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Banking on the Cloud. Felix Enescu [email protected]. Cloud Computing — FS CIOs Plan Rapid Shift Over the Next Five Years. v. When will your organization support: (a) >50% transactions on cloud infrastructure and (b) >50% transactions on SaaS applications?. All FS CIOs. - PowerPoint PPT Presentation
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This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2011 Gartner, Inc. and/or its affiliates. All rights reserved.
Felix [email protected]
Banking on the Cloud
Cloud Computing — FS CIOs Plan Rapid Shift Over the Next Five Years
When will your organization support: (a) >50% transactions on cloud infrastructure and (b) >50% transactions on SaaS applications?
v
Cloud infrastructure
SaaS
Source: Gartner Global Survey
8%
47%
26%
19%
9%
41%
27%22%
2010 2011-2015 2016-2020 Never
Cloud Infrastructure SaaS
All FS CIOs
Key Issues
1. What is the state of cloud computing for the BIS industry?
2. How can cloud computing enable long-term transformation?
3. What forms can cloud banking take?
Note: CC lets banks automate more processes and run them more cheaply than before — CB lets banks do things they could never do
before and that are unique to this industry.
FS CIOs Prioritize Cloud Computing
[Green = up on previous year; red is down]
Strategic TechnologiesRanking of Technologies CIOs Selected as One of Their
Top-Five Priorities in 2011 2011 2010 2009 2008 2007Cloud 1 2 - - -Virtualization 2 1 3 4 5Mobility 3 8 - - -IT management 4 9 6 6 8Business intelligence 5 4 1 1 2Service-oriented architecture (SOA) 6 7 4 3 3Enterprise applications 7 - - - -Infrastructure 8 10 7 7 4Networking, voice, and data communication 9 6 - 10 6Web 2.0/social media 10 5 - - -
Note: Data management and storage was ranked fifth or better over the last five years but didn't rank in 2011.
Source: Gartner CIO Survey
Demand Is High but Supply Is Immature
Strategy
Deployment
Risk
Road mapEngagement
Partners
Value-added services
0
20
40
20102013
0 = Embryonic30 = Developed
Major Vendor FS Cloud Maturity
Cloud Computing Technologies and Concepts Are Still Evolving
Technology Trigger
Peak ofInflated
ExpectationsTrough of
Disillusionment Slope of Enlightenment Plateau of Productivity
Time
Expectations
Years to mainstream adoption:Less than 2 years 2 to 5 years 5 to 10 years More than 10 years
Obsoletebefore plateau
As of September 2010
This chart is a composite, derived from Gartner published Hype Cycles. The particular combination and comparison of items made here has not been reviewed by Gartner.
Cloud Parallel ProcessingCloud Services Brokerage
Cloudbursting/OverdraftSaaS Delivery of Treasury and Trading Services
Cloud Management PlatformsCloud-Driven Business and IT Services
Virtual Private Cloud ComputingBrowser Client OS
Community Cloud
Cloud Application Development ToolsHybrid Cloud Computing
Cloud Testing Tools and ServiceCloud-Enabled BPM PlatformsCloud-Based Grid Computing
DBMS as a Cloud ServiceEnterprise Portals as a Service
Cloud APaaSCompute Infrastructure Services
Private Cloud ComputingCloud-Computing Security Concerns
Cloud Service IntegrationCloud Storage
ElasticityPlatform as a Service (PaaS)
Cloud ComputingCloud/Web Platforms
Public Cloud Computing/the Cloud"In the Cloud" Security Services
Real-Time Infrastructure
Dedicated Email Services
Enhanced Network DeliveryIT Infrastructure Utility
SaaS SaaS Sales Force AutomationVirtualization Cloud Advertising
Security as a ServiceGrid Computing Without Public Cloud Computers
Cloud Services for FS Risk and Compliance Management
Standard Hype Cycle adjusted for FS industry
Cloud Computing Heat Map for Investment Services
Area Application
"Cloud-Appropriate" Tests
Maturity and Standz'n Indep'ce Scalability Ubiquity Risk
Overall App'ness Pub/Pvt/Hyb IaaS/SaaS Cost Advg Rev Advg
Front Office Core applications Pvt S Trade analytics and data management H S Pre- and at-trade processes
H S Sales and marketing, CRM, and analytics
H S Middle and Back Office
Risk management Pvt S Clearing and settlement H IS Post-trade processes (recons, exceptions, and corporate actions)
H S
Generic/Enterprise/Infrastructure
Data management/MIS/BI
Pvt IS Remote application components/integration
H S
Network, telco, VoIP, and connectivity
Pub I
Storage H I
CC appropriateness:Low
MediumHigh
For Illustration
Only!
Key Issues
1. What is the state of cloud computing for the BIS industry?
2. How can cloud computing enable long-term transformation?
3. What forms can cloud banking take?
Note: CC lets banks automate more processes and run them more cheaply than before — CB lets banks do things they could never do
before and that are unique to this industry.
How Cloud Computing Will Transform the Way We Do Business With Banks
By the end of 2015, consumers will initiate at least 10% of all banking interactions indirectly via cloud services-based
exchanges and portals.
Reasons why it might be lower• Regulatory problems (e.g., ban on
non-regulated services being offered via CC) and other inhibitors such as…
• …security, reliability, and privacy• …lack of industrywide standards• Dynamic pricing doesn't take off• Tech issues such as lack of
componentization• Lack of automation and power to run
auctions on industrial scale• Local restrictions such as Internet
bandwidth
Reasons why it might be higher• Consumers expect to be able to
negotiate prices, terms, and conditions
• Consumers expect to be able to configure product features
• Banks will need to reinvent and decompose products and services to meet customer needs
• Competition and disintermediation (e.g., by P2P lending) raise urgency and accelerate progress
• Next natural evolutionary step after price comparison sites for banking products and services
Cloud Computing Evolution to Follow Electricity Trajectory
From cottage industry, to
centralized industry, and now (a little) to
decentralized, feeding back into
smart grid.
(Banking is about
here)
NYSE + VMware + EMC announcement for CC platform
Trust within closed communityTo come: spot price vs. future price?
Developing the Banking Cloud
Transactional
Executional
Operational
Tactical
Strategic
Execute
Order Clear EvaluateDecision
Support Workflow/Life Cycle
Business Approach
Strategic Market Analysis
DemandPlanning
Matching
CRM
Analysis& Planning
Settle
LiquidityMgmt.
Activity Management
Custody &Payments
Allocation/Attribution
Compliance
ClientReporting
Pricing
OrderExecution
Reconciliation
CRMPortfolio Analysis
Counter-part
InteractionIOI
Risk Analysis –MRM/CRM/PTC
OperationalRisk
Accounting
ExecuteOrder Clear EvaluateDecision Support
Settle
Clou
d Co
mpu
ting
SaaS
Info/Integ. aaS
APaaS
IaaS
Clou
d Ba
nkin
g
Generic:ERP, HR,
payroll
FS Applications:CRM, compliance, etc.
Mission-Critical Apps(e.g., FX and trade pricing)
Compositions/Business Processes(e.g., reconciliations)
Acceleration via Cloud Service Brokerages* (CSBs)
Type 3 – Cloud Service ArbitrageSimilar to T2 (aggregation) but without fixed suppliers (e.g., use three credit scoring agencies but only take "best" score based on criteria)
CSB Exists to Provide Governance and Integration as a ServiceType 1 — Cloud Service IntermediationVAR for cloud services — adds value such as usage, pricing, billing, and payment
Type 2 – Cloud Service AggregationPackaged applications from multiple suppliers over cloud with all data and processes integrated Q: Will
regulators allow use of CSBs in BIS industry?
[* nothing to do with securities brokerages]
Key Issues
1. What is the state of cloud computing for the BIS industry?
2. How can cloud computing enable long-term transformation?
3. What forms can cloud banking take?
1. Compete2. Collaborate3. Consume4. Combine
Note: CC lets banks automate more processes and run them more cheaply than before — CB lets banks do things they could never do before and that are unique to this industry.
Consumer Negotiations via Cloud Banking (Reverse Auction)
Supplier 2(issuing)
Supplier 1 (branding)
Supplier 3(fraud)
Risk Pricing
Bank A Bank CBank B
Wants
PORTAL/INTERMEDIATOR
Offers
Selects
Delivers
No bid
Invalid combi.
Withdraw
RateFeeLimitColor
FeaturesTiming
E.g., configuration for cr. card
Consume/Compete
Shift of power!
Champion vs. ChallengerAlgorithmic Operations• People shift from executing processes and making
decisions…• …to designing and refining processes that automate
decisionsTwo pressures…1. Continually improving the champion2. Regularly challenging the champion model with
alternative models
Develop new algo
Test in parallel
Deploy best algo
Daily optimization
Compete
Core Applications:
SpecialtyLoans
PNCInsurance
Savings DDA
CreditCard
MortgageConsumer
Commercial
WealthMgmt.HELOC
Fixed TermLife andPensions Corporate
Banking
Today
LoanPayoff
Component
Component
Component
Component
Component
Component
ComponentComponent
InterestAccrual
Component
Open Development Platforms, Componentization, and a New Kind of CBS Vendor
Neg. Amort.
Lending
The End of Core Applications
Micro Lending
Lending Services
Wealth Mgmt.
Customer Services
Deposit Services
(>2015?)
"App Store"Extension of
component-based architecture
Collaborate
A "SETI" for Online BankingConsume
A two-tier service for online banking:A ready-made community……for analytics, big data, etc.
Or…
Multi-tenanted Core Banking SystemsCombine
Action Plan for CIOs and Sourcing ManagersMonday Morning
- Begin to catalog the different uses of SOA, ENS, BPNs, Hubs, and CC already in progress within your BIS firm.
- Identify conflicts and harmonies between the uses made of the above and your various outsourcing models.
Next 90 Days- Build an inventory of your existing IT service delivery paradigm and find
examples of existing models that map to CC. Use these as benchmarks from which to assess risk, build business cases, and develop vendor relationships.
- Determine where you can go beyond non-core, proof-of-concept deployments of CC and what style of CC is appropriate.
- Use the heat map to assess the accessibility, readiness, and adoptability of CC for your BIS firm.
Next 12 Months- Design the transformative services that can leverage CC to put your BIS firm
in the vanguard. Start the move to CB.
Related Gartner Research Using Industry Working Groups to Advance Cloud Adoption
in Financial ServicesPeter Redshaw, David Furlonger, Juergen Weiss (G00212992)
Major Vendors' Embryonic Clouds Will Frustrate Financial Services CIOsPeter Redshaw, David Furlonger, Juergen Weiss (G00210834)
Cloud Computing for Banking and Investment ServicesPeter Redshaw, David Furlonger (G00205296)
Three Types of Cloud Brokerages Will Enhance Cloud Services Daryl C. Plummer, L. Frank Kenney (G00164265)
Real-Time Bidding Heralds Growth in Cloud Advertising Andrew Frank (G00174910)
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2011 Gartner, Inc. and/or its affiliates. All rights reserved.
Felix [email protected]
Banking on the Cloud
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2011 Gartner, Inc. and/or its affiliates. All rights reserved.
Felix [email protected]
Banking on the Cloud