Cloud Banking Pioneers: Banks Should Stop Reinventing The Wheel

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Technology never stops moving and making industries more efficient. Even the banking industry, historically hesitant to make changes to their technology infrastructure, is trending upward to the cloud.

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Improving Operations And Customer Service

Cloud banking refers to storing and accessing data and applications over the internet rather than on in-house legacy systems. A relatively new technology, it’s making sense to more banks as a way to improve operations and customer service; a survey by Accenture found that 47% of banks have a high share of their workloads operating in the cloud. The roots of the evolution took shape in 2009 when Chris Zadeh, ForbesBooks co-author of Banking The Cloud, founded Ohpen, the first cloud-based core banking company in the world.

“In 2008, most people were just hearing about the cloud,” says Zadeh, “and no one, let alone banks, thought of using the cloud instead of building their own IT systems. The cloud meant unlimited computing power without the hassle of buying, installing, configuring, patching or upgrading your own system.”

Matthijs Aler, Zadeh’s co-author and CEO of Ohpen, says that until Ohpen arrived on the scene, no bank had operated applications in the cloud before.

“Rather, every single bank in the world built its own, or installed bespoke third-party applications on-premises – what is known today as a legacy system,” Aler says. “Each bank essentially reinvented the wheel each time they set up a banking system. It was like building their own factory, and the results were a ton of time wasted, massive workforces required, and massive expenses.

“But with cloud banking, banks no longer need on-site infrastructure management. It allows them to reduce core costs and increase scalability and adaptability. They can quickly add new online services, develop applications, and improve the customer experience.”

Tips On Migrating To Cloud Banking

Zadeh and Aler offer these key points for banks to consider about migrating to cloud banking:

Get Your Definition Straight: What Is Cloud?

“Having a managed service by a data center company does not qualify as cloud,” Zadeh says. “If you’re only supporting a low number of customers, then don’t worry about using the cloud. But if you want a scalable solution that controls costs and is able to autoscale, then you will want the cloud.”

Get The Software-As-A-Service Playbook

Aler says banks that are cloud-based should be agile and innovative, and that changes on the side of the bank should work seamlessly with the cloud provider. “Ask a vendor simple questions,” he says. “Such as, ‘I want to adjust my fee structure or add new investment products. Where can I do this?’ If you get a blurry answer, run. This is your chance to escape future costs for changes.”

Scrutinize A Provider's Uptime And Performance Level

“Downtime and bad performance rank high on your worst nightmare list,” Zadeh says. “Make sure your provider has good disaster recovery/business continuity in place. A well-executed load/performance test should give you the assurance that the provider can deal with x times your peak resource requirements.”

Weigh Costs vs. Gains Of Modifying Software Processes

Where do software implementations cost money, take time, and turn sour? Aler says it happens the moment a bank asks the independent software vendor to change their solution and make a custom one for them. “Ask yourself what your company will gain by modifying the process in the software,” Aler says. “It’s way easier to change your processes to align with the software instead of the other way around.”

Assess Whether The Provider Will Be Friend Or Foe

“You need to be certain that the vendor will give you their all,” Zadeh says. “How have they managed their biggest risks? How do you know they will always be there – weekends included? How do they respond when the pressure is on?”


“A move to the cloud gives banks substantial benefits and will help them break through the difficulties they’ve encountered with legacy systems,” Aler says. “It allows banks to focus resources on value-added functions.”

About Chris Zadeh

Chris Zadeh is the founder and chairman of Ohpen, a Dutch financial technology company and the first cloud-based core banking company in the world. He is ForbesBooks co-author, with Matthijs Aler, of Banking The Cloud: The Comprehensive History Of Cloud Banking And Those Who Started It. Zadeh authored the No.1 Amazon best-selling book Monkey Money Mind: How to Stop Monkeying Around with Your Money. 

About Matthijs Aler

Matthijs Aler is CEO of Ohpen and ForbesBooks co-author of Banking The Cloud: The Comprehensive History Of Cloud Banking And Those Who Started It. Before coming to Ohpen, Matthijs was responsible for the launch of and the rise of BinckBank in the French online banking landscape.

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