Digital Transformation in the Banking Sector: The shift into cloud computing
The start of a new decade is already shaping up to be exciting for financial services, especially for banks as they continue to compete and remain relevant in a more challenging digital environment. Most financial institutions have serious misgivings about cloud technology and the risks associated with it, but financial experts agree that the impact of cloud computing on the banking sector has been substantial.
More and more banks have become much more confident about it, specifically towards public cloud adoption. They are no longer hesitant in using the cloud. The said platform emerges as groundwork for next generation enterprise capabilities, such as advanced data analytics and artificial intelligence.
In cloud we trust
According to “What’s Going On in Banking 2020” research, cloud computing is one of the Top 5 technologies this year along with digital account opening, P2P payments, video collaboration/marketing, and application programming interfaces (APIs). The study noted that 40% of respondents have already adopted cloud computing and a quarter of them are planning to invest in cloud computing technologies this year.
Indeed, cloud computing, collaboration technologies, and other emerging platforms within the financial ecosystems can drive opportunities for innovation in data capabilities, and open access to working more closely with fintechs to ultimately better serve their clients.
Cloud computing helps financial institutions compete in a far more efficient, consumer-focused manner. Cloud apps, tools, and technologies will become essential.
The cloud gets you going
While the odds in going for cloud computing are seemingly high, banks need to weigh in on the inevitability of things in relation to the need for and utilization of artificial intelligence and analytics.
Financial institutions are, more and more, seeing the need to rely on data sources from fintech partners, third parties, and vendors to provide AI data. Funneling all that amount of complex information in-house can be a logistically and financially unfeasible plan and, in likely cases, won’t be a practical option at all. An efficient handling of data via cloud will support AI tools.
Meanwhile, trends are pointing to the fact that data and analytics services — through aggregated analytics tools, data sources, and data management services, will be provided in an open platform (and possibly as a separate service). This will oblige more banks to adopt cloud computing in order to enhance their analytics capabilities.
Adopting these requirements have the consumers’ financial health in mind. After all, this is the basis of the whole competition. Now more than ever, performance is key as banks rigidly compete on who can best manage and improve their consumers’ financial health.
A more efficient integration of both data and services sees the need for cloud computing.
There’s more to cloud than you know
Here are three key drivers for adoption of public cloud-based services by banks, as pointed out by the British Bankers’ Association (BBA):
Innovating in agile manner
Utilizing cloud can boost your capacity to innovate. You’ll be equipped to be more agile, efficient, and productive. It can also help you to reallocate resources towards improving operations and prompt delivery of products and services to consumers.
Banks have been wrestling it out with concerns, such as capacity, redundancy, and security — just about the risks associated with traditional technology. Cloud computing has the ability to scale and equip banks with more control over these risks.
Given the reduction in initial demands for capital outlays for traditional IT infrastructure, adopting cloud solutions can prove to be cost effective. It is proven that during periods of on-demand and peak customer traffic, cloud allows banks to manage a more efficient computing capability. When cloud is adopted for risk-mitigation and innovation purposes it results to more cost savings.
Moreover, from a scalability and regulatory perspective, cloud computing can scan potentially thousands of transactions at pulse speed, which remarkably improves the financial sector’s ability to combat crime, such as money laundering and fraud.
The role of your service provider
With the amount of data produced and consumed in the financial industry increasing at exponential growth, banks need to install systems that scale. The work of your service provider must include cloud-native technologies that allow critical access to storage and compute resources.
The challenge for service providers is to take great strides in developing hybrid cloud systems and double down on how to make migration to cloud as seamless as possible for banks and other financial institutions — a lot of which continue to carry workloads in traditional, non-cloud setting.
Likewise, the key is to find the right balance of control within the design process; considering the increased speed and demand at which consumers expect. The greater goal here is to impose improvements in the way banks deliver their offerings.
Four Cornerstone Can Help You Get Into the Cloud of Things
While the rate of cloud adoption within the financial industry still has much room for growth, it is clear that more and more banks are already, wisely enough, moving their core banking applications to the cloud. We have to emphasize that the best part of the transition to cloud is the level of automation — think of loads and complexity of tasks that would’ve previously been manual that you no longer have to grapple with.
Many banks spend marathon meetings just looking at the impact of cloud computing, missing all opportunities at hand. Cloud computing is something that needs to be done in real time. Now is the best time to embrace the platform, so you can start measuring your progress along product roadmaps.
Four Cornerstone can help you look at the cloud from all sides, so to speak. Call us today at 1-(817)-377-1144.
Photo courtesy of Pictures of Money.