More Regulation. More Risk. More Cost.

More government regulation. More risk. More cost. Every day, bankers are faced with these challenges, and information technology issues are increasingly a big part of the reason why. The rapid pace of technological change has driven rapid growth in technology risks, which in turn have driven increased regulatory focus, all of which drive increased costs.

Today, more bankers are choosing to utilize cloud computing for IT network systems and support, in contrast to previous in-house hosting and support, because doing so allows them to reduce risk, control costs and more efficiently focus on achieving the strategic goals they have for their banks. Here are a few key reasons why this is occurring:

Risk of Obsolescence – Technology changes rapidly, making yesterday’s technology obsolete faster than ever before. Cloud computing provides IT as a service, greatly reducing the bank’s capital expenditures for equipment, limiting depreciation expenses and transferring the risk of hardware obsolescence away from the bank.

Qualified Personnel – Capable technical staffing is in high demand and finding qualified individuals, especially those with banking industry knowledge, can be challenging to recruit and retain. Cloud computing vendors dedicated exclusively to the banking industry provide the experience and depth of knowledge that only very few huge banks in the biggest metropolitan areas are able to achieve on their own.

Regulatory – Regulators typically designate technology firms that have a large number of client banks as Technology Service Providers (TSPs) and perform regular exams of these TSPs. As a result, the vendor must follow specific bank regulatory guidance in the performance of the services it provides. Regulators naturally have more knowledge of a firm they regulate than one they don’t, and a TSP with a solid reputation can help your bank.

Strategic Capabilities – When deciding to offer a new product or service, many times the limitation is in the bank’s technology (either the equipment the people or both). Cloud computing allows flexibility for the bank to grow, add or reduce employees , change software applications and have all of it available as needed without fixed costs such as buying equipment, hiring technical staff or being limited by the bank’s IT department.

Cost – Can you think of a time when your bank’s technology costs went down from one year to the next? Cloud computing vendors generate enormous economy of scale benefits for their clients and some provide fixed-rate pricing. This allows the bank to budget with greater accuracy and more easily make strategic decisions, such as opening new locations, making acquisitions or adding services.

Cloud computing allows banks to better manage their technology risks and gives bankers more time to be bankers and focus on their customers.

Read more about how BankOnIT helps banks better manage the regulatory, risk and cost components of information technology by visiting or call us at 800-498-8877, option 2.

About the author:
Robert Mendez is executive vice president of BankOnIT. Mendez has 25 years of experience as a banker and joined BankOnIT in 2006. He holds a BBA in finance, an MBA and is a graduate of the Graduate School of Banking at Louisiana State University in Baton Rouge. Mendez previously co-founded a bank regulatory software company. As a former banker, Mendez has a unique perspective on a bank’s need to meet security, efficiency, reliability and regulatory requirements, while maximizing earnings.