Consumers today want fast, seamless, and effective services at their fingertips. In a world of virtualization, these demands keep bank C-levels on their feet. What better than cloud technology to address these demands?
Cloud computing uses the internet to access data stored on external servers. Traditionally, banks have been slow adopters of technology and for good reasons. The risks involved in becoming a heavily cloud-dependent organization aren’t few. And banking institutions too, take their own time to assess risks.
Despite this, cloud computing in banking presents a glowing opportunity for financial institutions to transform their operations. On-premise banking infrastructure no longer cuts it. It cannot meet modern challenges that require banks to access applications via the internet. Moving to the cloud
isn’t a not an easy bargain, but one with many paybacks that bank CFOs must take note of.
In this article we talk about the intricacies of switching from on-premise to the cloud in a modern context. We also talk about how CFOs can regulate costs
and drive long-term financial strategies using the cloud.
Security is a serious concern for banks when moving to the cloud. Although 90% of banks use cloud computing for non-core processes, core services remain on the premise and off the cloud. This leaves a huge opportunity unused.
With the unique security challenges so common to banking institutions, CFOs can advocate for specialized security enforcement solutions inside and outside the cloud that can meet rigorous security parameters.
Fraud detection- It is important to mention here that public clouds are known to be more secure than on-premise infrastructure. This is thanks to the layers of protection that the cloud can be equipped with. Cloud-based banking also offers seamless fraud detection and protection by assessing large amounts of data from a variety of sources. It empowers banking institutions to stay ahead of the curve when anticipating discrepancies beforehand.
Blockchain integration- Blockchain is the latest in technological innovation to provide ground-breaking use cases. In cloud banking services, blockchain is outgrowing its cryptocurrency ecosystem. It can be used to add a layer of security to data and cloud architecture.
Richer Analytical Insights, Better Financial Reporting
Cloud services for banks arm banking and financial institutions with the ability to breakdown data silos across the organization. This leads to centralizing data and generating 360-degree insight for analytics. Data insights have been proven to transform decision-making, operational efficiencies, and organizational processes. The most significant advantage, however, is product and consumer analytics.
Product analytics- A reduction in product deployment cycles is just one of the many advantages that cloud computing in banking has to offer. It simplifies product testing in a way that enables organizations to test new solutions and to meet market demands and challenges while thinking on their feet. One of the most significant advantages is the easy facilitation of cloud banking possibilities that can empower customers of both traditional and non-traditional financial services.
Consumer analytics- The cloud offers a hyper-flexible platform that is ideal for processing tremendous amounts of real-time data. For instance, when the cloud replaced an investment bank’s legacy banking infrastructure, it yielded an enormous boost in analytics. The transformation enabled trading teams to explore new strategies, execute experiments, and adopt analysis of data points they did not have before. Barclays, a premier banking institution, was able to free up resources for its risk analysis team by implementing a cloud-based automation process. This is further helping banks and financial firms tailor products that align with consumer demand while also balancing financial risks in a volatile market.
Companies that do not make customer experience a priority will struggle and quickly fall behind.”
Jeff Pedowitz, President and CEO at The Pedowitz Group
Agility in Developing and Scaling New Product Offerings
Agility is not just a buzzword in business. Today’s processes need to be lean and simplified to support growth in a fast-changing market. Cloud computing empowers organizations to be nimble in reacting to competitive market landscapes. In addition, accompanied by the power of data, modern financial institutions can go further than they would have anticipated in designing solutions. The wide-berth of opportunities posed by cloud computing for financial services can help create a highly competitive, agile, and scalable financial organization.
Constraints to Look Out for When Switching to Cloud Computing for Banks
While cloud banking services provide a new vista for banking and financial services, the transition to cloud banking may not be simple. The banking sector is evolving, and the demonstrated capabilities of the cloud come with a significant challenge that senior leaders must take into account.
Migration Costs- The upfront cost of using cloud computing in banking is high. This may keep many banking and financial services’ organizations, especially smaller ones, from truly leveraging the cloud for open banking. A thorough financial analysis and planning is required to attain an equilibrium in cost through cloud banking services.
Skill Shortage in Cloud- According to an Accenture study, 41% of organizations rank a shortage of cloud skills as one of the top three barriers to adopting the cloud. Achieving a balance of in-house and third party cloud talent is key. A great example of this was demonstrated by the banking industry itself when it transitioned from brick-and-mortar operations to digital and from websites to mobile.
Compliance Concerns- Meeting security regulations and banking compliance codes is another significant challenge for cloud banking. Although regulatory authorities are increasingly supporting the cloud transformation, many banking institutions are cautious when it comes to exposing critical moving parts to regulation and the risk of non-compliance.
To Round Off
The cloud offers modern technology that is ready to scale at a day’s notice. With agility on offer, cloud computing in finance is much more than just an on-demand access to computing resources. Banking technology services are poised for a revolution, and cloud banking will play a major role in it. The points covered in this article discuss the immediate benefits that the cloud can offer. But as consumer demands and expectations undergo a whirlwind of activity, banking and financial services must join the bandwagon. They will need to assess how to leverage the cloud for their specific needs in a way that increases ROI
and creates a sustainable, thriving organization.
Frequently Asked Questions
What are some storage options for cloud computing in finance?
Public cloud storage is easily scalable as well as economical while private cloud storage offers complete control and greater scalability. Hybrid cloud storage offers the best of both worlds with significant user control and simplified customizations. Banks can explore a combination of cloud storage solutions that align with their security needs.
What are the types of cloud banking services used by banking institutions?
The types of cloud banking services that banks can opt for include:
How many banks are now using the cloud?
An IBM banking multicloud survey revealed that over 91% of banking and financial institutions were already actively using cloud technology.