How Banks Can Get the Most Out of the Cloud
Throughout the past year, the adoption of cloud technology has exploded among both large and small financial institutions in search of a solution to improve security, profitability and business continuity. There are still banks, however, that are apprehensive about making the jump to a new technology delivery system.
Don’t get lost in the “Cloud.”
What seems to be holding many banks back from transitioning to a more efficient and innovative process is the overarching term “cloud.” What does it mean? Is it private? Is it public?
Instead, bank executives should be asking themselves, which of my bank operations are ideal for the cloud? How can I get greater transparency into my lending operation?
In order to best enhance cloud-based reporting capabilities for internal and external purposes, banks need to remain focused on how this technology will address their business needs to ensure success by focusing on four main audiences.
- Regulators
Based on the state of today’s U.S. financial market, regulators are placing greater emphasis on the amount of detailed data banks provide during the examination process. While regulators have always been thorough in reviewing data for potential errors, banks now must be able to quickly and easily provide even greater detail and records should regulators request it. Specifically, this regulatory shift calls for much deeper detail surrounding a bank’s loan portfolio and areas of potential risk as opposed to traditional reporting methods.
- Bank Directors
Just as regulators have begun calling for more finite detail in data reports, those overseeing the bank as a whole are also interested in better understanding the current state of business at a deeper level. Although bank directors typically do not require the same level of detailed reporting as regulators, board reports have evolved to reflect a broader summary of the bank, such as current loan totals and total losses to date.
- Upper-Level Executives
To ensure the bank is functioning properly on a day-to-day basis, upper-level management executives need to be well aware of any areas of concern existing in the bank’s current loan portfolio. Based on available loan data, management not only requires a full understanding of the bank’s past and current business standing, but also a glimpse at potential areas of concern the bank may encounter in the future. This not only requires a sophisticated set of reporting capabilities, but also a keen understanding of the bank’s current lending environment.
- Lending Staff
For the bank’s internal lending staff, detailed data reports on the current loan pipeline are essential to the continued success of the loan production cycle. In order to adequately manage the cycle, the bank’s lending staff requires thorough detail for each loan in the portfolio, such as records of all outreach to borrowers, remaining documentation requirements and any necessary approvals preventing closing.
Typically, those interested in migrating to the cloud are doing so for two specific reasons: to save time and money. By investing in a cloud solution with more advanced reporting capabilities, banks can significantly lower the amount of time and money previously spent collecting data to compile reports and focus more energy on growing their business.
As suggested in the Federal Financial Institutions Examination Council’s (FFIEC) guidance on managing outsourced cloud vendors, the key lies in performing thorough due diligence before selecting a cloud provider. This research will ensure the given cloud provider is a good fit for the bank and that their data will be fully protected from any potential security risks.
Pullen Daniel has more than 10 years of experience in the financial services and banking industries. As executive vice president of nCino he is responsible for all aspects of product design and strategy and played a pivotal role in the initial founding of nCino. He can be reached at pullen.daniel@ncino.com.
