In the banking industry, innovation is driving competition, with the industry’s technology leaders maximizing the benefits of cloud computing. More and more banks are turning to cloud computing to deliver better customer experiences at a lower cost in real-time.
The cloud is a tried and true option that allows financial institutions to tap into new service modes, leveraging its technological advancement to enhance productivity and achieve greater cost efficiency, better agility, and fewer security risks. This article outlines the nine benefits of cloud computing for banks.
What Is Cloud Computing
Cloud computing refers to the on-demand delivery of computing services through the Internet. In addition, it can augment human productivity, providing insights that can positively affect the overall banking infrastructure. Instead of owning modern computer infrastructure, banks use cloud computing solutions to replace what a current data center provides. This practice helps them avoid the complexity of owning and maintaining complex IT infrastructures. Cloud computing options include:
- Public cloud services offered by vendors;
- Private cloud services built by a banking or financial institution;
- Hybrid cloud services combine a private cloud with public cloud services.
Benefits of Cloud Computing for Banks
Cloud computing essentially provides the foundation for digital transformation. Here are the nine benefits you should know.
Customer Insight
If banks don’t meet customer expectations, customers will go to another bank. Banks need to know what clients want in order to provide efficient services and build loyalty. Cloud breaks down data siloes, giving more comprehensive client insights. This helps them understand individual behavior and offer personalized services that drive conversion, boost engagement and reinforce loyalty.
Data Security
Financial institutions are at a high risk of a data breach. If that happens, it could cost them millions in lost revenue and fines. Cloud infrastructure is a more secure environment than on-premise systems. It protects against cyber threats on multiple levels. Additionally, it grants greater control over data storage, so banks can monitor their end-to-end processes and recognize security breachers and any suspicious activities. This allows them to respond proactively to potential risks and safeguard the customers’ data.
Operational Speed
Banks capture and store large amounts of customer data daily. Thanks to cloud technology, banks can handle large amounts of data efficiently. Cloud computing centralizes the data capture, storage, and interpretation processes. Additionally, it provides more accurate and faster data-led insights. As a result, banks see better operational speed and fewer latency issues.
Infrastructure Costs
Banks can save a lot of money by moving the application and data to the cloud. For one, they will remove the overheads for on-site infrastructure maintenance, storage, and security patch updates. Also, the pay-as-you-go model of public clouds is more affordable. Cloud service provision scales or decreases according to the bank’s requirements. So, banks pay only for what they need.
Scalability
Cloud-based infrastructure is connected to multiple servers simultaneously. Consequently, banks can quickly and easily scale their IT needs as needed without any additional investment. Such flexibility is very beneficial for financial institutions as it allows them to keep up with customers’ demands and serve them better.
Business Continuity
Having the data stored in the cloud ensures it’s backed and protected. Therefore, even if experiencing a natural disaster, power failure, or other crisis, banks would be able to access data quickly, continuing to conduct business as usual. This can help in minimizing downtime and productivity loss.
Efficiency of Processes
Banks can streamline processes and deliver secure services by adopting a cloud-based model. For example, connecting buyers and sellers can simplify processes like online payments by keeping both buyers and sellers on one centralized cloud-enabled platform. In addition, cloud infrastructure can help develop new products and services that meet the customers’ needs.
Agility
Legacy systems can significantly restrict a bank’s agility. On the other hand, cloud infrastructure enables financial institutions to innovate and improve customer experience by streamlining the processes and utilizing forefront technologies like AI, machine learning, and robotic process automation. Cloud also allows quick access to application and software updates without additional investments, making banks more agile and responsive to changing market trends.
Reliability
Hosting your data in an easily-accessible and updated cloud solution grants top-notch disaster recovery. You’ll be able to solve any challenges that might arise faster. Additionally, the cloud makes it easier for banks to meet regulatory compliance requirements.
Conclusion
Cloud computing offers numerous benefits like better security, flexibility, and business continuity. It’s also a cheaper and faster alternative to on-premise data storage. So, banks must replace on-premise infrastructure with a more flexible and scalable solution that can help in optimizing business performance and staying competitive.
