Retail banks responded with excellence and efficiency to the pandemic's abrupt and significant customer service issues. Many banks were eager to establish and implement customer migration plans to remote-based services like online and mobile banking.
This breakthrough is significant for the banking sector because it demonstrates what banks can achieve technologically when forced to do so by market demands. The obvious advantages of cloud computing for banks demonstrate how they can maintain their remarkable digital growth.
In banking, innovation is driving competition, with the industry's technological giants taking full advantage of cloud technology. As a result, these businesses may take advantage of the key advantages that cloud technology can provide.
Furthermore, delaying a cloud move carries significant dangers.
While banks are justifiably concerned about the security, control, and compliance implications of moving to the cloud, the disadvantages and risks of not doing so are far too large, and may even pose a long-term existential threat, given competitors' massive digitization gains.
For banks, there are four advantages to cloud computing
There are several ways in which cloud technology can help banks improve their operational and overall business performance.
1. Faster Operations
On a regular basis, banks have the potential to acquire and store massive amounts of client data. The difficulty is that banks are highly limited in how they use and connect this data using antiquated approaches such as data storage silos, if at all.
Siloing is ineffective and unfit for purpose in today's customer experience demands. Furthermore, it obstructs accurate and timely regulatory reporting.
Data collection, storage, and interpretation may all be centralized via cloud technology. It can also lower the costs of these important processes while producing significantly richer, more precise, and faster data-driven insights that banks can employ to boost performance.
2. Superior Data Protection
Cloud service providers monitor and examine their products on a regular basis for any signs of security vulnerabilities, and issue updates as needed.
Furthermore, cloud technology is built on data and for a data-driven world. It's a cutting-edge, future-proof solution for a digitally transformed business world.
As a result, its security credentials are far superior to what on-site infrastructure can provide. Furthermore, cloud security is fast improving, and it is realistic to anticipate it to continue to improve over time.
3. Insights into Customers
The current banking business is more competitive than it has ever been, with challenger banks and fintechs that specialize in specialized financial verticals giving traditional financial institutions a run for their money.
Traditional banks have been obliged to up their game in terms of competitiveness as a result of the increased degree of competition, which has been aided by regulations such as PSD2. As a result, banks are up against unprecedented competition from both other traditional banks and the still-burgeoning alternative finance industry, which includes fintechs and challenger banks.
The exponential growth of data and the use of cloud technologies to provide granular, deep, and rich customer insights are two important elements driving this competition.
Before the pandemic, customers were already more demanding of the type of financial service they expected, but the pandemic raised the bar even higher. Simply put, if banks fail to satisfy customer expectations, customers, particularly Generation Z and Millennials, will seek out another financial service provider who will.
To meet this demand, banks will need to expand their usage of cloud-based, data-efficient services throughout their operations. Banks that are proactive have already taken steps to identify laborious and inefficient procedures within their operations and business model, which cloud technology can easily improve.
4. Significantly Lower Expenses
Cloud computing eliminates the need for on-site infrastructure maintenance, security patch upgrades, and storage. This means that banks either don't need a team of personnel to conduct this specialized upkeep or can redeploy those employees to focus on other pressing business issues.
Another key cost-cutting feature is that cloud service provision scales or lowers according to a bank's needs. Banks only pay for what they require in this fashion.
The dangers of postponing cloud technology integration for banks
Because of the aforementioned reasons, banks are understandably reticent to fully adopt cloud technology. It most often reflects the difficulty of modifying legacy systems to work with the cloud, or the need to replace outdated technology entirely in some circumstances. Because of its previous reputation for posing security issues, the cloud may still be perceived as a risk by some banks.
Cloud security, on the other hand, has come a long way and is now largely considered the gold standard in data protection.
Aside from these worries, integrating any significant new technology necessitates the implementation of a change management procedure, which is no easy task. It necessitates consistent effort, meticulous planning, and effective execution.
In short, launching a new technology is a major undertaking for any company, but it is even more so for banks, which are typically enormous corporations. Banks, on the other hand, must initiate such reform.
The dangers of delaying a widespread cloud infrastructure transition are numerous. It allows competitors to improve their own operations and take use of the cloud's benefits, such as increased client involvement. Digital capabilities are becoming increasingly important to regulators, as evidenced by emerging frameworks such as MiFiD II and PSD2.
The cloud has the potential to make compliance more efficient while also pleasing regulators.
Banks can reach the market benchmark in data security through cloud technologies. Even with security updates, relying on outdated on-site technology might pose a security risk. In addition to these potential concerns, the cloud can help banks reduce their infrastructure and data processing expenses dramatically.
The cloud will play a significant role in the future of banking. The decision now for banks is whether they want to be leaders in cloud technology or laggards.
Need help migrating to the Cloud? Contact us today for a free consultation.