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Not an ash cloud, but a cash cloud

Overheard this week, a conversation between a bank’s CIO (the Technogeek), CFO (Mr. Bean) and CEO (The Governor).

TECHNOGEEK: So times are tough and we need to manage costs. I suggest we do that by using cloud computing and software-as-a-service tools.

THE GOVERNOR:  Can you talk English, technogeek?

TECHNOGEEK: Sorry, Governor. What I’m talking about is that we place all of our computing needs into the world of on-demand services.

THE GOVERNOR:  And what does that mean, I’m still not getting you.

TECHNOGEEK:  Well, it means …

MR. BEAN: Look, let me have a go nerdyman. Sir, it means that we will save lots of cash.

THE GOVERNOR:  Sounds better. How does that work?

MR. BEAN: Well we bung all the stuff that costs lots of money in his compute operations and give it to Google or IBM or someone.

THE GOVERNOR:  That’s not so good. Isn’t that dangerous?

TECHNOGEEK:  No sir, because they will run that as we need it. Let me try to explain in a simple analogy. If you were opening a bank account, you wouldn’t open a high net worth premier account on day one would you?

THE GOVERNOR:  Well, I would, because I’m a high net worth premier …

TECHNOGEEK: Sure, I know you would, but what I mean is that you wouldn’t open the bank account with all the bells and whistles on day one, because you don’t know what bells and whistles you need.

THE GOVERNOR:  No geekyboy, we would sell them that account with all the bells and whistles as we can then charge fees for that stuff.

TECHNOGEEK:  Of course sir, but in a computing sense – where we want to avoid investment and capital expenditure this year – what this cloud stuff means is that we can open a basic account on day one and then just pay-as-we-go.

THE GOVERNOR:  Oh, like a mobile service.

TECHNOGEEK:  Yes, that’s what I meant.

THE GOVERNOR:  So why didn’t you say so. Mr. Beancounter, is this a good idea?

MR. BEAN: Yes.

THE GOVERNOR:  A man of few words. What I’m asking is that I don’t like pay-as-you-go – my mobile is on a corporate monthly direct debit account – so why would we put our computing into that sort of arrangement?

MR. BEAN: Well, it means we can have unlimited compute capacity and just pay for what we need and use, rather than buying a massive great system in-house and paying for it all up front.

THE GOVERNOR: But don’t you pay more long-term?

MR. BEAN: Why do you say that?

THE GOVERNOR:  Well, this sounds like some sort of rental system and my mum used to rent her telly. It was good in the 1960s, but she’s now using a 1960s TV and paying 2010s rental prices. That doesn’t make sense.

MR. BEAN: Of course not sir, but this is not the same. We pay for what we use and the partner we choose – Microsoft, Cisco or whoever – has to maintain the infrastructure to today’s standards. Equally, we’re not really renting anything, we’re just paying-as-we-go. It’s different.

THE GOVERNOR:  It may be different, but if it’s not renting then it’s pay-as-you-go and that means, in my mobile service, that I don’t get a free phone every 18 months so it’s not as good a deal after all.

TECHNOGEEK:  I think rentals and mobiles might be confusing things here. Let me have another go at clarifying.

MR. BEAN: Good luck.

TECHNOGEEK:  Sir, today we have millions of dollars wrapped up in creaking systems that are not cut out to handle the 21st century demands of our corporate and retail customers.

THE GOVERNOR:  So? That’s normal for a bank, isn’t it?

TECHNOGEEK:  Yes, but it shouldn’t be, and we believe we can make a difference by doing things differently.

THE GOVERNOR:  Ah, so this might grow our business.

TECHNOGEEK: Absolutely right sir. In fact, it will not only grow our business but allow us to deal with any eventuality.


TECHNOGEEK:  Well, the idea is that – and let’s take a practical example – we could take our payments processing, for example, and place that application on a kind of bureaux service with Amazon, and they would run the computing for us.

THE GOVERNOR: Amazon? The bookseller?

TECHNOGEEK:  Yes, but they do a lot more than that these days and are one of the largest providers of computer services in the world.

THE GOVERNOR: A bookseller?

TECHNOGEEK:  Yes sir. Anyways, we put everything out to Amazon and they run our computing power for us. We then pay them per transaction and, depending upon our daily volumes, we then pay for what we use.

THE GOVERNOR:  Like an electricity bill or something like that?

TECHNOGEEK:  Spot on sir. Just like electricity, we pay for our computing power and services on a ‘as used’ basis. That way, we never have to buy a great big server farm or whatever, but can be completely adaptable to volume, scale and business demands as they ebb and flow.

THE GOVERNOR:  OK, I think I’m getting it now. We have a mobile pay-as-you-go service that works like an electricity bill that we rent from a book seller.

TECHNOGEEK:  Hmmm … not quite.

MR. BEAN: Look sir, I think you’re almost there. The bottom-line for me, and what convinced me, is that we never have to buy any hardware in the future. We just get that power on an as needed basis and it will save us about twenty squillions dollars a year.

THE GOVERNOR:  Oohhh, that sounds good … but what happens if there’s a problem?

TECHNOGEEK:  A problem with what?

THE GOVERNOR:  Well, let’s say that Google or Amazon give our information away or accidentally delete it or lose a transaction.

TECHNOGEEK:  Why would they do that, sir?

THE GOVERNOR:  Because they’ve done it before – look what happened to my emails with Bunty in Googlemail – and I’m just not sure that a third party can be trusted with our data.

TECHNOGEEK:  Oh, you’re worr
ied about privacy and security?

THE GOVERNOR: Absolutely. Aren’t you?

TECHNOGEEK:  Of course I am sir, but we’ve got that covered.


TECHNOGEEK:  Well, in our contract, it makes it clear that the data we provide to the service provider must be protected.

THE GOVERNOR:  And what happens if it’s not?

MR. BEAN: We get paid squillions.

THE GOVERNOR:  Can you trust them though?

TECHNOGEEK and MR. BEAN together: Yes.

THE GOVERNOR:  Alright, alright. Well let’s test it out with a toe in the water in some area that isn’t too sensitive, like employee payroll.

TECHNOGEEK:  Can’t do that sir.


TECHNOGEEK:  Because, you know …


MR. BEAN: Bonuses sir.

THE GOVERNOR: Oh shoot, yes. So what do you suggest we use this for?

TECHNOGEEK and MR. BEAN together: We have no idea, and hoped that you would come up with something sir.

Happy Fridays!


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • You have too much time on your hands Mr. Beanogeek!

  • Couple thoughts: a better analogy (for the uninitiated, ie in need of a quick and dirty superficial understanding, as per your scenario) is probably electricity – not many banks run their own generation or power grid… Next, while this dialog is fictional, the humour only works because it broadly mirrors reality (as is the case with all humour of this genre…) – and for me the fact that the Governor is clueless with respect to how the world now works and/or will work is a scathing indictment of corporate leadership. In his defense, I can’t imagine when a bank CEO might actually have time to read and learn about the world they live in as every waking minute is almost certainly booked solid, so I have a certain amount of sympathy. But I would suggest that this is a manifestation of the natural cycle of the ‘corporate circle of life’ where the winners of the last paradigm inevitably grow too big and complex to then reinvent themselves for the next. There is some hope, for example IBM managed to reinvent itself in the ’90s, but this was only after a near death experience. And in banking in particular (as we have seen all too clearly in the past 2 years) by being regulated and embedded at the heart of our economy and collecting oligopoly rents, these institutions have the power to significantly retard change (at the expense of everyone else) and so put off the day of reckoning. So they have that going for them. However while it may seem outrageous to bet against the T-Rex, I’ll go out on a limb and take a punt on the mammals who now seem irrelevant or easily crushed as they scurry about the financial underbrush but I suspect will be much better adapted to surviving (and even thriving) in the face of an ‘extinction level event’ that will be hard for the T-Rexes to hide from… 😉