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According to an O'Reilly survey, cloud adoption is steadily increasing across industries, with more than 90% of organisations utilising cloud computing technology. The last year's survey found that 88 percent of organisations worldwide were using the cloud, indicating an increase in adoption. While many industries have begun to rely on cloud services for their various data and operational needs, one industry is taking its time to fully embrace the concept – banking.

With banks and financial institutions scrutinising every aspect of cloud computing from a security and privacy standpoint, cloud computing in banking is moving at an overly cautious pace.

However, if COVID-19 has taught us anything, it is that consumers require services at their fingertips without having to visit a physical store – whether it is shopping for groceries online or managing their end-to-end banking needs. In light of this, banks, regardless of how slowly they adopt IT cloud infrastructure and cloud computing virtualization, understand that their 2030 version will look very different from what it does now. And that they must implement strategies now to prepare for their future selves.

We know that cloud services for banks will play an important role in this transition. This is how.

 

Cloud computing advantages for banks

 

Banks are moving cautiously but steadily toward IT cloud computing.

However, if COVID-19 has taught us anything, it is that consumers require services at their fingertips without having to visit a physical store – whether it is shopping for groceries online or managing their end-to-end banking needs. In light of this, banks, regardless of how slowly they adopt IT cloud infrastructure and cloud computing virtualization, understand that their 2030 version will look very different from what it does now. And that they must implement strategies now to prepare for their future selves.

We know that cloud services for banks will play an important role in this transition. This is how.

Improved data security

Cloud computing for banks, with frequently updated software, proves to be a security-first approach for a bank's operations. To ensure that the intent is met, it is critical to select a cloud computing service that meets the following criteria:

  • Certifications and compliance
  • Reliability and performance
  • Inclusion of cutting-edge technology
  • Assistance with migration
  • 24 hour customer service

 

Infrastructure costs have been reduced

There are no hard statistics, but banks' reliance on on-premise systems is a global phenomenon. While this reliance allows them to protect users' data, one major issue is the complex-level adaptability to organizational-level changes. Any change in the IT infrastructure, workload management, and so on takes time – time that results in massive downtime on the network.

When banks use cloud services, IT infrastructure changes become more manageable, and they can immediately scale their offerings.

 

Improved operational efficiency

The cloud environment greatly improves the efficiency of a banking institution. Banks can gain the following benefits by hosting their services in the cloud:

  • Quality assurance
  • Recovery from a disaster
  • Flexibility
  • Loss avoidance
  • Risk administration

By hosting banking portals in the cloud, institutions can focus on lowering fixed and variable costs while ensuring 99 percent uptime.

 

Software application access

Cloud computing in banking provides institutions with access to CRM and ERP software applications designed to improve client relations and employee experience. Because these apps are a component of the SaaS model, Helps to ensure business continuity

Banking firms benefit from increased fault tolerance, data protection, and disaster recovery through cloud computing. Furthermore, cloud computing offers massive levels of redundancy and backup at a low cost. The technology provides banking institutions with every component they need to be future-proof.

Because the cloud is on-demand, infrastructure investment is reduced, which reduces setup time. All of this reduces the development cycle for new products, resulting in increased efficiency and faster customer response.

 

Payment based on usage

For a traditional institution like banking, fear of technology is deeply ingrained. When it comes to adopting new technology, the cloud allows them to do so on a pay-as-you-go basis.

IT in the Green

Banking data transfer Cloud services reduce energy consumption and carbon footprint. It also leads to less idle time, which makes computing power utilisation extremely efficient.

Now that we've examined the obvious advantages of cloud computing for financial services, it's time to select the best cloud services for banks.

 

Selecting the most appropriate cloud computing model for financial services

The cloud allows banks to transition from a capital-intensive model to a flexible business approach that reduces operational costs while maintaining data security as a top priority. However, choosing the right cloud computing model is the key to a successful cloud development and integration process.

 

There are three main types of cloud for banking ecosystems.

Models of cloud services:

SaaS – This cloud type consists of business software and related data that users can access via web browsers. Customer relationship management, invoicing, accounting, service desk management, and content management are some of the business use cases that can be hosted on SaaS.

PaaS – This cloud type focuses on providing a complete platform for developing interfaces, apps, and databases, as well as testing. It allows banks to streamline development and reduce IT costs as well as the need for hardware and software.

IaaS – Rather than purchasing software, data centres, and servers, this cloud model allows banks to use these resources on an as-needed basis.

 

Models of cloud deployment:

Private cloud – This type of cloud infrastructure is used for a specific financial institution It is typically managed by the bank or a third party working from the premises. Banks are typically advised to host their services on a private cloud because it provides them with greater control and flexibility. A private cloud also reduces the risk of a security breach because it is deployed within the organization's firewall.

Public cloud – This infrastructure is available for use by the entire banking industry and is owned by the organisation that sells cloud services. If banks are looking for economies of scale, they can use public cloud.

Hybrid cloud – This infrastructure is made up of both private and public clouds that each serve a specific business use case.

 

Cloud computing models:

Virtual captives – In this model, there is a dedicated pool of centres and resources available on demand to assist banks with their cloud operations.

Staff augmentation – In this model, banks gain cloud expertise by hiring the right people. The team is housed internally, which allows for greater flexibility in meeting real-time demands.

Outsourcing vendors – This method employs offshore facilities and personnel to manage cloud operations. People and facilities in this model typically serve multiple banks.

These were the various cloud models available to a financial institution. We understand that for first-time cloud strategy users, deciding between them can be difficult. Allow us to make it simple for you. Here are some examples:

 

Syoft believes in cloud models

For mobile payment processing:

While large banks process their own debit and credit cards, we rely on Visa, MasterCard, and Stripe cloud solutions for our emerging BFSI clients. They offer financial institutions specialised expertise in security and fraud detection in addition to easy integration.

For customer relation management:

Marketing is a problem for the majority of banking institutions when it comes to customer relationship management. Few banks understand what their customers want or whether their services are meeting their needs. Salesforce, Mailchimp, Zendesk, and other cloud providers are among those we trust for this purpose. They are rapidly emerging as cloud providers for CRM and sales.

Core banking:

While large financial institutions have their own core banking system, it is not always the case.

It is best for them to select a turnkey cloud banking service provider that provides features such as online banking, teller lines, and so on. Jack Henry & Associates, Trident, FSI, and Fiserv are the cloud service providers we trust for this use case.

For human resource management:

 a number of banks are considering cloud-based HRMs that provide software for payroll, talent management, and other functions. SAP/SuccessFactors, Workforce Now, Darwinbox, PeopleStrong, and Oracle HCM are all popular choices for this use case.

For IaaS:

Due to rising data centre costs, banks are shifting their app development and testing activities to the Infrastructure-as-a-Service model. IaaS providers are well-known for providing timely software upgrades and cost-effective hardware, making it simple for banks to upgrade their digital infrastructure.

Regardless of which cloud model you choose for your bank, there are some inherent challenges to cloud adoption in banking. Understanding what they are will not only help you choose the best model, but will also allow you to more confidently adopt cloud services.

 

Banks' Cloud Adoption Challenges

A number of impediments stand in the way of banks' cloud adoption initiatives. Let's take a look at some of the most pressing issues.

 

Latency

Physical distance between a data centre and a cloud service provider can have an impact on performance by introducing latency issues. This latency can cause delays in core banking operations such as card authorization. Aside from the geographical differences, moving systems from a data centre to a cloud environment can result in additional latency.

 

Residency of data

When data is hosted in the cloud, several "data ownership" issues arise. Regulatory compliances exacerbate the problem, as several financial institutions are subject to government-mandated limits on where they can store data.

 

Resilience

Although outages are far less common in cloud environments than in traditional IT environments, they do occur. Unlike traditional IT outages, the impact of cloud outages is much wider now, as banks face the possibility of high-level data security breaches and downtime that is beyond their ability to manage in real-time.

 

With Syoft, embrace cloud technology.

Syoft has been assisting the BFSI industry in lowering risks and increasing benefits by integrating the best cloud transformation strategies. We assist banks in approaching cloud migration module by module, ensuring reduced transition risks while allowing them to experience the many benefits of cloud computing in a cost-effective manner.

Our cloud-first strategy enables transformation at scale and in real time.

We can assist you in embracing the agile digital environment by moving you to the cloud. Contact our cloud experts right away. Regardless of which cloud model you choose for your bank, there are some inherent challenges to cloud adoption in banking. Understanding what they are will not only help you choose the best model, but will also allow you to more confidently adopt cloud services.

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