How financial services companies are moving to the cloud
Typically, companies in the financial services industry have been reluctant to make any changes to their legacy IT infrastructure due to the highly regulated nature of the industry.
But it seems now that the industry is becoming more comfortable with technological change. With a growing pressure on IT budgets and the need for digital innovation, many financial services firms are beginning to make the move to the cloud.
Is the color of the cloud Azure?
In a 2017 survey from The Economist Intelligence Unit, 74 percent of banks reported that the cloud will become a major factor in the industry within the next five years.
This large figure is unsurprising considering the benefits of cloud adoption.
Tariq Shaukat, a president in Google’s cloud division, recently described the reasons behind financial institutions flocking to the cloud in a recent Google blog post:
“When I talk to these financial institutions, they tell me they look to the cloud to help them drive growth and differentiation, to cut costs, and to transform into more nimble, innovative companies.”
“They’re modernizing archaic systems, improving customer experiences through machine learning APIs, and creating connected ecosystems that drive efficiencies, new business models, and opportunities. They see the cloud as not just a driver of efficiency, but an enabler of change,” explained Shaukat.
So how exactly can adoption of the cloud infrastructure benefit the financial services industry?
1. Reductions of costs
It perhaps comes to no surprise that adopting the well-architected environment of the cloud will cut costs.
The move to the cloud means that companies will no longer have to invest heavily in on-premise or co-location hardware and software with a limited shelf life.
According to one report, 88 percent of financial institutions stated reduction in TCO (total cost of ownership) as the biggest benefit of cloud adoption.
By moving to a cloud infrastructure, businesses can save money on the operation costs of incumbent on-premise solutions while also improving efficiency.
2. Integrated security
In order to scale their business using new and innovative technologies, the harnessing of a cloud infrastructure is pretty much inevitable.
For many companies, concerns surrounding security act as a barrier to cloud technology adoption. But despite this perception of cloud computing being less secure than on-premise capabilities, there has so far, been very few security breaches in the public cloud.
Many cloud providers offer a suite of security features to ensure your data remains safe on the cloud. This includes the ability to control who has access to data, behavior analytics regarding threats or anomalies, integrated security across all business applications, the physical security of regional data centers, and more.
3. Improve scalability and flexibility
Cloud computing enables financial services companies to quickly and easily scale up and down according to the rapidly changing market and customers demands.
This means that unlike traditional in-house systems, businesses only need to pay for the platforms they are actively using across your IT infrastructure.
PayPal is reportedly moving its workloads to the cloud to scale up and back up without wasting resources.
4. Big data, automation, and analytics
Like many other industries, financial services are leveraging big data and analytics to improve many aspects of their operations.
While technology has allowed businesses to collect large amounts of data, the true value cannot be extracted if you don’t know how to handle it.
The cloud offers financial institutions a more efficient and cheaper approach to big data and analytics.
With the capabilities in place to analyze a diverse dataset from the very start, financial services companies can make informed, intelligent decisions that are predictive and holistic.
With big data and analytics, you can also deliver a personalized experience to your customers based on trends and past behaviors.
Just this week, HSBC shared how they’re adopting a cloud-first strategy so they can innovate faster. The financial institution with around 3,900 offices in 67 counties and territories worldwide are using data analytics to gain a deeper understanding of their customers’ needs. From this, they hope to provide them with new banking features and functions to satisfy such needs.
6 June 2023