Customers’ needs, interactions and requirements have evolved significantly in recent years, with a greater focus on immediacy, accuracy and personalization. This new scenario applies to virtually every interaction of customers with their environment, and financial services providers are not an exception. A great part of financial institutions adopt and actively utilize new technologies to meet such customer expectations, transforming their businesses and developing the new capabilities to become more efficient and bring more value for customers. In this context, cloud computing becomes a critical element of the financial system, as the technology enabler that helps firms expedite processes, reduce risks and increase efficiency. Besides, this technology enhances the ability to identify business opportunities and revenue streams, being a core element to positively impact customers through more personalized proposals, at better prices through safer and less risky operations.
This article will cover key aspects of cloud technology that enables companies to compete in the new financial services landscape with the help of a number of benefits.
Why financial sector uses cloud computing?
Banks require intensive use of technology for operation. Traditionally this has been solved by on-premises systems, deployed locally on the company’s own computer infrastructure. However, the progress of technology has considerably accelerated, requiring banks to embrace this development in the financial market. They do so consciously and strategically. Cloud has become a key technology to develop new financial services and to innovate, to collaborate with third parties and to compete in the digital context.
Nowadays the market dictates the speed of change. Flexibility and time to market are imperative for banks and cloud computing is the technology with the greatest potential to meet both needs. Banks need cloud technology to compete with other non-regulated players entering the marketplace on a level playing field. Innovative, fast-evolving cloud technologies allow banks to take advantage of the best-suited technology for customers and business processes at each moment.
IBM Cloud for financial services
IBM Cloud for Financial Services is designed to build trust and enable a transparent public cloud ecosystem with features for security, compliance and resiliency that FIs require. FIs can confidently host their mission critical applications in the cloud and transact quickly and efficiently. With an ecosystem of multiple FIs and more than 40 ISV partners to start, the IBM Cloud for Financial Services offers a new generation of cloud for the enterprise. FIs can now deploy on public cloud to enable innovation and deliver new, more personalized customer experiences, while managing stringent industry regulations for sensitive data and complex workloads.
With those combined industry pressures, in order to create new operating and business models that can deliver innovative products and services with competitive speed, financial institutions must find ways to partner with independent service vendors (ISVs), software-as-a-service (SaaS) vendors and fintech companies themselves.
Cloud Benefits for the Financial Services Industry
- Enhanced security
There is no doubt in anyone’s mind that security is the main concern when embracing cloud-based technology. However, many businesses are moving to the cloud nowadays to strengthen their security infrastructure. Due to the great increase in the number of data breaches and cyber attacks, it is difficult to have a foolproof IT environment safe from hackers. Within a traditional IT setup, something as simple as a phishing email attack, has the ability to bring the whole network down. Cloud computing provides a highly resilient security architecture and goes through stringent security checks at regular intervals.
- Agile Innovation
The ability to access a shared pool of configurable computing resources can increase a financial institution’s ability to innovate by enhancing agility, efficiency, and productivity. Public cloud deployments can enable financial institutions to direct internal resources, previously focused on the administration of IT infrastructure, towards innovating and delivering new products and services to market more quickly. In addition to that, cloud can also provide more flexibility to get into new businesses. Cloud resources provide the way to try out new ideas without extreme investments in supporting systems. A shift in business focus can be made fairly quickly. Finally, the time to market when introducing new proposals is also shorter, especially when you can rely on fully automated processes.
- Risk mitigation
Cloud can provide efficient solutions to mitigate traditional technology risks, such as capacity, redundancy, and resiliency concerns. The scalable nature of public cloud computing can provide financial institutions with greater control in the management of variable IT demands, while offering new commercially viable methods to implement enhanced security controls.
- Cost benefits
Cost efficiencies can be derived from reducing the initial capital expenditure investment required for traditional IT infrastructure, and through providing more efficient means for financial institutions to manage computing capacity necessary to satisfy customer demand across peak periods, leveraging on a pay per use model. In addition to these direct cost benefits, new business efficiencies gained from public cloud deployments within bank innovation and risk mitigation processes can also deliver associated efficiencies.
- Storage and Big Data
Storage is one of the largest benefits of moving to the cloud. The finance industry generates unbelievable amounts of data on any given day due to millions of card transactions, stock market transactions, loans, and insurance documents and payments. Unlike the traditional IT setup where constant upgradations and maintenance is required, Cloud computing provides unlimited storage to ensure businesses never have to worry about increasing amounts of data.
- Personalising Customer Experiences
The cloud offers companies the opportunity to house all their various types of data in one secure location, enabling them to personalise services for customers. By using the data cloud, companies have a consolidated governed location for all types of data (for example, clickstream, transactional, and third-party) that can ingest data from new sources, such as IoT devices. This enables organisations to gain a 360-degree view of customer behaviours and preferences from multiple inputs. A full customer view is fundamental for a successful personalisation strategy as it enables organisations to pinpoint high-value customers and ensure they have a good experience at every touchpoint.
Cloud computing is continuing to revolutionize the way companies do business. Over the past six years cloud computing has quickly gained momentum and is becoming widely adopted across multiple industries. It is a key enabler for a successful data economy and service delivery, as it can seamlessly connect banks with other financial institutions, customers and FinTech innovators. The pervasive and secure use of cloud – benefitting customers and banks alike – supported and consistently governed through a risk-centric approach by banks, is in alignment with the already existing risk management culture of banks. Used wisely it can help to control cost in a more efficient way, improve the flexibility of the business model, allow operational specialisation and improve resilience.