News

Moving to the Cloud can prevent the perfect storm

Alain Vansnick, Regional Director at Temenos, featured in Børsen

Media Coverage,
Alain Vansnick – Regional Director, Temenos

Innovation and evolution have been front-of-mind across Nordic banks for decades.

From the 90s onwards, as EU banking laws became more liberalised and competition from other markets became more fierce, many banks across the Nordics kicked off a major consolidation process to strengthen their competitive advantage.

Overall, the region has been in a financially strong position, with its banks running profitable businesses.[1] An Accenture report in 2015, however, stated that this led ‘to a degree of complacency and a lower sense of urgency for Nordic banks to transform in the digital space.’[2] With other European banks getting further ahead in the digital innovation game, those in the Nordics had to play catch-up.

It’s now almost five years later – and while there’s certainly been progress, this remains a key challenge. Some banks across the region are still running on old legacy systems, as updating them can be complex, time-consuming and costly. There’s a human challenge to the situation, too. Many of the Nordic banks’ expert legacy engineers are approaching the age of retirement. With their legacy system experience and specialist regional expertise, who will take the Nordic engineers’ place?

Add to this, too, the growing pace of digital disruption across the global banking landscape. Traditional banks are flanked on the one side by social media giants, by media-savvy fintechs and challenger banks on the other. Positioning themselves as experts in personalised, customer-focused banking, these new entrants to the digital banking market are keen to be perceived as a better alternative to traditional banks.

For the Nordics, therefore, a technical storm is brewing quickly. Who can help the region’s long-standing banks digitise further and keep up with competition?

The answer is simple. The Cloud can. It is imperative for Nordic banks to go cloud-native in order to keep evolving at speed – and deliver a best-in-market customer offering.

Without a shadow of a doubt, the success of this tech revolution depends on increasing intimacy with customers. Technologies like AI, machine learning and blockchain must be the key driver for strategic thinking and investment at banks, enabling them to move away from legacy systems and create a connected ecosystem that provides dynamic solutions to customers. These technologies thrive at their best within a cloud-native context.

Being cloud-native is about the very way a bank’s software is constructed. Effectively, it means having lots of small bits of code rather than huge chunks of software hosted in the cloud. This allows developers to edit relevant parts of code, rather than take down an entire IT service. In short, cloud-native tech literally allows you to code in the morning, then deploy in the afternoon.

This would enable Nordic banks to deliver real-time, high-quality and truly personalized services to their customers that are relevant and contextual. It would also significantly reduce their operational and product costs.

The potential reward to be reaped from such investment in digital banking technology is enormous. Our recent research report shows that, by embarking on an end to end digital transformation, banks can actually potentially unlock a trillion-dollar profit opportunity.   

In sum, Nordic banks with their feet on the ground should have their heads in the cloud. A digital transformation isn’t always all roses and rainbows, of course – but those banks who go through with it may well find their pot of gold.


[1] Page 7 https://www.accenture.com/_acnmedia/accenture/conversion-assets/dotcom/documents/global/pdf/strategy_7/accenture-digital-disruption-nordic-retail-banking-study.pdf

[2]  Page 7 https://www.accenture.com/_acnmedia/accenture/conversion-assets/dotcom/documents/global/pdf/strategy_7/accenture-digital-disruption-nordic-retail-banking-study.pdf

Media Coverage,
Alain Vansnick – Regional Director, Temenos