Financial, banking, and insurance institutions are increasingly implementing cloud technologies to reduce costs, scale, and innovate their businesses. Research conducted by Capgemini in 2023 showed that 89% of financial services executives recognized cloud computing as a cornerstone of banking business transformation. As a result, the cloud banking market is expected to reach over $230B in 2032. How are cloud services used in the financial industry, and what advantages make companies value them? Let's find the answers in this article.
Explore the benefits of cloud computing in banking
Cloud adoption in financial services offers numerous opportunities for growth in the competitive landscape and multiple benefits:
Improved cost-effectiveness
The adoption of cloud computing in banking and financial services helps companies reduce costs for owning and maintaining on-premises infrastructure and data centers. Cloud providers offer a pay-as-you-go model, which allows businesses to pay only for active services without upfront payments. It also allows you to scale your workloads up and down without paying for unused ones. During peak times, banks and financial organizations can easily and quickly allocate additional resources to handle the increased workload or reduce capacity in periods of lower activity. Additionally, cloud adoption in insurance, financial services, and banking helps reduce IT labor costs, eliminating the need to manage, maintain, and support on-premises infrastructure.
Increased security
Cloud providers adhere to strict data privacy and security requirements, offering robust security measures like data encryption, access controls, threat detection, network security, etc. Cloud adoption in financial services helps reduce the risk of cyber-attacks or data leakage, ensuring data security. Additionally, businesses can utilize a hybrid cloud approach, migrating operations to the cloud while leaving critical data on-premises to leverage the efficiency of cloud services along with strengthening the security of data storage.
Enhanced business continuity
Cloud computing in banking and financial services enhances business continuity by enabling advanced disaster recovery capabilities. These include distributing data across geographically disparate data centers and built-in system redundancy. Thus, cloud providers ensure continuous service delivery and minimized downtime.
More personalized user experience
Cloud computing in banking and insurance domains offers accessibility through different web and mobile products, ensuring comfortable transaction management and monitoring of balance updates. Cloud solutions enable quick real-time processing, allowing financial organizations to handle large volumes and quickly respond to customer requests. Providing advanced analytics from customer data helps anticipate user needs and adjust to them. This increases customer satisfaction, enhances trust and loyalty, and encourages building long-term relationships with financial companies.
Accelerated innovation
Cloud computing in financial services opens the way for innovation. Financial and banking firms can easily experiment, test, and deploy new products and features. This allows them to launch new offerings faster and respond more swiftly to changing customer demands. Furthermore, cloud providers can offer various innovative tools, allowing advanced technologies like AI or RPA to be implemented faster than on on-premises infrastructure. Combining cloud-based services and AI solutions allows consumers to receive self-service features at any moment and resolve their issues swiftly.
Read more: Hybrid cloud: How to make it work for banks
How does the financial and banking services use cloud computing?
Cloud computing in banking, insurance, and financial institutions simplifies access to storage, applications, and shared resources, allowing companies to analyze data on remote servers with improved processing speeds and heightened security. Financial institutions can reach their business goals by using the cloud to acquire:
Digital banking platforms
Cloud computing in BFSI facilitates the delivery of digital banking services, including mobile applications and online banking. They provide customers with seamless access to their accounts, personalized financial advice, real-time transaction updates, and innovative features such as online payments and virtual wallets.
Read more: Cloud-based digital banking: pushing a new business frontier
Loan origination and processing
Cloud services streamline loan applications by automating workflows and improving departmental collaboration, leading to faster decision-making. Cloud platforms integrate with third-party services such as credit scores and income checks for rapid borrower verification. This allows lenders to handle higher volumes with greater accuracy and speed, boosting overall operational efficiency and satisfaction.
Enterprise resource planning (ERP)
Adopting cloud ERP enables banks to fully meet customer needs and expectations through improved connectivity, data-driven insights, operational efficiency, and risk management. Cloud-based ERP solutions enhance efficiency and coordination by integrating various departments such as finance, procurement, and human resources, streamlining internal processes, and providing multiple benefits from basic after-sales support to complex outcome-as-a-service models and data monetization.
Data analysis
Cloud computing in banking sector can facilitate complex data analysis to provide insights into financial trends, user behavior patterns, interactions with banking products, and more. Financial, banking, and insurance companies can utilize these insights to develop offerings that meet customer needs and expectations and expand their customer base.
Fraud detection
Cloud adoption in banking is vital in handling vast amounts of data from various resources to analyze transactions and identify suspicious activities. It helps banks detect fraud before any harm is done.
Customer Relationship Management (CRM)
Financial and insurance institutions can utilize cloud-based CRM systems to store and manage customer data and interactions in a centralized location. Based on this data, companies gain important insights to provide their customers with personalized services and solutions.
Operational synchronization
Efficient data exchange and collaboration tools provided by cloud computing in financial services enable quicker and more effective integration of various business departments, ensuring seamless operational synchronization.
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Cloud computing in banking industry: success stories
Let's review real-world cases of cloud adoption in financial services to see how companies from banking and finance benefited from cloud computing.
Boosting scalability through cloud migration
Discovery Limited, a South African financial group, has experienced business growth that required scalability and the launch of additional operations. Moreover, they aimed to grow their customer base and ensure effective data management.
N-iX assisted Discovery Limited in migrating its infrastructure and database to the AWS cloud. Our team also created a new product to provide bonuses to user accounts, automatically checking for discounts and special offerings for clients.
As a result, our client reduced costs, enhanced operational efficiency, and enabled autoscaling through a successful cloud strategy. Cloud computing also helped mitigate risks and estimate costs. A new product allowed the financial company to expand its customer base, nurturing active clients and attracting new ones.
Read the full case study: Expanding financial services and gaining more scalability with AWS Cloud
Automating tax calculation with the cloud-based solution
Our client is a global provider of tax calculation services for thousands of consumers. The company experienced rapid growth, so its manual calculation process could no longer handle such a volume of work, requiring a lot of time and effort.
N-iX helped the company develop a cloud-based Property Tax module and integrate it into its tax system. Using Azure Storage, we automated the calculation process, allowing the client to execute it in the background. This module was also cloud-agnostic, making it available in any cloud environment.
Thus, our client improved the efficiency of data management with automated calculation and report generation. A new cloud solution has increased the speed of tax operations, reducing costs, manual effort, and time-to-market.
Read the full case study: Increasing efficiency in finance through automation and cloud development
Robust data protection with cloud computing in banking group
One of our clients is a global bank providing financial services to over two million customers. The bank aimed to move its workloads to the cloud to enhance the protection of sensitive data. In addition, it needed to develop a disaster recovery strategy to minimize the risks of data loss and security breaches.
As an AWS Advanced Tier Services partner, N-iX conducted an AWS Well-Architected Review (WAR) to prepare and plan cloud migration while avoiding potential issues and risks. This plan helped execute a smooth transition in compliance with all strict safety rules. Besides, our cloud team implemented a disaster recovery plan and enabled data recovery using AWS S3.
Our client received a detailed transition plan that addressed issues in the early stages of migration. This allowed the company to successfully adopt cloud technology, protect sensitive data, and ensure business continuity in the event of a disaster.
Read the full case study: Robust data protection and disaster recovery in banking with migration to AWS
Embrace cloud computing with N-iX
Cloud technology provides numerous advantages for financial institutions but also entails several challenges. To effectively implement cloud computing in banking, businesses should partner with an experienced cloud services consultant to overcome them and fully realize the potential of cloud computing. For example, N-iX has over 21 years of experience in delivering cloud services for businesses from different domains, including banking, finance, and insurance. With a team of 180+ certified cloud engineers, N-iX also partners with three leading cloud providers and has the status of the AWS Advanced Tier Services Partner, a Google Cloud Platform Partner, and a Microsoft Solutions Partner. We offer a flexible implementation model that enables us to support you in the way that best suits your business.
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