Published by Jessica Weisman-Pitts
Posted on October 27, 2022
By Trung Nguyen Hoang (Thomas Nguyen), Financial Services Solutions Group at FPT Software
Cloud is more than just a technology buzzword. It has become a major catalyst for enterprise business transformation, and a potential game changer for how banks and financial services organisations will operate in the future.
Many organisations in the global financial services industry have embarked on a cloud journey over the past five years. Even before the Covid pandemic hit, approximately 91 percent of banks and other financial institutions were utilising or planning to use the cloud. This trend has accelerated notably in the past 12 to 18 months.
According to a recent Gartner study, application modernisation is the most widely cited objective in banking and investing services. In the report, 70 percent of banking leaders stated that they expected their cloud spending to increase in 2022. While most banks currently rely on external service providers, Gartner’s survey indicates a future shift to cloud activities being owned by internal IT teams. Organisations have begun to build private clouds and establish their own data centres.
These statistics show how banks and credit unions are increasingly turning to cloud computing solutions, whether they need to store data, want to adopt applied analytics or meet growing capacity and speed requirements. The expected returns from successful cloud projects include better customer insights, improved efficiency, cost-effective innovation – and more.
Better customer insights
Customer data contains valuable insights that can only be unlocked with the help of advanced cloud analytics. Real-time data analysis can provide the foundation for improved customer personalisation and proactive engagement across all channels – things that were impossible to achieve with legacy infrastructure.
Enhanced efficiency
While striving to deliver a smoother customer experience, financial institutions still struggle to streamline, automate and link back-office activities to front-end activities. Cloud technology can connect and integrate numerous data and operational systems, allowing staff to access data readily without being chained to a local network. This can speed up processes for more productive analysis and meaningful decision making.
Driving innovation
Financial institutions can use cloud technology to shorten product deployment cycles and simplify product testing. This allows them to test new ideas in real time and to respond rapidly to market demands. Another transformation borne from cloud solutions is open banking, a consumer-approved method of giving a third-party organisation access to their bank’s financial data. This hybrid cloud implementation could help broaden customer options across traditional and non-traditional financial services.
Seamless customer service
Every touchpoint of the customer journey counts. Many banks choose cloud-based CRM solutions to manage their client data and interactions in real time. These platforms can record consumer contacts across all communication channels, regardless of where or when they occur. Collecting and analysing the full customer history in this way allows banks to offer superior customer service and ultimately tailor solutions for a better customer experience.
Stronger customer engagement
Using cloud technology, banks can build new solutions that meet changing client demands by analysing how customers engage with financial goods. An advanced digital messaging and communications strategy could create a robust data flywheel for financial institutions by deepening customer insights, enabling better data-driven decisions and strengthening customer engagement.
Better fraud detection
The cloud’s framework enables financial services organisations to automate regulatory reports with regulatory strategy and incident handling. In addition, cloud infrastructure provides a more secure environment than legacy systems due to its always up-to-date nature. A safe ecosystem is maintained with three main cloud security solutions: infrastructure security, operations security and application security. Working together, these solutions support financial institutions in detecting suspicious activities before they can have a negative impact.
The future is in the cloud
According to a Google Cloud and the Harris Poll poll, 83 percent of financial service companies already use cloud technologies in some capacity. However, a majority choose hybrid cloud solutions, with fewer organisations opting for single-cloud and multi-cloud. And for many banks, a hybrid strategy works best because it enables them to benefit from both the flexibility and scalability of the public cloud and the protection and control of the private cloud.
For instance, banks can address security and data privacy concerns by constructing a hybrid cloud where crucial data is kept in a private cloud and computational power is housed in the public cloud.
The best way for financial institutions to deal with any anticipated cloud challenges is to ensure that their IT infrastructure complies with data privacy and security standards. They must also have solid risk management procedures in place to promptly detect and respond to any possible issues.
By doing that, they will be able to make the most of all the potential the cloud has to offer.
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