5 Benefits of Private Cloud adoption for the Financial Services Industry
A survey by the Bank of England revealed that thirty of the UK’s largest banks have adopted almost 2,000 cloud-based applications. The survey also found that 23% of financial organisations outsource cloud functions to facilitate file collaboration and sharing.
Other reasons financial institutions utilise the cloud include fraud detection, communications, finance, business management, customer relationship management, and analytics. “Cloud outsourcing plays an important role in minimising the costs to financial institutions of maintaining and updating large amounts of proprietary IT software and infrastructure.
In addition, it is central to the viability and growth of new UK FinTechs,” notes Andrew Barber, a financial services expert.
So, what are the benefits of cloud computing in the financial services industry?
1. Reduced Costs and Increased Profitability
Cloud computing delivers computing resources, such as servers, intelligence, analytics, software, networking, databases, and storage via the internet to offer economies of scale, flexible resources and enable faster innovation. Due to the reduced physical storage needs and high adaptability, the cloud enables financial services firms to realise reduced costs. According to a recent study, 48% of financial organisations expect the cloud to reduce costs within two years after deployment, and nearly as many expect cloud adoption to increase profitability.
Also, 66% of banks leverage cloud advantages to improve revenue.
The cloud computing pay-as-you-go model typically enables flexibility and cost savings in several ways. Firstly, a financial services firm pays for the resources it needs only.
Unlike on-premise installations where a company must purchase the equipment and incur maintenance costs, FinServ firms can choose a pay-per-user model for cloud-hosted software and applications, which reduces costs significantly more than the up-front costs incurred for in-house solutions. At the same time, employees can access cloud data and software anytime, from any location, boosting employee productivity and increasing profits.
2. Faster and More Efficient Customer Services
Adopting cloud computing solutions enables financial services institutions to develop and launch new products more easily and quickly. Quick deployment of new services and products is particularly vital for the financial services sector, which has often lagged behind other industries in responding to new customer requirements. For instance, financial services traditionally require at least one and a half years to develop and launch new non-cloud applications, even at the prototype phase.
Furthermore, with initiatives like Open Banking and Payments Services Derivative 2 (PSD2) now in place, which requires financial services companies to integrate more efficient payment ecosystems, leveraging the cloud’s ability to develop and deploy new features quickly is essential. Cloud computing is also crucial in helping organisations in the financial sector to usher in fast-moving and customer-centric digital banking to stay relevant and maintain a competitive edge.
In addition, cloud computing assists financial services companies in keeping pace with new market demands. The cloud enhances business agility by enabling financial services businesses to make changes to the IT infrastructure on the go, in turn facilitating rapid and effective response to customer requirements and new market dynamics. Cloud solutions can help financial services entities to transform customer relationship models to meet target customers’ expectations quickly.
3. Artificial Intelligence and Big Data Processing
The financial services industry has historically hesitated to process data off-premises, causing scaling challenges. Still, many organisations are now adopting cloud computing to leverage AI speed and big data management. Cloud computing is beneficial since it enables financial services firms to scale, store, and process large amounts of data that can increase exponentially overnight.
Cloud solutions enable financial institutions to mesh traditional structured and unstructured data to perform AI-enabled analytics to derive crucial insights to navigate the financial market.
Every financial company processes data at scale and can leverage the cloud’s economies of scale to process and analyse huge chunks of data.
Cloud computing also provides unprecedented power and scale for financial institutions that host and build on big data. Cloud storage can store and process data created daily, including data on organisational services’ pricing and information generated in real-time. The flexibility of cloud computing solutions makes them ideal for developing AI-based services and products that can potentially disrupt the financial services sector.
The cloud’s capabilities to analyse vast datasets intelligently, derive critical information from the data patterns and enable future prediction extrapolations is a vital benefit that can enable financial services to position themselves as market leaders in service and product delivery.
4. Strengthened Security and Compliance
The UK’s financial industry is among the most regulated. As a result, numerous laws focus on data security by mandating financial companies to implement specific security controls to ensure strong data security and compliance.
A key benefit of adopting cloud solutions is proactive threat management, where experienced and dedicated cloud architects deploy endpoint (applications, devices, and access ports) threat management solutions to monitor, track, and respond to cloud security threats. The cloud also provides data security controls, such as multi-factor authentication, encryption, and password security, which restrict access to sensitive financial data.
Also, data privacy and security are primary concerns for the highly regulated financial services sector. By adopting top-tier cloud computing solutions, financial services firms can maintain robust security centred around meeting compliance regulations.
Some cloud providers such as Cloud Geeni have gone a step further to develop and deploy fully compliant cloud computing environments tailored to comply with the necessary regulations in the financial industry.
Financial services organisations can also leverage the automated compliance processes in some cloud solutions to track compliance gaps and implement the required security controls to address these gaps.
5. Increasing Resiliency
Financial technology has become highly ingrained in core processes in the financial services sector. Cloud-based FinTech permits UK banks and insurers to leverage innovative digital solutions to provide efficient services and products. However, technological disruptions can disrupt the highly digitized industry resulting in economic turmoil and unavailability of vital payment systems. Fortunately, cloud adoption builds resiliency.
Cloud resiliency enables financial services institutions to foresee and prevent potential technological disruptions and ensure business continuity and disaster recovery.
For financial services firms, cloud resiliency begins with aligning key business planning and objectives with an architecture designed to support resiliency through strengthened disaster recovery programs.
In addition, the cloud’s infinite resources ensure that financial services companies can continue providing critical operations as they respond to challenges or issues that would cause massive disruption and service outages in an on-premise environment.
Private Cloud for Financial Services with Cloud Geeni
Cloud Geeni have been trusted supplier of fully managed private cloud platforms to the financial services sector for over three decades.
We take pride in our customer retention, with many of our original clients continuing to grow and achieve operational excellence through managed private cloud.
With the end user experience as our primary focus, our fully managed service allows your financial firm to concentrate on growth.
Our cloud consultants have a wealth of knowledge within the sector and can advise a cloud adoption framework to suit your firm’s specific needs whilst ensuring regulatory compliance and data security.
Get in touch with Cloud Geeni today to discuss your cloud adoption options.