Chris Skinner's blog

Shaping the future of finance

The difference between cloud-based and cloud-native

Chris Skinner Author Avatar

I am having a debate on a regular basis about being cloud-native and digital at the core versus cloud-based and adding digital. The two are very different. Most big banks are moving to be cloud-based and adding digital, but that is not digital at the core and cloud-native. The latter has a business model born for the internet; the former is evolving an old business model for the internet age.

The fact that so many banks are committing to cloud and working from home during this pandemic convinces them that they’re doing digital. But they’re not. It reminds me of the surveys I’ve seen where C-level bankers claim they’ve done digital because they’ve got a mobile app and that it does not require any change of their core business model.

That’s so wrong.

Therefore, it amused me when I saw a headline stating that banks worldwide have wasted almost $1 trillion of investment in digital transformation.

An IDC analysis estimates that 70% of all digital transformation initiatives do not reach their goals. Of the $1.3 trillion that was spent on digital transformation in 2018, it was estimated that more than $900 billion went to waste.

Ravi Kittane, Financial Services Technology Consulting lead at PwC Malaysia, wrote a post about it

In my experience leading major digital transformation initiatives for over 10 years, the following three reasons are major contributors.

  1. Lack of alignment between top level management, transformation teams and teams deploying the new capabilities
  2. Failure to automate end-to-end business processes (such as customer onboarding, account opening) resulting in fragmented solutions
  3. Inability to build organisational capabilities and talent to sustain continuous development beyond initial Proof Of Concepts

I agree with Ravi’s view but would take it further and say that most digital efforts fail because:

Or, as Joshua James interpreted it:

  1. start with the wrong goal
  2. take the wrong approach
  3. don’t take it seriously
  4. don’t allow any learning/risks
  5. outsource the blame for failure

As you can see, I gave the reason why this happens; the reason why 70% of all investment in digital is wasted by banks; the reason why things like Bó and such like never living up to bank expectations. It is because banks do not understand this subject.

Now, that may sound weird, but Andy Haldane – the Chief Economist with the Bank of England – made this clear years ago when he presented at the Financial Services Club. Back in 2012, Andy claimed that bankers take productivity gains from technology as bonuses citing research by the American academic, Thomas Philippson of New York University, which shows that the markets are inefficient. His findings proved that the unit costs for finance have risen over the past century which, in other words, means that the financial markets of Rockefeller and J.P.Morgan a century ago were more efficient at a unit cost level than the markets of today.

This is down to the fact that banks invest billions in technology but have rarely used technology effectively. They’ve dodged replacing and upgrading core systems for years, which holds them back; they’ve seen the internet and mobile revolution and decided it is an add-on to everything that was there before; some have tried to adapt their organisation to the internet age, but without rethinking the business model, products or services therein.

It is for these reasons that challenger banks, big technology firms, the internet giants and new players like Ant Group are stealing a march. It is not because banks are being disintermediated by technology. It is because {most} banks are useless with technology.



Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, 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...

Intelligent Money: Our Future Is Where We Do Not Think About Money, As Our Money Thinks For Us

What is the future?

Learn more

Learn more about Chris

About Chris Skinner

The Past, Present And Future Of Banking, Finance And Technology

Fintech expert Chris Skinner: countries need digital transformation to remain competitive

Join me on Linkedin

Follow Me on X!

Hire Chris Skinner for dinners, workshops and more

Learn directly from from one of the most influential people in technology, gain insights from the world's most innovative companies, and build a global network.

Chris’s latest book

Order now

Chris Skinner’s ‘Digital For Good’ Book Launch Event – CFTE

Top 50 Global Thought Leaders and Influencers on FinTech 2023

Chris Skinner
Commentator, CEO of The Finanser and best-selling author at The Finanser

Thinkers360 Thought Leader

Contact Me

Global Awards

Lifetime Achievement Award

Global 100 - 2024 Winner

Chris Skinner - Financial Markets Advisor of the Year - The Finanser - UK 2023

Best Financial Markets Advisor of the Year 2023

30 Best Regtech Blogs and Websites 2023

Kids creating the future bank | TEDxAthens

Captain Cake and the Candy Crew

Captain Cake Winner of a Golden Mom’s Choice Award


Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser