Transaction banking in the cloud: Towards a new business model

Transaction banks are confronted with a growing number of challenges that are affecting their present business models. They are increasingly pressed to adapt to changes in their competitive and technological environments. Transaction banks need to redefine their business models to reflect these changing trends better. That means finding more cost-effective IT delivery methods that also support the rapid creation of innovative new transaction banking services to their corpor­ate clients. Innovations such as cloud computing are set to play an increasingly influential role. Banks have, for a long time, been reluctant to adopt computing technologies, particularly for security reasons. Cloud computing, however, has gained greater prominence over the past year, and is now also generating interest from transaction banks. They are increasingly aware of the benefits that cloud computing could bring, giving them a cost-effective way to respond to the present changing conditions. This paper discusses what cloud computing could mean for the transaction banking industry. What are the main drivers, the benefits and the various challenges that transaction banks will need to overcome? It discusses ways in which innovative transaction banks could leverage the cloud for competitive advantages in the coming years. What shape should their cloud take; which model can be used at sufficient scale to make it cost effective and operationally efficient; and when and how to implement the cloud? How will it impact their business model? Some forward-thinking on cloud computing in transaction banking is explored.