Cloud can be used to spur innovation

ASEAN is the world's sixth-largest economy and is on track to become the fourth largest by 2030, behind the European Union, the United States and China.

The open attitude that governments and businesses in the region has towards technology and innovation are key drivers behind this success. The continued success of the region's economic growth will depend in part on its ability to build a winning cloud-based ecosystem to speed up innovation.

The expectations of more demanding banking customers in today's digital world are growing exponentially.

The platform economy has since transformed many business sectors, including music, travel, hospitality and consumer brands. Financial institutions are now waking up to these new innovations and developments.

Customers today expect to transact multiple times a day, anytime, anywhere with mobile banking, and will not hesitate to switch banking services if their expectations cannot be fulfilled - even if this means switching to a non-traditional financial services provider.

But in most cases, fintech companies want to innovate only from the outside-in and are not concerned with the core banking services and operational capabilities where banks excel. At the same time, banks have something that fintech companies want and need: data.

Banks and fintech companies need each other now more than ever, and the cloud provides an efficient meeting point for these two groups.

A cloud-based approach supports technologies such as Platform-as-a-Service, which are key in enabling innovative new providers to enter the banking sector and delivering their services to a wider audience in a nimble and cost-effective way.

A cloud-based approach would also help banks become more agile, enabling them to bring new products and services to market faster to meet changing customer needs.

The cloud offers flexibility and can enable banks to scale their services more rapidly and efficiently than is typically possible in a legacy environment.

It is encouraging that banks are increasingly harnessing cloud capabilities as part of their digital transformation journeys, with many already taking steps to move existing legacy IT systems to the cloud.

This signals the value financial institutions see in cloud adoption in delivering agility, innovation and cost reduction.

Banks need to appreciate that 90 per cent of innovation will come from outside of the organisation.

With open cloud-based platforms, banks can consider how to co-create new value with partners in the ecosystem, which may include software developers outside their organisations, whether they are academics, fintech firms or third parties, as well as additional information, services or product providers.

Collaboration on a cloud-based system also favours fintech companies. Instead of trying to build a market from scratch with an unknown brand, they can leverage the trust customers have in traditional banks.

The Asean Financial Innovation Network - a regional industry sandbox offering cloud-based testing to financial players - and its API marketplace, which are due to be unveiled at Singapore FinTech Festival 2018, are exciting developments that can enable fintech companies and banks to collaborate in an open ecosystem and ignite innovation across the region.

We believe this will lead to better and fairer access to financial products, and ultimately serve society's collective goal to make more quality services available to help people and institutions better manage their money in the new digital age.