How cloud is transforming the banking industry?

Updated On : September 2018

In today's dynamic world, the cloud is helping banks transform their business and take it to a new level without the factors of time and money getting in the way. Cloud computing helps to create a more flexible and agile business model to take care of growing business needs. It creates an opportunity for bankers to connect with their customers directly.

Cloud computing helps to create new markets and services to differentiate from competition and improve the ways customers' access and use the bank's products and services. With cloud computing, banks will be able to provide consistent service to customers across all branches, all over the world and also include a large amount of customer information and analytics which will allow them to further customize and serve customers better.

Some of the benefits of the amalgamation of analytics and cloud computing for banks and financial institutions are

  • Better service - Cloud computing equips banks better to respond to economic uncertainties, interconnected global financial systems and demanding customers.
  • Reinvent business models - Cloud computing can help a bank to reinvent its business and operating models.
  • Cost-saving – Eliminating the need for huge investments in new software and hardware, these funds can be used for ongoing, smaller operational cost.
  • Deliver IT flexibility - Cloud computing can help increase flexibility and streamline operations, allowing banks to achieve higher growth and revenue targets.
  • Business continuity – Cloud computing offers high levels of backup and low cost of redundancy. The service provider takes care of the technology, while banks and financial institutions have higher fault tolerance, higher data protection and higher disaster recovery capabilities.
  • Usage-based billing – Banks can select the services they need and pay as they go.
  • Business agility – The cloud is available on demand and hence the cost for infrastructure investment is low. This saves the time required for initial setup and reduces the development cycle for new products. It also speeds up customer service efficiency.
  • Customization – A cloud's expanded computing power and capacity allows it to store information about user preferences, which in turn can facilitate product or service customization.
  • Business focus – Financial institutions can focus on their core business areas by moving their normal services like software patches, maintenance etc. to the cloud.
  • Green IT – Cloud computing reduces energy consumption and carbon footprints.

Challenges in the Cloud

Although a technology that cannot be ignored, there are a few concerns specifically for cloud computing in banking. The deployment models mean an environment sprawl and a lack of control for change management which could lead to security risks, reliability issues and inability of effective business continuity planning. Absence of core application solutions has slowed down the process further. Some of these solutions are regulation, location, liability and retrieval in the cloud which has prompted most banks to opt for mini 'private' infrastructure clouds.

With the application of standardized processes and workflows, the risk of implementation lessens and established change management practices are promoted. Due to legitimate concerns about the external cloud and its criticism, banks have used technology to deliver IT as a service to internal users, which is the 'internal' or 'private cloud.'

Private cloud benefits

  • The private cloud gives bank the control over their IT while reducing complexity and increasing flexibility besides other benefits
  • Private clouds provide high security and ensure that no data is lost or misplaced
  • Cloud computing allows a lot of systems to operate at high transaction volumes without loading the network or slowing the process, ensuring better customer experience
  • Private cloud promise cost savings and efficient services by having dedicated resources for each business unit in an enterprise
  • Private clouds are affordable, safe and enable a transition in banking

Cloud in the future

Private clouds have their place in enterprise IT, but they might not provide the cost benefits, economies of scale and ROI associated with public clouds. Customers looking to leverage the cloud for complex workloads which need high levels of security and compliance are finding the private cloud model lacking. For certain workloads such as collaboration they look to leverage public clouds which provide them with an OPEX model. Banks today are mostly using private clouds but they must turn to external clouds to take advantages of all the benefits that it comes with.

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