Using the cloud to make it real

There's an interesting article in CRM Buyer which was reported in banknet 360. It talks about a trend in banking away from traditional IT upgrades related to call center technology and moving to "Software as a Service" (SAAS), where call centers are created and managed virtually, allowing continual updating to the state of the art and management of decentralized call center operations. It's a big idea, because it allows IT departments to avoid the need to continually upgrade internal technology and it moves the IT cost from capital to operating expense.

As big an idea as this is, it might be an indicator of something else that could be even more important to financial services. If call center technology can be moved to a hosted services environment that lives in the internet cloud, what else could live in the cloud? Could a lending system live in the cloud? Could you build a DDA system on someone else's servers? Of course you could. If one was to de-link the bank from banking and concentrate on the delivery of the function instead of the management of an infrastructure, what could banking look like? You could deliver service anytime, anywhere a customer could see the web, whether through a wi-fi phone, traditional cellular, a laptop, a home computer, a kiosk, a storefront, an RV branded with the bank's name, on the laptop of a personal banker, or even a branch? And you could do it with almost no technology back office. Clearly there are security issues that pervade this vision, but there are always security issues and they are eventually addressed. The key is that it's possible today to build a complete banking service with almost no IT infrastructure, and that service can be delivered wherever TCPIP connectivity exists.

I doubt if there's an existing bank that is able or willing to transition to a completely virtual banking system, it's just too difficult to overcome the existing infrastructure and embedded cost structure. But somewhere out there there's a person or a group who doesn't have an embedded infrastructure, that doesn't need to play by the traditional rules of bank building, and that has a vision of delivering superior banking products and services at a lower delivery cost than there is in the market today. The question is who and where, not whether because the economics of moving from capital to operating expense for financial services delivery is just too powerful.

Google is building an entire computing system in the internet space, including word processing, calendar, spreadsheet, mail, and just about anything else that you can do with a standalone pc. Amazon is offering their services platform to third parties for private use.

Who is going to create the first bank in the cloud?