Pacing ahead to conquer the next-gen technology & drive business growth
Table of Contents
Banks used to be simple institutions whose sole function was to take public deposits and lend money. Various monetary and fiscal policies enhanced its functioning over time, and the banking system is still undergoing significant changes today. This development is primarily owing to technological advancements that are fast transforming the entire world.
Owing to the new-age technologies, the traditional banking processes have become outdated to a large extent. For example, in India, the approval and deployment of CORE (Computerized Online Real-Time Exchange) Banking allowed people to make payments online without having to visit bank branches. This advancement ushered in a sea change in the banking industry, allowing speedier processing and better customer interactions.
The next revolutionary phase in the Indian banking sector is brought by the emergence of artificial intelligence and machine learning. As India's corporate banking sector is still in its infancy compared to other countries, it is crucial to modernize banking infrastructure. Indian banks can use cloud-based banking to improve their ability to supply efficient services and establish cost-effective operations. In fact, according to a survey by IDC, approximately 80% of Indian corporate banks are likely to use Cloud technology by 2024.
What is Cloud Computing?
Cloud computing is a technological advancement that allows for the on-demand delivery of computer services such as software, data storage, and processing power through the internet. This method aids in the modernization of old financial systems, making them far more effective and efficient. There are a variety of cloud computing options. Some examples include vendor-provided public cloud services, financial institution-built private cloud systems, and hybrid cloud solutions that integrate a private cloud with various public cloud services. Openstack is a popular and free open standard cloud computing platform that is often used as an infrastructure to support both private and public cloud services.
Why should banks implement cloud-based technology?
Over the years, the cloud environment has developed tremendously, and banking laws and regulations are evolving to accommodate the same. As a result, many institutions, including YES Bank, have begun using cloud-based computing. The following are some advantages that cloud-based technology provides banks:
Cloud solutions offer significant cost savings. By implementing cloud technology, banks would be able to reduce their expenditure on acquiring traditional IT infrastructure. Additionally, it would enable banks to handle and process massive amounts of data in less time. As a result, banks can operate effectively even during busy hours. In a nutshell, cloud-based technology saves banks money by increasing efficiency and lowering capital expenditure.
Banks are bombarded with massive amounts of customer data. Legacy infrastructure lacks the advanced analytics required to process them. Cloud-based computing, on the other hand, allows for real-time analysis of client data, resulting in personalization and high engagement across all channels. Instant access to consumer data can assist banks in better understanding customer behavior and thus improving their services. Customer loyalty and engagement will increase as a result of better services.
Many banks and financial institutions struggle to automate and streamline their operations due to outdated systems and processes. Customer service is frequently affected as a result of this. Cloud computing connects all disparate data and operational systems. This facilitates quick and effective data analysis, as well as improved decision-making and efficiency.
Banks and other financial firms benefit greatly from cloud-based technology. It helps them in reacting quickly to changing market situations, as well as gathering and evaluating data. This helps in delivering a better customer experience and, at the same time, provides many operational productivity benefits. As a result, cloud technology enables banks to take advantage of various opportunities that may arise.
As the traditional system has become outdated, they have become vulnerable to potential data and security threats. In this respect, cloud solutions provide a secure environment as they can detect potential intrusions quickly and have built-in protection to secure banking data. To facilitate disaster recovery, they also provide a high level of redundancy and backup services.
Through a variety of mobile and application-based capabilities, cloud technology will also assist banks in expanding their customer base. They can even expand their offerings and conduct new experiments to evaluate what customers appreciate and how they can improve their activities and services.
One of the largest banks in Spain, Bankinter, has been recently reported to be using the cloud to run credit risk simulations in 20 minutes, down from 23 hours before.
For the Commonwealth Bank of Australia, cloud reduced the time and cost of standing up a new server from eight weeks and several thousand dollars to eight minutes and 25 cents, making the bank much more responsive to changing customer demands.
How to develop effective Cloud Stategy?
Here are four steps for banking institutions to follow to develop an effective cloud strategy -
Step 1 : Articulate a clear purpose and rank your goals:
The first step in designing and implementing a cloud strategy is to define the primary reason the bank or credit union is looking to leverage cloud capability. Whether it be leapfrogging legacy technology, accelerating innovation, driving efficiency, or scaling for greater capacity, it’s crucial to identify long-term goals.
Step 2 : Choose the right deployment model:
Given the scale and sensitive nature of data that banks possess, it is crucial to understand cloud deployment and determine where data and systems will live.
Step 3 : Determine scope and budget:
Cloud-based services are implemented and priced predominantly based on utilization. To determine the right fit, banks should consider metrics such as transaction volume and processing capacity in determining which model is appropriate. Other factors to consider include future scalability projections and geographic footprint, particularly where there is a need to do business or operate data centers in different countries.
Step 4 : Choose partners wisely:
With regulations evolving continuously, banks should consider partnering with organizations that understand and have experience helping clients navigate the complexities. Cloud technology meets the highest security standards and can help organizations meet industry-specific regulatory requirements. Financial institutions no longer have to rely on physical servers with limited storage.
Every bank’s needs are different, and cloud technology helps level the playing field between small and large banks because it can be configured and optimized for organizations of all sizes. With the cloud, any financial institution can access capabilities that may be too costly in a traditional licensing arrangement.
Although banks were hesitant to adopt and use cloud technology in the past, successful implementation by several leading banks have demonstrated that it can provide various benefits. Apart from making the banks more agile and aggressive, it results in more efficient services and cost savings. Hence, it is not surprising to see how banks worldwide are increasingly switching to cloud technology to provide improved services to customers at a lesser cost. Therefore, to compete with more innovative and responsive competitors, Indian banks must improve their infrastructure to facilitate cloud-based computing before it's too late and they need a perfect partner to help them support this initiative which NSEIT can surely be. Check out our cloud-based solution to know more or write us at firstname.lastname@example.org.
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