The great entry of cloud banking is a fascinating spectacle to witness. For one, the cloud-computing and its rapid adoption are moving to the forefront as a focus for IT leaders, business experts, and C-suite executives. For another, the cloud can be a catalyst for business transformation and a potential game-changer for how financial organizations will operate in the future.
The changing consumer expectations, emerging technologies, and security breaches are pressurizing today’s enterprise to rethink their business approach. To prepare for this possibility-filled future, banks need to start embracing clever cloud strategies.
Why is cloud banking gaining a lot of traction today?
The banking industry is home to a large volume of consumer data and is always eager to provide the best services to its customers. In such a scenario, cloud computing technology serves as a transformative digital solution. It offers unwavering levels of security, agility, scalability, and capability to handle consumer data.
Fortunately, banks today realize the significance of cloud-computing services. With cloud-banking in place, banks are able to offer:
- new services to their customers,
- to improve overall customer experience,
- react to market demands more quickly, and
- meet the required regulatory and security standards.
As a result, the cloud capabilities are becoming table stakes for financial institutions that are looking to innovate.
Migrating from traditional data centers to the cloud might sound daunting but the endless benefits make it an option to consider.
The bottom line: It’s never too late to update your enterprise to the cloud-banking grade!
You can approach this transformation incrementally. The first step is to mix and match hybrid and multi-cloud solutions based on your organizational needs, maturity, and readiness. That being said, most organizations today choose a multi-cloud approach due to easy deployment and multiple benefits. Irrespective of the deployment model, be assured that the data residing in the cloud is safer and sound than it is with on-premise storage models.
How cloud computing is helping banks meet various business challenges?
- Expensive IT infrastructure: Cloud computing coverts capital costs into periodical operational costs. Thus, regulating the overall cash flow.
- Regulatory compliance cost: Cloud can compile the regulatory requirements with the ‘software as a service’ model with minimal cost.
- Capital scarcity: Since the capital investment in IT infrastructure is low via the cloud, there is no room for capital inadequacy.
- Return on investment: Implementing cloud will help banks to save time, money, and efforts. Thus, enabling you to re-invest the saved time, energy, and efforts in expanding your business growth.
- Risks and security breaches: Banks that are on cloud-computing are better prepared to face uncertainties of any kind. Be it, economic troubles, environmental changes, or a shift in customer expectations.
What are the different cloud-computing technologies?
The cloud environment is broadly classified into 3 major services. They are:
- SaaS (Software as a Service): This is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet. They are mostly on a subscription basis.
- IaaS (Infrastructure as a Service): This is an instant computing infrastructure, provisioned, and managed over the internet.
- PaaS (Platform as a Service): This is an on-demand environment for developing, delivering, and managing applications.
These services and the evolution of cloud computing has enabled several industries to create customer-centric platforms – that are highly secure and efficient.
The role of cloud banking in creating a better customer experience
Mobile commerce and seamless digital customer experience have become central to business success in recent years. Today, Customers expect real-time service and intuitive usability. At present, some of the leading financial institutions have owned cloud infrastructure that focuses on user experience heavily. This, in turn, has added further pressure on the incumbents to innovate and add value for customers.
Incremental improvements or minor value-added services are no longer a unique selling point for customers. Be it, offerings such as basic spending insights and categorization etc. Banks need to think bigger about the services and tools that will be true game-changers. For instance, data-driven insights can be used to provide timely notifications to customers about their spending habits, helping them stay on budget, etc.
6 big benefits of cloud banking:
1. Cut costs:
With cloud computing in place, banks will not have to invest heavily in dedicated hardware, software, and related manpower. It makes updating your IT infrastructure an easy affair. Because of its pay-on-demand model, you are required to pay only for the hardware and software that you need.
2. Helps to Innovate IT Strategy:
It helps to innovate IT strategy. Cloud is becoming an engine to quickly build new capabilities and services to address business imperatives. Many transformative solutions today are cloud-based. Be it, customer relationship management, finance, or enterprise resource management. A cloud business case helps emphasize how the bank can cost-effectively tap into cloud-delivered solutions to:
- drive customer insights and experiences;
- grow revenue;
- lower costs;
- find and onboard better talent;
- provide more consistent enterprise operating platforms.
3. Improved data security:
Data security breaches have severe consequences for both users and vendors. When it comes to data security you need to consider 2 things:
- How an enterprise’s current infrastructure may be limiting its ability to detect and address new risks/vulnerabilities
- And, how cloud technology can help
With state of the art equipment and up to date software, the cloud provides a great platform to safeguard data. Management of financial data would require banks to select cloud providers that meet criteria like:
- Certifications and standards
- State of the art technology
- Reliability and performance
- Migration support
- Service dependencies
4. Regulatory compliance:
Cloud computing can help banks and financial services firms meet ever-evolving regulatory reporting requirements. And this is a critically important capability in an industry where cross-border transactions are the norm. Cloud solutions can also help banks:
- Conduct intraday liquidity and risk calculations, and
- Analyze trade surveillance data to detect anti-money laundering and other fraud issues.
5. High efficiency:
The efficiency of a financial institution increases multi-fold when in a cloud environment. By hosting data on the cloud, banks can enjoy benefits like:
- Disaster recovery
- Quality control
- Loss prevention
- Flexibility and mobility
Payment gateways that are not on the cloud suffer from slow and complicated payment processes. Using different technologies between the buyers and sellers will slow the transactions. But migrating the whole system to the cloud brings the buyers and sellers together on a shared application. This will improve transaction speeds and also tracks data easier.
6. Better client servicing:
Cloud computing facilitates banks in the faster development of products and services. It boosts the computing power to meet the growing demands of their customers. And provides better insights that help banks to create customized services for their clients.
So, what stands between the cloud and banks?
While the cloud seems like the way to go, there are a few limitations that are stopping banks from making this transition from premise storage models to the cloud. The main one being ‘Data Security’. Due to security concerns, many banks are hesitant about migrating. However, the situation is not the same and cloud security measures are more powerful than ever today. Be it, employing encrypted cloud services to manage risks or avoiding shared services or public cloud usage, and more!
Cloud-banking has arguably transformed financial services in ways previously unseen. Migrating to the cloud can be taxing but through transition the process becomes easy. As the cloud is slowly becoming a high priority for banks, this move will provide an edge in optimizing operating and capital expenses. The benefits are many, and the cost savings can be significant. Cloud-banking will elevate how banks function and make the process smoother for both – the enterprise and the users.