Cloud Transformation in Financial Services Sector
Cloud in Financial Sector
Cloud computing enables banks and other financial organizations to build, deploy, and manage their applications on the cloud. Digital wallets, payment gateways, and the UPI-based payment system, which we use in our country are all based on the cloud.
Figures Reveal the Dominance of the Cloud in Banking and Other Financial Services
According to a survey conducted by McKinsey, about 70 percent of Indians are willing to switch over to a virtual bank. According to a Harris Poll survey released by Google Cloud, most financial organizations are using cloud services in one form or the other.
About 83 percent of the financial institutions claimed that they were using the cloud as part of their computing infrastructure. The survey also says that 54 percent of the respondents have their workloads fully deployed in the cloud. The segments that most fully adopt the cloud are data and IT security at about 74 percent, fraud detection-based systems, and regulatory reporting systems at 57 percent each. According to Finextra Research, 90 percent of the respondents prefer SaaS or cloud-based services as part of their new infrastructure.
Financial Services Based on Public Cloud
Most of the public cloud services offer cloud solutions for banks and other financial institutions. Apart from revamping the way the banks operated with traditional IT infrastructure, cloud solutions also offer enhanced and next-generation services to their customers. The cloud solutions empowered financial institutions to test and launch new products.
Most banking and other financial institutions deploy these solutions that not only ease how they carry out their day-to-day functionalities but also enable them to provide better services to the customer. Some of the Google Cloud Platform (GCP) based solutions for financial institutions are Open banking, Contact Center AI, Lending DocAI, High-performance computing for risk simulation, etc. Microsoft Azure provides High-performance computing (HPC), Cloud-scale analytics, and Backup and archive solutions for financial institutions.
Benefits of cloud computing in financial services
1) Banks Can Leverage Data Warehousing Capabilities
As far as any financial institution is concerned, data is something that keeps them thriving all along. The data warehousing capabilities provided by the cloud enable a financial institution to reduce capital expenditure costs as it eliminates the need to invest upfront for hardware and other infrastructure capacities. Also, cloud-based data warehousing enables faster recovery of data.
According to a TDWI study, 82 percent of businesses are prioritizing their budgets for technologies that are related to analytics and business intelligence. A survey by IDC reveals that the highest investments of 28 percent of banks will be in analytics and big data. Cloud empowers banking institutions to leverage the computational capabilities to carry out extensive big data processing that can enable them to gain visual insights about their banking services and how effective they are in providing a good engagement to their customers.
2) Cloud Solutions Enable Banks to Better Serve their Customers
According to the Ipsos-Forbes Advisor U.S. Weekly Consumer Confidence Survey, about 76 percent of Americans have used their bank’s mobile applications for everyday banking activities like checking the balance, account statements, etc. Cloud enables banks, insurance, and other financial institutions to develop and launch new products and services in an apt and timely manner. Financial institutions could respond to their customers and their requirements in a steadfast manner thereby drastically bringing down the downtime.
3) Cloud Improves the Security of Banking Activities
As per an Accenture study, only a meager 28 percent of the banking customers were of the opinion that mobile and other digital modes of banking were unsafe. Still relying on the conventional IT model for application development in this digital age presents the enhanced risk of exposure of the applications to data breaches. With this concern, more and more banking service providers are moving their applications to the cloud. Most of the cloud providers comply with the latest information security best practices and use services based on encryption, authentication, etc. Cloud also offers good disaster recovery mechanisms to ensure safer and faster recovery of data.
4) Cloud Enables Better Efficiency
Cloud technologies pave faster and more seamless collaboration. Cloud services can facilitate better communication between different branches of a bank or a financial company no matter where they are located. Cloud thus enables financial institutions to better drive their core banking operations.
5) Cloud Solutions Enables Banks to Cut Down Their Cost Overhead
Cloud enables banking institutions to get around the need to maintain data centers and servers. Operating an on-site infrastructure can eat away a major chunk of the costs and the profit earned by a bank. Cloud technology enables financial institutions to reinvest their profit and thus provide next-generation services to their customers. Thus eliminating the costs required for hardware and other infrastructure cloud services enable a financial institution to drastically cut down the total cost of ownership (TCO).
6) Cloud Hosting of Banking Applications Ensure Better Mobility
The cloud hosting of applications enables the customer to access the services of their banks in a matter of seconds. It does not matter where the operating zone of a bank or the physical location of a customer is. Digital banking applications ensure round-the-clock services for customers on any device.
7) Enhanced Business Agility
The enhanced flexibility and scalability presented by the cloud enable banks and other financial organizations to market their applications faster. Financial institutions can simultaneously work on multiple applications without incurring any additional capital expenditure. The on-demand availability of resources enables banks to scale down or scale up the underlying cloud resources based on their requirements.
Cloud transformation is a necessity as far as banking services are concerned. No customer will be happy to stick to the services of a financial institution that brings to them the memories of olden day banking. If you are making them revisit those years, you are sure to lose them.
Activelobby provides cloud-based management and migration services. We manage, monitor, and maintain your cloud infrastructure. As part of cloud migration, we assist you in your pursuit of transition to the cloud. We support most of the cloud platforms like GCP, Microsoft Azure, and AWS, to name a few.