services Directive (PSD2) means that banks will be obligated by 2018 to provide third-party providers access to their customers’ accounts through open APIs. Fundamentally this will mean that banks are no longer competing with just banks, but all financial services providers.

A Chief Digital Officer (CDO) or a ‘digital function’ is tasked with leading digital transformation at a financial institution to cater for such significant changes in consumer behaviour, customer experience and regulatory pressures on increased competition and openness. This article focuses how the cloud can be leveraged as the platform to drive digital transformation in financial services.

Understanding the Cloud

Adoption of the cloud in Financial services is continuing to gain momentum. According to an article from the Wall Street Journal, a report published by Deutsche Bank in 2016 indicates that 30% of banking workloads will move to the cloud in the next 3 years.

Forecasted adoption is also supported by regulators such as the Financial Conduct Authority, introducing revised guidelines ‘firms outsourcing to the ‘cloud’ and other third-party IT services’ stating that ‘We see no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules.’

Innovate More Often and Quicker with the Cloud

The ability to innovate more often and quicker is paramount to a CDO in financial services. In a report published by Juniper Research almost $14B was invested in the Fin Tech sector through Venture Capitalism in 2015. This appetite for investment is driven by the opportunity that is seen in the market to significantly disrupt traditional players through digital platforms.

Cloud presents an opportunity to easily experiment with new technologies and innovate more often at a significantly lower cost. The biggest barrier to innovation is typically cost, often new projects require significant amounts of capital to get off the ground and it can be difficult to justify a business case when the return is unclear or unproven. With the Microsoft Cloud customers can pay for services on a usage basis, which enables customers to quickly get projects of the ground because the risk of failure is significantly lowered because if the project is unsuccessful resources can be simply turned off.

The ability to innovate more often with the Cloud was one of the core drivers for Aviva who built a mobile app on the Microsoft Cloud to track driving behavior to influence insurance premiums.

Steve Whitby, Business System Director at Aviva said “With Microsoft Azure, we can test and scale as needed. Our app is very much a product of its time, and we can build on capabilities that were unavailable in the past. As a result, we can offer our customers cutting-edge solutions like never before.”

To find out more about how Aviva is using the cloud to innovate click here.

Driving Deeper Customer Insight through Cloud Analytics

In a highly competitive market and with increasing customer attrition rates in financial services, it’s imperative for a CDO to know their customer and personalise services based on their behaviour/preferences. The Microsoft cloud provides a plethora of BI and analytics tools that can help customers harness data and get deeper insight into their customers.

Tangerine Bank, Scotiabank leverage the cloud to adjust new product roll outs or advertising campaigns in real time based on customer feedback. According to Billy Lo, Head of Enterprise Architecture, Tangerine Bank “Without having deep access into all this data via the Microsoft solution, we wouldn’t be able to see the impact of the changes we’re rolling out, like our upcoming credit card. Now we can easily evaluate effectiveness and clearly see what we need to adjust.”

To find out more about how Tangerine Bank get deeper customer insight through leveraging the cloud, click here.

Multi-Platform and Optimising mobile experience through the Cloud

A key challenge for any CDO delivering a digital strategy is how to deliver a consistent mobile experience to their customers who leverage multiple devices on multiple ecosystems. Maintaining separate development teams and code bases for multiple platforms is expensive and cumbersome. The Microsoft Cloud has a range of cloud services that makes it easier to streamline cross-platform development and create a consistent user experience by using a shared code base across multiple devices.

Crédito Agrícola is a great example of a customer who have simplified their mobile development through leveraging the Microsoft cloud. Traditionally they developed individual apps for Android, iOS, and Windows Phone, but want to move to a solution which could deliver to all platforms.

According to says Jorge Correia, Director at Crédito Agrícola. “Everything is going mobile, and it’s crucial to provide customers with a better mobile experience. That is the objective of this solution. Our cross-platform approach with Xamarin and other Microsoft technologies is a model for other banking entities.”

To find out more about how Crédito Agrícola leverage the cloud for mobile development, click here.

What next?

A CDO has a significant opportunity to leverage the cloud to fundamentally change the way that their organisation interacts with their customers today and delivers mobile services. It is a vital tool for a CDO at a more traditional enterprise to help them compete and defend their business from dynamic FinTech companies that are eating away at their traditional revenue streams.

Find out more about banking in the cloud