How cloud computing is transforming the financial services industry
By Trung Nguyen Hoang (Thomas Nguyen), Financial Services Solutions Group at FPT Software
The cloud is more than just a technology buzzword. He has become a major catalyst for business transformation and a potential game changer for how banks and financial services organizations will operate in the future.
Many organizations in the global financial services industry have embarked on a journey to the cloud over the past five years. Even before the Covid pandemic hit, around 91% of banks and other financial institutions were using or planning to use the cloud. This trend has accelerated considerably over the past 12 to 18 months.
According to a recent study by Gartner, application modernization is the most commonly cited goal in banking and investment services. In the report, 70% of bank executives said they expect their cloud spending to increase in 2022. While most banks currently rely on external service providers, the survey Gartner indicates a future shift to cloud businesses owned by internal IT teams. Organizations have started building private clouds and establishing their own data centers.
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 demands. and speed. Expected returns from successful cloud projects include better customer insights, improved efficiency, profitable innovation – and more.
Better customer insights
Customer data contains valuable information that can only be unlocked using advanced cloud analytics. Real-time data analytics can form the foundation for better customer personalization and proactive engagement across all channels that was impossible to achieve with the existing infrastructure.
While striving to deliver a smoother customer experience, financial institutions are still struggling to streamline, automate, and link back-office activities with front-end activities. Cloud technology can connect and integrate many data and operational systems, allowing staff to easily access data without being tethered to a local network. This can speed up processes for more productive analysis and meaningful decision making.
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 respond quickly to market demands. Another transformation born of cloud solutions is open banking, a consumer-approved method of giving a third-party organization access to their bank’s financial data. This hybrid cloud implementation could help expand customer options across traditional and non-traditional financial services.
Transparent customer service
Every touchpoint in the customer journey matters. Many banks choose cloud-based CRM solutions to manage their customer data and real-time interactions. These platforms can record consumer contacts across all communication channels, no matter where and when they occur. Collecting and analyzing complete customer histories in this way enables banks to deliver superior customer service and ultimately tailor-made solutions for a better customer experience.
Stronger customer engagement
Using cloud technology, banks can create new solutions that meet changing customer demands by analyzing how customers interact with financial assets. An advanced digital messaging and communication strategy could create a robust data backbone for financial institutions by deepening customer insights, enabling better data-driven decisions, and enhancing customer engagement.
Better fraud detection
The cloud framework enables financial services organizations to automate regulatory reporting with regulatory strategy and incident management. Additionally, cloud infrastructure provides a more secure environment than legacy systems due to its always-up-to-date nature. A secure ecosystem is maintained with three main cloud security solutions: infrastructure security, operations security, and application security. Working together, these solutions help financial institutions detect suspicious activity before it can have a negative impact.
The future is in the cloud
According to a Google Cloud and Harris Poll, 83% of financial services companies are already using cloud technologies to some extent. However, a majority are choosing hybrid cloud solutions, and fewer organizations are opting for single cloud and multi-cloud. And for many banks, a hybrid strategy works best because it allows them to benefit from both the flexibility and scalability of the public cloud and the protection and control of the private cloud.
For example, banks can solve data security and privacy issues by building a hybrid cloud where crucial data is kept in a private cloud and computing power is housed in the public cloud.
The best way for financial institutions to deal with all the expected challenges of the cloud is to ensure that their IT infrastructure is compliant with data privacy and security standards. They must also have strong risk management procedures in place to quickly detect and respond to any potential issues.
By doing so, they will be able to make the most of all the potential the cloud has to offer.