The Cloud has been taking over major parts of many industries across the globe. Whether an institution creates products, provides services or analyzes data, cloud-based services are quickly replacing older, more expensive dedicated hardware and software with a limited shelf life that take considerable manpower to properly maintain. The financial industry might have taken longer than others to embrace the cloud, but experts say that by 2020, the “no-cloud” policy will become like the “no-internet” policy today.
The benefits of adopting cloud-based services are wide-ranging, and affect both core operations of financial institutions, as well as customer relations and human resources management. Here are the main ways the cloud is helping banks and other institutions deliver better services, more cost-effectively.
Running a bank has been an extremely complex and expensive endeavor. New servers and data centers need to be constructed and employees need to be recruited and trained to be able to properly operate and maintain these local networks. This has made new competitors joining the banking sector difficult, and thus helped cement the monopoly older players have in that market.
Cloud-based services in the banking sector allow both established and new banks to abandon the need to build their own networks and data centers, and instead pay to use a secure, always up to date and future-proof cloud-based infrastructure.
In one instance, Melbourne-based ME Bank saved a whopping 75% on its development and testing environments when it ditched its on-premises data center and used a more efficient, cost-effective, cloud-based infrastructure.
Improved Scalability and Efficiency
Customer-centric financial institutions are quickly becoming the most sought-after by tech-savvy customers. This means that in many instances, banks need to scale up quickly to meet the demands of their customers, who increasingly expect more from their banks. Traditional hardware-centered networks take a lot of time and expenses to set up and cannot compete with the speed at which a cloud-based infrastructure can increase capacity and scale up.
Efficiency is also a key advantage when using cloud-based services. This is especially true for banks that operate in different markets and countries. Banks that operate across markets and demographics, need to analyze massive data sets to optimize their portfolio of services to stay up to date with what customers expect from their bank in this hyper-connected day and age.
Meet Customer Demands Fast
New products usually take at least 18 months to properly develop, test and roll out. Several banking initiatives like Open Banking and PSD2 have demonstrated that banks can create, develop and launch new products and services in just 3 months, a fraction of the time it takes with current more traditional infrastructure.
This speed is invaluable to both established banks and those currently on the rise. The ability to adapt quickly to customers’ needs, as well as integrate the latest research and technology into a bank’s bouquet of services, is what puts banks ahead in today’s cut-throat market where consumers expect not service to not be just over and above, but almost instantaneous as well.
Stronger Relationship with Customers
52% of SMEs in the UK feel banks aren’t business friendly, and 44% of millennials in the US claim their banks “do not understand them.” In light of these attitudes, it has become more important than ever for banks to not only understand their customers but adapt to their feedback in real-time.
The cloud helps gather and analyze customer feedback faster and more comprehensive than ever before, allowing the bank to better identify its weak points and how best to address and strengthen them. A good example was how Tangerine Bank used Microsoft’s Analytics Platform System (APS) and Azure HDInsight to send out incentives to retain their customers, and helped them expand their market share as well.
The cloud is coming to the financial sector, and 2018 has seen that trend grow exponentially. In the age of crypto and online payments, banks need to stay one step ahead without breaking the bank (pun intended). The cloud offers a perfect way to provide better services, while scaling up and keeping your existing customers happy.