Cloud computing has become a key catalyst for digital banking transformation and a potential game-changer for how financial institutions will operate in the future.
Banking and financial institutions are turning to cloud-based technologies steadily to bring new capabilities to market more swiftly, enhance data security, and scale proficiently while reducing risks. Cloud computing has become a viable replacement for traditional banking systems that are becoming increasingly vulnerable to data tampering.
According to a report, the market for cloud security solutions in the banking sector is estimated to grow at a CAGR of 33.1% during the forecast period, 2021-2026. The rising demand for cloud security and the increase in cyber security threats are the major factors driving the growth of the market.
What’s more? This advanced technology is also helping in financial software development for banks and financial institutions that assist in reducing IT infrastructure costs and complexity, innovate effortlessly, and discover newer channels for increasing customer outreach. Overall, leveraging the cloud to achieve business goals has become a top priority for many banking organizations worldwide.
Moving forward, in this article, we will examine the need for cloud computing in the banking and financial services sector in detail and how it is helping redefine the customer experience.
How is cloud computing redefining the banking and financial services industry?
As highlighted above, cloud computing services offer a myriad of benefits to banking institutions, such as increased efficiency and reduced costs and effort. These benefits enable organizations to stay relevant and thrive in a dynamic ecosystem while providing a springboard for improved customer value and revenues.
Below are a few key benefits of cloud computing for the banking industry that will help understand why moving towards IT cloud infrastructure is the need of the hour.
Improved data security
Financial and banking institutions today are painfully aware of the severe consequences of a data breach. When such incidents occur, they can cost millions or even billions in lost revenue. However, banking institutions can reduce such risks by moving to cloud hosting, enabling them to create multiple data backups in a secure medium.
Cloud-based infrastructures allow banks to respond rapidly to potential risks and safeguard their customers’ data. Banking institutions can also opt for cloud-based VPNs for securing their infrastructure and data from unauthorized access.
Today, cloud service providers offer different types of cloud computing services with the best security measures to safeguard apps, data, or even the entire infrastructure from potential threats. You can choose the best cloud computing service based on your requirements.
Increased process efficiency
Cloud-based platforms enable banks to streamline their processes and deliver secure and touchless services, especially relevant in the current dynamic business environment.
Processes like online payments can be simplified further by connecting sellers and buyers on a common, cloud-based digital platform. This technology also enables the banking industry to build new products and services for users, based on data analytics.
Customer relationship management (CRM) and enterprise resource planning (ERP) are the most popular softwares built in the cloud. These softwares allow banks and financial institutions to secure the data and streamline core processes. The softwares also enable the remote accessing of the information by the users and improves overall process efficiency.
Reduced costs
Once you move to the cloud, easy access to your company’s data will save time and money. In addition, with most cloud services, you need to pay only for the features you deem feasible for your work and organizational structure. This pay-as-you-go system also applies to the data storage space needed to service your stakeholders and clients, which means that you’ll get exactly as much space as you need and not be charged for any space that you don’t. This, in turn, results in higher returns and lower costs.
For instance, ME Bank, a Melbourne-based retail bank, transitioned from its incumbent on-premise data center infrastructure to a more efficient cloud-based system. After shifting its development and testing environments to the cloud, ME Bank reduced the cost of delivering new services and applications by 75%.
Improved flexibility and scalability
Cloud-based infrastructure is connected to a number of servers simultaneously. This enables banks to increase or decrease their processing capability based on changing market conditions without any additional investment.
The ability to rapidly upscale cloud computing capacity enables banks to keep up with evolving customer needs and stay competitive in a dynamic ecosystem. Conversely, cloud computing also allows your organization to easily scale back as the need for certain resources decreases.
Business continuity
Banking firms adopting cloud computing get higher levels of data protection, fault tolerance, and disaster recovery. Moreover, cloud-based platforms provide backup at a much lower cost. The technology gives banking institutions every ingredient to make them future-proof.
Since the cloud is on-demand, the investment in infrastructure gets minimized, which in turn lowers the set-up time. All of this results in a lower development cycle for new products, leading to greater efficiency and expedited customer response.
Automatic software updates
There is nothing more frustrating than having to wait for system updates to get installed, especially, if you have an immense workload. Cloud-enabled apps and platforms update automatically instead of forcing the IT department to perform a manual organization-wide update. This results in saving valuable IT staff time and money spent on outside IT consultation.
Final thoughts
Cloud computing technologies have become an integral part of banking and financial institutions. By providing advanced options for automation, data security, and cost savings, cloud infrastructure allows for technological innovation and exploration in the banking sector. If security, scalability, and affordability are your priorities, then working with cloud computing technologies is a smart move.
So, in case you are planning to invest in the cloud, it’s advisable to get in touch with a trusted cloud service provider. The experts will make your transition smoother and help scale your business.
