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Banking on the Cloud

By: Randy Rodriguez

Over the past year cloud computing has quickly gone from a “wait and see” to “wait and die” proposition for corporate America. Forrester Research recently estimated that global spending on cloud computing will jump from $41 billion this year to 241 billion by 2020. IT professionals these days all seem to have their heads in the clouds, so to speak, but not everyone: financial institutions aren’t exactly jumping on the bandwagon.

Of course, this is not without good cause—regulatory and privacy issues require prudence. But presently there is a rising sense of urgency among banks to adopt cloud-based technologies, and this is all thanks to one simple fact: some banks are already doing so.

The reasons are multifold. There are the cost-savings benefits as well as increased storage, automation and flexibility. For banks, a key benefit is the cloud’s Web-based nature, which allows for more interaction and collaboration from anywhere.

But the cloud’s real value is best assessed at a more holistic level, where attaining agile business transformation across an organization’s people, processes and technologies can put a bank in an entirely new league of competitiveness.

Early Cloud Deployments

One such bank realized it wasn’t doing a good enough job upselling to current customers. To take advantage of the bank’s full range of commercial and consumer services, customer referral leads had to hop across multiple divisions, each with their own common language and sales methodology. As a result, many referrals would get lost in translation along the way, and upsell opportunities were squandered.

To make it easier for employees to use and promote referrals in order to grow existing accounts, the bank took to the cloud to transform its paper-based lead generation management process into a virtual share-based one. With this new system in place, the bank figured it could encourage employees to develop partnerships beyond their own business units within the organization for greater gains throughout.

One year later, this bank was able to connect 8,400 employees across 18 business units, creating a coordinated Salesforce-driven intrabank referral system that allows users from any division to pitch products and collaborate with product specialists across the entire organization. Since launch, the bank generated 500,000 referrals—that’s a half million of new revenue opportunities—with an 80% closure rate.

By using cloud technologies to build an entirely new optimal customer relationship business process, this bank was able to increase wallet share—and this isn’t limited to growing accounts within the scope of a single individual. With greater company-wide collaboration, users can work together to look beyond specific account contacts and, in the case of commercial accounts, identify new revenue potential from within their overall businesses.

This goes well beyond embracing the cloud for oft-publicized cost-savings benefits. In this instance, a bank was able to break down the walls within its organization for greater agility and use the cloud specifically to drive and grow the business.

But it doesn’t take a big bank to drum up big wins. One small, New England-based wealth management firm offering private banking and investment management services implemented Salesforce Chatter as a contact and opportunity management tool. By integrating Twitter, the bank was able to enhance its one-on-one marketing with close and personal management of each customer relationship.

Good Business is Good Customer Service

While account growth and profitability is probably the cloud’s greatest gift to banks today, the new cloud-driven 360 degree customer views that help banks gain wallet share also work to boost customer service and retention. Banks can learn from their mistakes when referrals fall flat, and stronger training and incentive programs can be put into place to ensure customers are better serviced, and users are vetting and referring stronger leads.

Step outside of in-house lead generation into fraud detection—where another bank is known to have moved to a cloud-based system—and 360 customer views can be used by relationship managers to better respond to complaints and gauge overall account health. By adding the power of stronger predictive modeling, potential customer issues and possible termination of profitable accounts can be more easily and quickly identified, prioritized and addressed before clients take their business elsewhere.

The analytics engine that helps banks track customer activity can also be compiled to provide valuable stats across the entire customer base. Trends in customer needs and account activity can be used to determine what products are likely to sell well if promoted, and new marketing campaigns for current customers can be created that speak directly to present pains and priorities on their road toward financial success.

The Prep Work

Of course, with new opportunities come new challenges. Any bank considering a move to the cloud will have its eye on privacy. In a cloud-based model, we are capturing more customer data than ever before, and strict policies and customer agreements need to be set up to outline how that data is being collected and used.

There are of course also regulatory requirements to consider from a security perspective. Sifting through data from hundreds of databases to determine what resides in the cloud and what doesn’t can be a daunting task.

Another key challenge is change management. For any new implementation to succeed, you need to capture the hearts and minds of your users. There is often a sense among users that new cloud-based systems are being deployed to support more intrusive, over-the-shoulder management. Proper internal communication is essential to dispel resentment and to show users that greater visibility can ensure proper training and sharpening of their skills. System champions can also be set up within the organization for each business unit to share best practices and serve as internal help desks.

As with any new deployment, measurement metrics must be defined beforehand to set goals and report on progress. Here is where cloud-based technology can be both a godsend and a curse in that the volume of data that can be pulled and analyzed is extraordinary. Care must be taken to determine which data will truly matter. In the example listed above, you’ll want to start with tracking median growth in wallet share, which with cloud computing should be achieved in terms of weeks, rather than years.

Finally, when using cloud-based technologies to break down the silos within a business, a common language needs to be created to ensure productive collaboration across all business units. Sales methodologies for each business unit need to be shared so users at any customer touchpoint know how to properly vet each new referral.

Here Comes the Cloud

With many banks emphasizing customer retention and growth in monetization over new acquisitions, cloud computing is beginning to strike a chord in the industry. Of course, no organization should feel compelled to move mission-critical data and applications to the cloud as a knee-jerk, competitive reaction. Flexible cloud technologies work only if they can move in lockstep with changes in the business—whether that’s during implementation or well after.

But change is essential. And those who continue to wait and see could very well end up watching the cloud revolution from the sidelines. It will be a rainy day indeed.

Randy Rodriguez, managing director, Bluewolf.

Copyright (c) January 2012 by BankNews Media