I spent a couple of days at the big annual event for bankers last week in Boston hosted by BAI.  They also had some high quality speakers, two of whom, Jack Welch and Al Gore,  I’ve had the brief honor of meeting previously. The third was Ram Charan, noted author and educator, and as this is the first time I heard him in person, I must say that he was excellent. All of them are plugging their books and writings including AL Gore’s latest, Our Choice: A Plan to Solve the Climate Crisis. But that is expected and I look forward to reading VP Gore’s latest.

What I thought was to a degree absent was a session on how cloud computing can assist banks, especially those that fall in the below $10B in asset range. These could be represented by banks, Savings and Loan’s (S&L) or Credit Unions (CU).

Here is what I thought was there and what was missing:

Some banks are using cloud computing for the traditional Software as a Service (SaaS) capabilities including sales such as Salesforce.com.

Some are using it to augment some of their infrastructure needs including data storage.

A few are using it to augment website capabilities.

What I didn’t hear was a bank or other financial or lending institution that started its core operations around cloud computing. And I think there are still a lot of valid concerns why this is not happening as rapidly as in some other areas of business. Let are my thoughts:

First, banking is highly regulated and likely to get more so, not less. Consumer and depositor data is closely monitored as part of the Gramm Leach Bliley Act. Cloud computing opens some doors to loss of data security.

Second, the OCC and OTS have considerable oversight in regular audits of large and small banks. Getting caught in a bad audit is not something anyone wants.Cloud computing may not lend itself well to an intense audit.

On the other hand banks, new, upcoming and traditional all can benefit from this approach. Traditional banks get to employ new services faster and quicker, while new banks don’t have to invest in a lot of Information Technology (IT) assets to get moving.

I would hope that next year we’ll hear more concrete stories of how banks are employing and deploying greater and wider services through cloud computing providers such as Amazon, IBM, Google, Oracle and Microsoft, as well as some of the outsourcers, Independent Software Vendors (ISV’s) and bank services providers including FIS, Metavante, Harland and Jack Henry.

If you would like further information on this topic, please feel free to contact me at ralphs@rgsmanagement.com 

Since I tend to frequently use what I suggest, I keep getting asked lately what technologies I’m suggesting to help some of my clients. This is not a simple question since it typically depends on the client. What’s good for one situation is not always good for the next. In a sense, I could answer this from different perspectives and to make this personal I’ll use my background as a backdrop. You could do the same since, particularly if you have a broad range of experience or have a specific knowledge base. 

From one perspective, as a former IT Architect at AT&T Bell Laboratories, I typically pushed the edge of applying and incorporating the latest technologies. Since there were legions of programmers around me, if the technology performed poorly, I or someone around me could probably fix it. This is the least likely scenario today in business and although the first to be mentioned here, is my last choice – unless - this new technology could provide you with a significant edge against your competition. This frequently occurred with some of the big capital markets companies like Citi or Goldman Sachs where a microsecond head’s start in trading can be everything (first mover always wins in that market).
 
From another perspective, as an end user of technology and former Risk Manager in the financial and insurance world, I can say I gravitated towards first fully understanding the software programs that I had access to and what their strengths and deficiencies were. I then tended to experiment with commercial off-the-shelf programs that I could manage myself. So I would sometimes try a new software program using a subset of the data and information that I had at hand. Since I knew the data intimately, I frequently tried running new software alternatives against that data to understand whether the new results were better, or more importantly I tried to discover whether I could gain some fresh insights into this old data. If the new program didn’t take me a lot of learing time and was easy to install, I knew I was on to something. As an example, I used this approach successfully to deliver just-in-time risk reports to our large customers using a software tool that no one was using at the time. It took me from a manager to an Asst VP early in my career.

Lastly, I think there is the case of smaller companies (under 200 employees) who simply can’t get too far down the track with new programs. With this set of users, and I have some, focusing on simplicity and complementary programs is the right approach. These tend to be Microsoft Office only shops – maybe with some specialty programs like CAD (Computer Aided Design) if they are an engineering design firm for example. In fact, the operative technique here is to use programs that easily fit together and have been integrated together by many companies.

In short, keep these in mind before adding new technologies:

• What are your business needs – first and foremost?
• What technology resources, capabilities and people do you have and will this drain them from doing other worthwhile projects?
• Does it complement and add value to what I’m doing? What are some complementary and low-risk technologies that I could use?
• Is there a short term ( < 6mos) bang for the buck? Long term ROI doesn’t make it with many managers today.
• Will it require a lot of integration with other programs?
• Can I get a business user to trial it quickly?
• How will it get supported (internally/externally)?

So what are some of the technology picks that I like for business? I have a number of them depending on your size and on whether you’re a wealth management company, a health care company developing its web presence, a small or medium size business grappling with the basics, or a large or small business trying to understand its customer base. I will outline some of these good ones in another blog – or feel to connect with me. Feel free to offer your thoughts, favorites or other comments as well. I’d love to hear them!