Benefits Of Cloud Computing For Heritage Bank Ltd


The banking industry is considered one of the most conservative of all sectors, playing by rules developed in the 19th Century in some cases. However, as technology has changed, so has the ways in which business such as banks conduct their operations to meet customer needs (Sarlak & Hastiani, 2011). The competitive business environment means that businesses such as banks must adopt and use a customer centered operational model. Customers of banks have not been left behind and are increasingly using technology devices such as computers and mobiles devices (tablets and smart phones) (Kreps et al., 2016). Some people would like to do their banking from home rather than visit their local bank branch. While banks have adopted technologies such as ATM (automatic teller machines) and internet computing, there are still other new technological advances that can greatly enhance their operational efficiency and lower their operational costs (Xiao, 2016). This paper will discuss technology infrastructure suitable for a bank, through the use of Heritage bank as an example (focus bank) within the larger banking industry in Australia. The banking industry has been chosen because of its central role in the financial sector and the fact that banks still remain conservation and highly cautious in their adoption and use of technology, especially modern internet based technologies. To get us going, this paper will discuss heritage bank in brief and then discuss its products and services. Its present technology system will then be reviewed and then a new technology model that the bank should adopt discussed, with justifications as to why this technology would suit heritage bank. Recommendations will then be made on how the bank can adopt such a system, giving a step by step approach, after drawing conclusions.

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Heritage Bank, officially known as the heritage bank Limited is the largest mutual bank in Australia headquartered in Queensland in Toowoomba. The bank has a branch network of 61 across the South East of Queensland. The company assets exceed $ 8.5 billion and have just over 700 staff working for it. The bank has an office in each state capital and runs over 1900 retail outlets to serve customers.  The bank has a unique ownership structure in that the owners are its customers and not just shareholders as in the traditional sense of shareholding, a model it has successfully used since 1875 (Parker, 2012(

The products and services offered by the bank include retail banking, as well as banking services for the agribusiness sector and business banking services. Further, heritage bank offers services that include superannuation, financial planning services, and insurance services. Its products include various cards (credit and debit cards), loans and bank overdrafts, as well as term deposits. Internet banking is also offered by the bank so that clients can access their accounts and undertake banking services through the internet (‘Heritage bank,’ 2017).

Proposed technology Model: Cloud Computing

Cloud computing refers to an IT (information technology) paradigm that allows users to ubiquitously access shared IT assets that they can configure and customize for their personal use. These IT assets and infrastructure include servers, computers, computer networks, software, platforms, services and various applications. These IT resources and assets can be provisioned by vendors / service providers rapidly with the users having to spend minimally on management effort and financial outlay in purchasing equipment (Chandrasekaran, 2015). In a way, cloud computing becomes an outsourced service because the services are provided by another party and the user pays for these services per use. Organizations, depending on their computing needs, can then process and store data in clouds that they own (private clouds) or those owned by others where they pay for use (public cloud), or using a combination of both in a set up known as hybrid cloud computing. Cloud computing works on the principle of aggregation and economies of scale, for instance, the way consumers use electricity from a central supplier and paying for the service per use (Mahmood, 2013). This saves users a lot of hassle as would happen if each person was responsible for generating their own electricity. Through such a set-up, banks like heritage bank will be able to enjoy numerous benefits that will improve their efficiency and help drive down costs, and enable the bank to focus on its core business which is the provision of banking services.  

However, the adoption of cloud computing as an outsourced service has been received with skepticism and much caution by the banking industry, particularly in Australia. Many regulators view cloud computing as an outsourced service which means the use of such services by banks is a regulated activity. The existing laws on offshoring and outsourcing will apply in cloud computing (McKenzie, 2016). The Australian APRA hold the position that banks that use cloud computing from third party service providers in relation to their material business functions needs attention at the board level and compliance with regulation. The situation requires carrying out due diligence on the proposed provider to ensure integrity. The internal risk controls of the provider must also be undertaken as a risk management process (McKenzie, 2016). Banking entails holding sensitive financial data belonging to clients and handing this information to third party service providers that may store them in different jurisdictions, as well as the belief that banks will be handing over control of its data to third parties has seen banks look at cloud computing with caution. The complexity for contractual requirements and the need to manage risks as well as comply with regulation has further hindered the uptake of cloud computing by banks such as Heritage bank.   

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Recommendations to the Board

However, banks are increasingly adopting cloud computing because of its benefits and the following are compelling reasons why the Board of heritage bank should adopt cloud computing (Roberge, 2012)

Heritage bank Limited,

Queensland, Australia

Cc: IT Director

CC: Operations Director

Cc: Customer Service Director

Cc: Financial Director

Benefits of Cloud Computing for Heritage Bank Ltd

One of the biggest benefits for banks to use cloud computing is reduced costs as it implies banks will invest less in dedicated computer software, hardware, and manpower to manage them. The cloud offers a modular system that takes away the cost of upfront investment in usually costly infrastructure, that will need replacement as technology advances and they get obsolete (Smith & Drury, 2017).

Cloud computing will also improve scalability and flexibility for banks enabling heritage bank to respond to changing technological, market, and customer dynamics quickly and seamlessly. The bank can scale up or down depending on market and customer needs, at a low cost (Nicoletti, 2013).

Cloud computing will help the bank increase efficiency by providing the leverage where new technologies can be quickly integrated.

It will enable the bank serve clients better and faster, increasing customer satisfaction because it easy to develop and bundle new products, significantly removing delays due to procurement (Brynjolfsson & McAfee, 2014)

It will lead to stronger customer relationships where heritage bank can use the massive computing power and big data analytics to get deeper insights into their customers.

It will bring clients closer to other providers, such as payment processors and retail outlets through fast processing of transactions (Muraleedharan, 2014).

Ensure better integration of its branch operations and ensure business process continuity through cloud backups

To start off, Heritage bank should first build a sizeable data center and develop its internal private cloud to store sensitive information and ensure it retains control over sensitive information. The company can then outsource other service models from trusted public clouds, including infrastructure as a service, platform as a service, and software as a service where its transactions can be processed and stored to ensure business process continuity and offer a ready virtual backup. Heritage Bank can use virtualization in its private cloud for further cost cuts. A bridge should then be implemented to link the private and public cloud.

In migrating to the cloud, care must be taken, with elaborate risk management plans to ensure these are no disasters. The board must be involved and due diligence done on prospective service providers. The migration can start with a trial for a single branch and the process evaluated and any possible risks noted before the final migration can be done. The board should ensure an elaborate SLA (service level agreement) is signed with the service providers and risks managed effectively. The migration process should not interrupt the daily operations of the bank


Banks have remained traditional in their operations for a long time, with technologies such as cloud computing being viewed skeptically and with caution, due to regulation and the fear of the unknown. Cloud computing has several benefits that Heritage bank can benefit from, including reduced costs, better service delivery, better customer relations, leverage, and business process continuity and is highly recommended. In migrating to the cloud, an effective risk management plan should be put in place


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