Competing in a rapidly transforming financial services industry requires both broader access to cloud services and reliance on a trustworthy cloud-based solution for managing regulatory compliance.

There’s no question that banks are competing in a very different environment than even five years ago. The COVID-19 pandemic has dramatically accelerated digital transformation across all industries. Mobile and no-touch banking have gone from nice-to-haves to table stakes in the span of six months. Now, more than ever, banks need to find a fast, safe path to innovation — a path that will lead them straight to the cloud, not just for cost savings, but as a platform for innovation, automation, and great customer experiences.

Let’s recall how we got here. The cloud began as a scalable platform for storage and infrastructure — roles that it still serves today. But the cloud has also evolved in recent years to become a strategic platform for businesses looking to embrace digital transformation and innovation. As banks are discovering, the cloud is more than a CapEx play; it’s also a competitive advantage.

Three key areas where banks need to excel

How does the cloud help banks compete? Let’s look at three areas where today’s banks need to excel in order to deliver great customer experiences: convenience, trust, and cost.

Convenience for banking customers is no longer defined by local branches and longer hours. Instead, convenience means being able to do everything online and, increasingly, on mobile devices — deposits, bill paying, loan applications, and more. In addition to this, banking customers are seeking frictionless fulfillment and instant gratification. They don’t simply want to apply for a loan online; they want the entire process to be fast and simple, from application to approval to deposit of the money into their account.

Most banks today are not able to deliver that kind of experience. It can take weeks as banks process, document, approve, and transfer loan funds. Banks know they need to be better at this, and they’ve looked at optimizing workflows and modernizing applications. For all that, their systems remain slowed down by traditional software development and IT architectures and processes. And this is exactly where the cloud can be so important — it speeds up everything and allows banks to automate processes to achieve in minutes what once took weeks.

While new fintech companies are diverting market share from traditional banks, customers will continue to use traditional banking because of reputation and trust. But trust is tenuous; just ask CapitalOne or any other financial institution that has been the victim of a data breach. There was a time when banks wouldn’t have dreamed of putting sensitive workloads in the cloud, but those times are over. The need for security, privacy, and encryption is exactly why banks should be moving more of their business into the cloud. Cloud platforms are designed specifically with strong security features. Adding built-in compliance mechanisms that protect banks, their customers, and their partners would give banks a solution that protects their reputation and trustworthiness while enabling them to deliver the user experience innovations customers want.

Cost-to-income ratio is an accurate measure of a bank’s future success, impacting everything from pricing strategies to advertising. Traditional banks typically have a cost-to-income ratio of 50 to 60 percent. Compare that to the new breed of fintechs, which have cost-to-income ratios in the range of 25 percent. Lower costs give fintechs an enormous competitive advantage over traditional banks in terms of pricing and the ability to invest in new services. Moving operations into the cloud is a fast and effective way for banks to bring down their costs without sacrificing speed, security, or service.

Learn more about IBM Cloud for Financial Services

A trusted public cloud platform is what banks need to unlock both cost efficiency and the resources for achieving business objectives that depend on innovating customer experience. Find out how IBM Cloud for Financial Services provides a solution that combines access to the means for innovating with a trustworthy framework for streamlining and automating compliance.