When cloud technology first emerged, the majority of financial institutions were hesitant to adopt it right away. There were a number of questions and concerns in relation to cloud systems’ security, particularly in connection with its ability to keep clients’ sensitive financial information safe from hackers and other unauthorized individuals.
However, times have considerably changed since then. Now, a number of banking institutions leverage the cloud – not just for storage, but for the transmission of all kinds of information and materials. In fact, Gartner forecasted that within the next two years, over 60 percent of banks across the globe will use the cloud to process the bulk of transactions that take place with them.
There are a number of advantages that are causing the financial world to turn to the cloud, including the following:
Serve clients quicker
One of the biggest reasons banks are adopting cloud technology is the systems’ ability to bolster client service. According to Banking Tech contributor Alastair Brown, cloud software and services are significantly easier to deploy and launch within a financial institution’s infrastructure, allowing them to reduce any delay during a system upgrade. This enables clients to gain access and utilize the bank’s online system from any device, from any location with Internet connectivity.
“Banks will be able to boost computing power to meet demand peaks and provide the latest treasury solutions without needing to worry about whether the technology is up to date,” Brown wrote.
Enhance client relationships
Besides being able to serve clients faster through the cloud, the technology can also improve the relationships banks establish with their customers. By leveraging the cloud for big data analytics, financial groups can utilize the client information they have to foster new insights, as well as better decision making. This way, they can improve their overall standing with clients by customizing their services to better suit their needs.
Reduce IT operating costs
This is an advantage felt not only in the financial sector, but for nearly every cloud adopter out there. A main benefit touted by many providers and users is the cloud’s ability to cut costs, especially when it comes to new hardware and software investments. Instead of having to purchase, install and maintain network components on their own premises and by their own staff members, organizations that adopt the cloud can utilize the infrastructures of their providers. This way, the cloud vendor is in charge of the updates and upkeep of the system, leaving the client to spend this funding in other mission-critical areas of their company.
Boost responsiveness to the changing market
Brown also noted that the cloud offers banks the opportunity to be more responsive to shifting market conditions due to the technology’s inherent flexibility and scalability. With this advantage, financial institutions can grow or shrink their system in accordance to market conditions, as well as client demands. This capability can enable the bank to separate itself from others in the financial space.
“The ability to respond quickly will be an important competitive edge,” Brown pointed out.
Challenges to cloud adoption
While there are clearly a number of benefits that come along with cloud technology, there are certain obstacles that banking organizations must overcome. According to Computer Weekly, these can include:
- IT security – A lack of confidence when allowing cloud providers to control certain technological aspects of the business.
- Data security – Concerns about the safety of customers’ personal information and confidential company data.
- Reliability – If the cloud service goes down, how will the bank and its customers access important resources?
- Regulatory compliance – Banks need specialized technology that complies with the standards of the industry.
Financial institution decision-makers should address these items before deploying a cloud system to ensure that any concerns are examined and any issues solved. By researching the technology and contacting a trusted cloud provider, administrators can be assured that the cloud infrastructure installed will be secure, reliable and compliant.
The cloud in action: Canadian bank boosts mobility
One of the best ways to illustrate just how impactful the cloud can be for financial institutions is through an actual use case. According to Forbes, Tangerine Bank in Canada is one of countless banks in the country that have leveraged the cloud. In particular, the firm adopted the technology to bolster its mobile abilities, as a quarter of its clients utilize mobile devices to do their banking. The organization deployed an IBM cloud system which has enabled it to more quickly launch new mobile applications – now, the bank can have a new app up and running in two weeks, as opposed to its previous six weeks.
“Ultimately, new cloud technology is redefining the relationships…Tangerine [has] with [its] customers by improving the quality of services they receive and giving them a greater choice of banking channels,” Forbes contributor Jane Munn wrote.