Banking and financial sector leaders increasingly recognize the role of cloud computing in today’s capital markets, i.e. smooth engagement with modern infrastructure. The traditional banking infrastructure is outdated, inflexible, and inadequate to compete with more responsive and innovative competitors.
Cloud computing in the Banking and Financial services sector is set to become the prerequisite for complying with changing consumer and marketplace expectations, advanced security risks, and deployment of innovative solutions.
Cloud Computing for Banking and Financial Sector
The on-premises banking infrastructure is getting more and more difficult to update and increasingly costly to maintain. This is why cloud computing in the financial services sector is essential to replace these legacy systems.
To address the need for capacity and speed, financial services firms are increasingly looking for FinTech Cloud Computing solutions to store data and workloads and access advanced software applications via the internet. This leads banks to implement operating models that help improve revenue generation, reduce costs and respond to reputational risks quickly and efficiently.
While most financial institutions are actively using cloud services today, they could only shift a small part of their banking workloads because of complexity and concerns over security, risks, governance, and control. Most of these organizations are yet to deploy the core systems to the cloud.
However, in the coming years, cloud computing in the banking industry will power vital infrastructure for enabling agility, improved remote collaboration, and shorter application development and deployment cycles.
5 Key Advantages of Deploying Cloud in Banking and Financial Sector
Cloud computing in the banking and financial services sector offers tremendous opportunities by equipping them with a cheaper, faster, and more elastic alternative to on-premises data storage. Once massive data sets are gathered in one place, organizations can apply advanced analytics to reap the benefits of FinTech cloud computing solutions.
1. Reduced Infrastructure Costs and Usage-Based Billing
Perhaps the most visible advantage of cloud computing in banking and financial services firms is its ability to scale and adapt to the needs and timeframes of organization expansion without heavy investments. FinTech cloud computing solutions can turn the large up-front capital expenditure of additional hardware and software into a smaller, ongoing operational cost.
Additionally, dynamic cloud pricing allows financial institutions to increase or decrease computing capacity and choose the services as needed on a pay-as-you-go basis. This way, companies can effectively respond to ever-evolving financial priorities.
2. Improved Efficiency
Remaining compliant with ever-evolving regulatory reporting requirements makes it difficult to streamline processes. Although, cloud technology’s top-notch disaster recovery system helps meet these requirements effortlessly by conducting intraday liquidity and risk calculations and mining trade surveillance data.
Cloud computing in the banking industry makes streamlining and automation of processes possible, which helps to deliver secure and contactless services that apply to the current business environment. Also, the time spent looking for sophisticated insights into the traditional system can be invested in more productive and impactful analysis and decision-making.
3. Enhanced IT Security and Business Continuity
In the case of cloud computing, the provider is responsible for managing the technology. Cloud computing providers have extreme security standards compared to outdated systems that are vulnerable to data tampering.
Cloud computing in financial services firms can provide added comfort from cybersecurity risks by obtaining higher data protection, fault tolerance, and disaster recovery. Cloud technology also provides a high level of built-in redundancy and backup at a lower price than on-premises, traditionally managed solutions.
4. Greater Agility and Operational Resilience
Cloud computing in the banking industry helps achieve greater business agility by enhancing organizations’ overall resilience to respond more quickly. It supports a more efficient and faster response to the needs of banking customers and changing market conditions. This leads to better customer experience and operational productivity benefits.
Cloud technology’s flexibility and operational resilience allow banks to replicate data and app services across more than a single data center or region. Due to this ease of operation, financial institutes experience shorter development cycles for new products.
5. Drive Business Innovation
Cloud computing in financial services firms allow simplified product testing in real-time for innovations so that companies can react to market acceptance/rejection quickly. This helps innovate and create strategies to build new customer experiences, create market offers and optimize operations.
Cloud computing also helps unleash and manage new talent and new ways of working. This can be achieved through tech alignment with business unit needs by leveraging tools such as machine learning, IoT platforms, image recognition, natural language processing, etc. This will attract new workers and provide banks with access to ecosystems with new skill sets.
Today, banks and other financial institutions need to implement strategies to confront changing consumer expectations, emerging technologies, and alternative business models of the future banking environment. Financial Services Institutions (FSIs) across the globe are already leveraging private, public, and hybrid cloud solutions to develop innovative products and services, transforming the way FSIs will operate in the future.