Some of the largest global financial institutions have moved to cloud, including the Canadian giant TD Bank, Bank of America, and Metlife.
According to PWC research, "mainstream Financial Institutions are rapidly embracing the disruptive nature of FinTech and forging partnerships in efforts to sharpen operational efficiency and respond to customer demands for more innovative services." Funding is moving from a venture capitalist dominated field towards more mainstream investments. PWC's report states that "According to research based on data from PWC's DeNovo platform, funding of FinTech startups has increased at a compound annual growth rate (CAGR) of 41% over the last four years, with over US$40 billion in cumulative investment. Cutting-edge FinTech companies and financial innovation are changing the competitive landscape, and are redrawing the lines of the Financial Services industry."
Major global banks are now jumping in on the cloud bandwagon to offer innovative and exciting experiences to their customers. "We are shaping the future of banking in the digital age by creating personalized, connected and legendary experiences across all of our channels," says Bharat Masrani, Group President and Chief Executive Officer, TD. He continues, "Our strategic relationship with Microsoft will help accelerate and fuel new and innovative banking experiences for our customers, clients and colleagues."
Bank executives realize the power and potential of cloud computing and how it can impact their business in the digital age. Investment in cloud computing continues to grow now on a global scale. American Banker reports that "seventy-one percent of bank executives surveyed in a recently released report says they plan to invest more in cloud computing, nearly four times the figure a year earlier, according to PricewaterhouseCoopers."
How Does Cloud Computing Benefit the Financial Industry?
The financial industry can benefit from cloud computing. The ever-growing need for storage space, security, reliability, convenience, flexibility and accessibility are all reasons for financial services companies to take advantage of cloud computing. Cloud computing ensures that financial services will remain relevant in the digital future and provide their customers with the most innovative services possible. We have discussed in detail about the benefits of cloud computing to the financial industry below.
Security
Leading cloud providers such as Amazon, Microsoft, and Google have been monitoring regulatory developments to help their financial services clients stay ahead in all aspects of security and compliance.
The three areas regulators seem to focus on including Data Security, Cyber Security, and Risk Management.
Data Security: Regulators expect financial institutions to implement controls and safety measures to protect the security and confidentiality of data stored in the cloud.
Cyber Security: Financial regulators expect financial institutions to maintain a strong cybersecurity posture. In the cloud, security is a shared responsibility between the cloud provider and the customer.
Cloud providers offer multilayered security protocols, penetrations scans, and conduct security audits to assess vulnerabilities.
Risk Management: Compliance regulations require financial services to have a robust risk management process. To achieve that, cloud customers need to have an ongoing monitoring plan to ensure that they can have a timely response to any eventual risks in the cloud environment. All three major cloud service providers offer a set of governance and traceability tools.
Cost-Effectiveness
Working on the cloud comes with huge cost-cutting benefits for the financial industry. Continuous investments on IT infrastructure, installations, updating, and maintenance are major expenses Banks and Insurance companies will not have to deal with when they move to a cloud service. Add to that cost of personnel, training, and administrative cost that is required to operate and maintain on-premise facilities.
Storage and Big Data
Storage is one of the most substantial benefits of moving to the cloud. Due to compliance regulations, operational requirements, and internal banking rules, the Financial Industry generate large amounts of data. Due to millions of tractions in debit cards, credit cards, online payments, money transfers, and other daily transactions performed by retail clients, banks require massive storage space. The same applies to other non-retail banking, where brokerages and investment firms are required to keep and maintain records for a specified period. Data is not only necessary to be able to perform these transactions, but also for record-keeping as required by regulators.
Cloud services provide ample data storage capacity, and most clients pay for whatever storage they use.
Scalability
Working on the cloud allows financial services to expand the usage of storage space on the cloud as they grow services, offerings, and or client base online. As their ecosystem expands, so will the need for more storage for infrastructure for the new architecture. Developing storage space on the cloud will be a lot easier and more cost-effective.
Building an Innovation Ecosystem
Moving into cloud services help banks and insurance companies build an ecosystem that fosters collaboration with technology startups in areas including blockchain, AI, AR, voice and image recognition. These are the technologies that banks, investments firms, insurance companies, and financial services providers need to embrace if they are to be relevant and able to compete in the marketplace.
Compliance
Major cloud vendors take extreme measures to make sure that in joining with and offering services to finance industries, either party violates the no Compliances rule. Compliance entities, governmental, and industry associations have formed committees to work with some of the major cloud vendors for monitoring purposes.
Access to superior technology
Powerful, state-of-the-art applications and computing infrastructure that small businesses could not afford otherwise are available via the cloud (e.g., accounting and customer relationship management packages). This access helps you to respond more quickly to changes in the marketplace, enter new markets, and transform ideas into new products and services at a much faster pace.
Mobility
Cloud computing enables employees to work on the go. At any time, they access servers using smartphones and tablets for real-time monitoring and analysis, as well as access company emails, proprietary business applications, and CRM tools when they are out of the office or outside of business hours.
Cloud computing has been attracting many players in the financial services industry. The innovation, simplicity, ease of use, and convenience brought forward by cloud computing have encouraged more financial service providers to migrate to the cloud. This includes some of the world's top banking corporations, as mentioned above. It has been realized that to move forward and not get behind in the digital future, one needs to recognize the importance of cloud computing. Cloud services providers are always improving their offerings to keep attracting customers in the financial services industry. It is essential to make sure everything is streamlined and transparent for both the cloud services providers and cloud customers. The enormous need for increasing data also makes the cloud a viable option as opposed to physical drives. Cloud storage can be expanded on demand without upgrading or replacing your physical drives. Everything is stored securely in the cloud and accessible from anywhere in the world. Cloud services such as Microsoft Azure and Amazon Web Services are always making sure data stored on the cloud is always secure and protected from any security breaches. Thanks to all the innovations and consistent improvements in cloud computing and the desire to create robust ecosystems, financial services are looking at the cloud as their next and perhaps permanent home in the digital frontier.
Infowise
Here at Infowise Solutions, our client list includes some of the world’s best-known financial institutions. Our products that are used by the financial sector are a cross-section of what we offer; workflow automation, process automation, advanced dynamic forms and document filing. We have helped thousands of businesses across the globe in leveraging the power of their Office 365 platform to its fullest potential to quickly build a wide variety of modern business solutions, tailor-made to meet their business requirements. Financial services companies have been taking advantage of our offerings for years, and we tailor them to their requirements. Through our implementation partners, we have been part of the digitization process for many businesses in the financial sector. We, through our partners, provide financial services all the assistance to go digital and we advise them on which cloud platform works better for them, Microsoft Azure or Amazon AWS, depending on their requirements. Please visit our partner's page and research which partner is best suited to deliver the service you require.
References
https://www.pwc.com/gx/en/industries/financial-services/assets/pwc-global-fintech-report-2017.pdf
https://azure.microsoft.com/en-ca/overview/
https://www.americanbanker.com/news/why-banks-are-finally-embracing-cloud-computing
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