Accenture Banking Blog

Lately it seems like every conversation I have with middle market banks turns into a discussion about cloud. Leaders are increasingly worried about being left behind, and rightfully so. The hype is real.

This market’s interest in cloud stems from what’s happening across banking. A full 95% of banks have adopted some form of public cloud. 1 They’re investing to get speed, scale, insights and cost savings. They see cloud for what it is: a critical enabler of both their business and technology strategies.

Time for some serious myth-busting

It’s exciting to see this interest in cloud. What’s not exciting are the myths that swirl around it. They make it hard for the middle market banks to realize cloud’s full potential. So here’s a debunking of the cloud myths I hear most often from this market.

Myth 1: The cloud isn’t secure enough for us

Middle market banks often resist cloud because they think it’s not secure enough. This isn’t surprising, because banks think of security as their superpower. They hold sacred the idea that they are better at security than anyone else. They have to be. Banks must protect data and their own intellectual property. The stakes are high, and the regulators are exacting. In fact, regulators are a formidable barrier for non-traditional players eyeing the market.

The reality is that banks excel at security, and I have no doubt that they always will. But so do cloud service providers. Every year, Microsoft, Amazon, Google and others invest billions in security as it relates to cloud. Middle market banks simply aren’t going to outspend this. What’s more, recent FFIEC 2 guidance around the “safe and sound use” of cloud indicates that they see it as part of the future.

With proper governance, change management, audit and controls assessments, and with cloud security management, cloud will become the new normal. Banks are already good at the first three of these, and adding cloud security management isn’t a stretch. This is good news. Because as the barriers to entry around security fade away, middle market banks will increasingly find themselves competing with digital players that are built from the ground up on cloud. So they must start preparing now.

Myth 2: We’ll get locked in to one vendor with cloud

Middle market banks that watch what national players are doing with cloud know that many of them have adopted a hybrid approach. By hybrid, I mean working with multiple cloud service providers and employing both public and private cloud strategies. Of the large banks we work with, 60% have a multi-cloud strategy, and just 15% work with a single provider. 3

Here’s where the myth comes in. Because middle market banks don’t have the scale to benefit from either a hybrid vendor approach or their own private cloud, they assume that the only other option is the dreaded vendor lock-in. After all, they are already feeling the pinch of being locked into data centers and mainframes, and understandably don’t want to recreate this problem.

Thankfully, this doesn’t have to be a cloud deal breaker. With the proper technical architecture and creative deal structures—and by aligning to open standards—banks don’t have to give up critical points of control or a positive business case.

Myth 3: There’s zero flexibility in how we can implement cloud

Many middle market bank leaders assume that cloud implementation is a “my way or the highway” undertaking where every bank has to follow the same steps and get to the same destination. This couldn’t be further from the truth.

There are different ways to accelerate to cloud, depending on a bank’s current state and business case. Many banks in this market begin with the low-hanging fruit: applications and platforms, which typically gets them about 30% in the cloud. Data is another area for cloud migration. Some ambitious banks begin here. Others pursue data after migrating apps and platforms. Either way, it pays off. For example, in my experience I’ve seen banks that already get a lot of value from their on-premise data realize about 40% in cost savings when they move data processing to the cloud. Whatever the order of operations, migrating data to the cloud has a compelling business case.

Moving core banking to the cloud is the next horizon, and it’s the most difficult. So much so that even the  big banks have yet to achieve full mastery. My message for the middle market: Don’t equate moving to the cloud to core banking in the cloud, or that you must follow a one-size-fits-all prescribed process. You can implement cloud on your own terms. And in support of your own business case.

The sky’s the limit

Some things never live up to the buzz around them. I’m happy to say that this is not the case with cloud. As I’ve said before, cloud is a powerful enabler of everything that middle market banks need to do to compete. That’s why accelerating to cloud now is non-negotiable. So let’s shed the myths—and get to work.

I hope this blog lets some of the air out of the cloud myths that you’ve heard. Please don’t hesitate to connect with me on LinkedIn to share your thoughts and questions.

1 Accenture, “The Cloud Imperative in Banking,” 2020.
3Accenture, “The Cloud Imperative in Banking,” 2020.