How financial service industry can accelerate digital transformation through cloud technology?

It is quite crucial for any domain to keep itself streamlined with the technological innovations happening around. One disruptive technology can make an entire industry go obsolete. In the context of Finance, we all are well aware that it is the backbone for any company, so is the finance domain as a whole, for a country. How can financial services industry afford to lag behind in the race of technological adoption then?

The finance industry, being the most regulated one, follows a formal structure by strictly adhering to the rules and compliance. Along with that, it faces a great threat towards maintaining the security of data by keeping customer experience and satisfaction at the top.

It is a must to introduce "Digital transformation" in banking and financial services, not just to revive the manual workflow but for myriad reasons. The cloud facilitates in dealing with data more effectively and efficiently. This technology can provide solutions to many of the problems, which the financial services industry is dealing with. Not only it aids in providing a competitive advantage to financial sector companies, but it also ensures superior customer services, after all, in today’s scenario, it's the services that matter the most.

If we talk about cloud technology in the finance sector, security plays a major role.

It is, in fact, not just a huge subject of concern, but a challenge as well. As the financial services industry deals with the most confidential and sensitive data. Around, 85% of the Fintech companies are using “Cloud” as a medium to safeguard their confidential and sensitive data against cybercrimes and thefts.

Earlier, the companies used to have a misconception that the on-site data was safer than data over the cloud. However, over the time it has been duly noted that data over the cloud is safer, as Cloud providers like AWS, Azure, etc, spend millions of dollar towards safety. Also, Security practices like encryption, firewall, authorization, authentication, anti-virus, etc are equally important while migrating data to the cloud.

Advantages of cloud computing in the financial services industry:

Savings can be accelerated through the cloud in the financial industry by cutting down the redundant and extraneous costs associated with physical server and infrastructure. The major drawback associated with the physical server is the high cost of investment associated with it as an entire IT infrastructure needs to be deployed. Financial companies can move their data to the cloud, with “pay as you go” model thereby can save millions of dollar. The cloud also leads to flexibility in the working methodologies. There will be an optimal utilization of IT resources.

Now the companies need not block their funds in deploying infrastructure, dedicated servers, hardware, software, and maintenance staff, etc, instead, of capital expenditure, they are just incurring operating expenses. As IT mechanisms are not the forte of the financial industry, it is advisable to leave such complications to the domain specialists of the cloud.

Speed is also ensured with cloud technology. Speed has become something of great importance lately. As per stats, 70% of people don’t visit a website whose loading takes more than 4 seconds. Not only it causes high bounce rates, but it can also land your potential audience in the lap of your competitors, thereby serving as an advantage for them. The speed of websites and other digital mediums matter a lot. Around 69% of the clients online buy financial products like mutual funds, insurance, and other wealth products. More than 40% of clients, prefer to use online banking services, considering the swiftness of the transactions.

JPMorgan Chase, for instance, was quite excited about cloud adoption. The company was quite keen to work with FinTech startups, which could have enhanced customers’ experience. As these startups use public cloud since inception, they can definitely prove beneficial to bank’s digital channels.

Scalability will be a lot easier with cloud adoption as it allows the financial companies to easily respond to volatile market and customer demands. More than 60% of companies chose cloud platform to get an ease in scalability issues. AWS has done a huge promotion for its services in the finance industry regarding scalability and it has already captured around 60% of the market.

The bank’s own security infrastructure such as the biometric system, for confirming identity, etc, for authorization, can be moved to the cloud. The scalability issues in staff count somehow affect the effectiveness of such systems which can get resolved through the cloud. More than 72% of clients in banking would support the use of a biometric system for identification. The cloud technology can indeed boost the finance sector.

Wells Fargo has adopted cloud technology with the major goals to inculcate ease in file sharing, execute seamless virtual meetings, banking, and website hosting. They took this drastic step of data transformation to understand their customers better, provide enhanced services, and become an agile organization.

Efficiency in the workflow methodologies automatically creates a huge scope for achieving excellence. The banking sector is expected to invest around $16.7 billion in cloud computing technology by 2019. With cloud technology, information can be accessible anytime, anywhere. Also, breakdown, slowness, and downtime which were prevalent in the traditional server system, are no longer the case. Using cloud is like an added advantage to the finance companies over their rivals.

Cloud helps the companies in adopting “a customer-centric” model. It helps in storing and dealing with a huge bulk of data i.e., big data. More data implies more information about customers, which further helps in outreaching the customers. Also, timely updating and recovery of data in case of disaster can be possible with the cloud. ERP and CRM are the most prominent software of cloud computing in the Finance domain. The former manages all the company related activities, while latter manages all the data and business transactions associated with customers.

Reliability is a crucial factor while doing business or any transaction with other company. Some companies do not wish to transact with those, whose IT function is not sound and secure. The cloud, therefore, ensures integrity, agility, and reliability. The inclination is more towards AWS cloud platform and hybrid cloud. Digital wallets, e-Wallets, online transfer of funds, and online transactions via banks are exemplary applications of the cloud services in the finance sector.

Bank of America, for instance, chose to migrate to Microsoft cloud to transform their entire business. The goals were to achieve business efficiency, to initiate digitalization and ensure utmost customer satisfaction. In the entire process of transition, BOA also achieved economies of scale, a secured platform for their data, and minimized their risks threats, etc.

Another well-known example is Deutsche Bank, which has adopted a ‘Cloud-first strategy’ with a goal to migrate almost 80-90% of its applications to the cloud platform by the year 2020.

Entailing digitization in finance can perform miracles indeed. Benefits associated with cloud computing can be effectively leveraged to achieve digital transformation in financial services. Zymr is into a full stack of cloud services with a keen focus on FinTech. As the competition is increasing at an incredible pace, it is crucial to have a proactive approach towards technological absorption rather than a reactive approach to outperform the competitors. Zymr can assist you in providing a competitive advantage with effective cloud solutions. Contact the Zymr team today!