impact of cloud computing on the banking & finance sector

Impact Of Cloud Computing on the Banking & Finance Sector

  • By Zachary Davies
  • 07-12-2022
  • Cloud Computing

The evolution of the cloud over the past years is potentially one of the significant advances in the tech world. Cloud and AI have changed the landscape by accelerating the innovation and transformation of businesses worldwide, including those in the finance and banking sector.

Cloud opens to a vast world of possibilities, from flexibility and ability to scale day-to-day operations, agile data processing and operations, increased storage capabilities, robust security, etc.

Leading cloud providers offer an array of innovative products that can be securely accessed anywhere, which banks and financial institutions can adopt. And suppose they need help setting up the cloud, they can seek the help of leading financial software development companies who offer custom fintech app development services and software solutions.

First, let us see how the cloud computing model works and how it impacts banking and financial services. Then, finally, we will dive into the benefits of cloud computing before diving into what the future holds for the banking and financial sector.

How does the cloud computing model work?

Cloud offers flexible business models to banking and financial institutions. However, they must choose a suitable service model that matches core business requirements like the ones below.

The BPaaS-Business process is a service used for billing, human resource, payroll, etc.

SaaS-Software as a service where companies can access software and data from their browser. The cloud service provider houses the business software and related data. For example, accounting, Customer Relationship Management(CRM), Enterprise Resource Planning(ERP), invoicing, content management software, and Human Resource Management Systems (HRMS) can be delivered using this model.

PaaS- Platform as a service where the cloud service provider offers a platform for the business to run, manage and develop applications without any infrastructure complexities.

IaaS- Infrastructure as a service where businesses can use resources without purchasing software or hardware.

Cloud computing and its impact on the banking and financial sector

The future of banking looks bright and different from what it is today. Faced with changing user preferences, emerging technologies, and business models, banks and finance/fintech companies need sound strategies to help transform their landscape.

Cloud helps transform the banking and financial sector by leveraging its power through holistic, integrated solutions that can help address any challenges they face and maximize opportunities for next-generation solutions. Also, an important statistic to note here, global investment in cloud computing is expected to reach USD 12 trillion by 2025.

As cloud technology adoption becomes widespread, banking and finance markets have begun their adoption to store data and access advanced software applications. It can improve revenue, increase customer insights, reduce costs, deliver market-friendly products efficiently and monetize enterprise data assets.

Cloud also helps break operational and collect data from silos across finance, risk, regulatory, customer care, etc. Once massive data sets are collected, companies can opt for advanced analytics to get integrated insights, drive better business performance, and increase stakeholder returns. Let us now look at some benefits of cloud computing in the banking and finance sector.

Benefits of using cloud technologies in the banking and finances sector

Fintech and Banking can reach new heights with enhanced cloud technology. A combination of benefits that the cloud offers make for an exponential improvement over legacy infrastructure solutions. Let us look at some benefits of cloud computing in banking and financial services.

1) Flexibility

Cloud eliminates data storage problems that have been plaguing banks and finance companies. Cloud means faster, easier access to data for analysis, deep learning, risk mitigation, regulatory management, etc.

2) Lower Costs

Cloud’s pick-and-choose model means businesses get what they need while reducing overall overhead and no extra charges for features not used. As a result, it reduces overall costs, and the money can be spent on other initiatives.

3) Better Data Management

Data can be scaled to meet any volume, and businesses can rely on the cloud to eliminate any issues caused by data silos. The result-better data management and dedicated computing resources at your disposal can be shown as per needs.

4) Effective Compliance Tracking

Cloud makes compliance tracking easier as it can process huge volumes of data at lightning speed. Collecting, storing, and reporting is easy across multiple products and assets. Best suited for flexibility and reliability that is needed to scale businesses.

5) Risk Management

With unparalleled processing power, the cloud can reliably deliver data that can be analyzed to generate more extensive and better insights. In addition, owing to streamlined development by using Big Data and AI can help in creating a comprehensive risk assessment process.

6) Forger stronger customer relationships

Cloud tools can enhance customer interactions via chatbots, surveillance, and customized product offerings powered by AI and machine learning. Secure better insights into customer behavior and preferences using customer data into tangible insights required to retain and grow the customer base.

What the future holds for the Banking and Financial sector

Cloud computing has already emerged as a winner, with its position secured as the “New Normal” in finance and banking. As cloud adoption rates continue to grow to unprecedented heights, financial service organizations and banks must adapt to the cloud and act now to cope with the constantly changing banking and finance services landscape.

Also, with the consumer base becoming more tech and moving towards digital financial services, making fintech solutions a part of core offerings is a must. Cloud computing solutions can advance financial inclusion, help reduce costs and allow customers and companies who lack access to banking needs to use the cloud.

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