Today, every business aspires to grow and reach new heights in terms of revenue and profitability, and this is the case with the banking industry. Digitalization has made inroads into every industrial sector, and banking is no exception.
One of the revolutionary shifts that we have seen in recent times in banking digitalization is embracing banking on cloud.
Though cloud technology has been a radical development in recent times, and many industries are using it extensively, the banking industry has been slow to embrace this technology.
There have been concerns regarding the security and privacy of customer data when using outside cloud providers. The unfavorable opinion of regulatory bodies in the finance sector has also impeded the adoption of this technology.
Slowly but surely, the banking industry is recognizing the overarching benefits of cloud-based banking. Banks have started using cloud banking solutions at various levels and are seeing remarkable results.
Before we see how banking cloud services are transforming the banking sector, let us first understand what is the use of cloud in the banking industry.
What is Cloud Banking?
Cloud banking, in simple terms, can be defined as the use of cloud technology for banking processes. By using this technology, banks can now access computing services like servers, software applications, storage networks, databases, analytics, and more from anywhere and anytime.
Customers and banks can easily store, manage, and access information with cloud banking solutions. It is now possible to integrate all the services that a bank offers in one place, and that is, on the cloud.
Now that we have a general idea of what banking on cloud is, let us have a look at how cloud in the banking industry, has brought about a transformation.
1. Reduced IT Costs
Technology and banking have been going hand-in-hand in the last decade or so. Banks are now coming up with IT-enabled services and products to serve their customers better.
Internet banking, mobile banking, payment wallets along with digital core banking services have become commonplace. These services are extensively used; especially by the Millennials of today.
Additionally, banks also have to focus on keeping consumer data safe and satisfy regulatory requirements.
All of this requires enormous capital investment. The cost to procure and manage the hardware and banking software is extremely high. Also, the requirement of skilled IT personnel to develop and maintain these systems can add to that expenditure.
Cloud for banking industry has made it possible for banks to access the computing capabilities of the cloud platform on a pay-per-use basis and reduce capital expenditure. These charges are designated as operational expenditure rather than capital expenditure, thereby increasing profitability.
2. Better Customer Service
Customers today have greater expectations from their banks than before. The digital era has transformed the way customers handle their banking activities. Customers can now do their transactions online from anywhere and anytime.
A cloud banking platform gives a bank the ability to adapt to this change in customer behavior and addresses the need for the latest technological capabilities. Today, it is possible to service a customer’s needs with agility. The immense computing capabilities and the big data facilities of cloud computing make it easier for banks to understand their customers better.
Banks can thus improve their efficiency and provide personalized services and products to their customers. It is easy to develop and swiftly launch financial products because of the unlimited technology capabilities of the cloud.
Cloud banking solutions have made banking processes more streamlined and easy to access, contributing to better customer satisfaction. A satisfied customer is a bank’s greatest asset, and now banks can see greater customer retention rates.
3. Boost in Efficiency
Cloud computing allows banks to develop and use the best and latest computing services. It is possible to scale the IT resources without major investment, thus reducing costs and increasing efficiency.
Banks using cloud can now centralize their operations. The customer no longer remains the customer of a branch but becomes the customer of a bank. It is possible to service a customer from any branch using the cloud. The use of smartphones and mobile devices allows customers to access their financial resources on the go.
Banks using cloud computing can provide banking services 24/7, with real-time updates and maintenance of accounts. Banks can also meet regulatory requirements for greater transparency and safety of customer data as cloud providers follow stringent data security protocols.
Customer insights with the help of data mining are helping banks discover fresh markets. Banks are also understanding the needs of customers and providing services at every touchpoint, leading to greater customer engagement. Customers can be turned into advocates with this approach.
Cloud has allowed better utilization of banking resources. It removes duplication of tasks and provides greater clarity to banking personnel, and increases productivity. All of this has significantly improved the overall efficiency of the banking sector.
In conclusion, cloud technology has revolutionized the banking sector. With the need for greater efficiency and a high level of customer engagement, banks are eyeing cloud technology as a solution.
Banking on cloud offers many undeniable advantages that the banking sector can no longer ignore. The regulatory bodies are also opening up to the idea of banks using external cloud providers for the storage of customer data.
In the coming days, banks are increasingly going to use cloud banking solutions because of the technological convenience they offer. Increased emphasis on the security of customer data by cloud providers is also creating confidence in the banking sector.
All in all, cloud technology for banking is here to stay and will bring about some far-reaching changes in the banking sector in the coming years.