IMPACT OF CLOUD COMPUTING ON THE BANKING SECTOR

Abstract

Ever since the launch of cloud-computing solutions, several sectors, including banks and Fintech, are slowly drifting to it. With abundant benefits, the cloud is turning out to be the ultimate storage option for the data. Even for personal storage, platforms, such as Google Drive or Dropbox are running at the fore. Migrating from traditional data centres to the cloud might sound deterring but the endless benefits make it an option to think about.

Introduction

The Big Data Revolution has caused industries around the world to improve their capability to access and mine data from all sorts of sources and to accomplish the same existing information-technology infrastructures are bringing in innovative digital solutions. And cloud computing has become the sector’s most transformative digital solutions.

The cloud as an advanced option to boost capacity to handle data is now providing an unmatched level of agility, security and scalability to banks. For data analytics, batch processing and data storage, banks are accessing the cloud which makes its resources more flexible and efficient. This advanced technique is also enabling financial institutions to achieve considerable gains in efficiency and reductions in costs.

Cloud computing technologies

Cloud computing is defined as the delivery of computing services which includes gamut of networking, software, analytics, servers, storage, databases, and intelligence—over the Internet, which offers faster innovation, flexible resources, and economies of scale. The three major services under it are: –

PaaS (Platform as a service)
SaaS (Software as a service)
IaaS (Infrastructure as a service)

The evolution of cloud computing has allowed several banks to create a customer-centric platform with greater security and higher efficiency.

Banking and Fintech

Applications of Cloud Technology

Digitalization of the services has allowed the banks and financial institutions to build up an infrastructure to provide the best and appropriate service to the customers.
Attacks from hackers can be eliminated by authenticating the data centers and every single data stored is safe with hybrid cloud computing.
Hybrid cloud computing servers offers end to end protection to the information stored in the cloud which allows confidentiality, integrity, and availability of the information over the internet.
It ensures secure transactions and smooth customer experience in banks.
Updating the payments is quite easy through cloud computing.
Cloud based Enterprise Resource Planning (ERP) and Customer Relationship (CRM) software allows the banks and financial institutions to secure the data and also enable remote accessing of the information by the users.

Importance of cloud banking

Economical – Unnecessary capital expenditures as well as large upfront costs of the infrastructure can be avoided.
Improved Manageability – Can make rapid changes to their resources for all the unpredictable business requests and also allows applications to upload online in no time.
Resiliency – Extremely useful for banks and financial industries due to the ability to create wide enough enterprise availability that is greatly helpful for the continuity of a banking business
Scalability – Large acquisitions and mergers in the banks and the financial industries are common which is why easy integrations and good scalability become important. Cloud computing helps in scaling the IT operations according to the needs of the company.
Accessibility – Accessing data and applications from any other computer is achievable at any time and everywhere.
Security – Provides high level of data protection, especially for sensitive data e.g. customer information. The data kept in centralized data storage can only be accessed through strict authentication methods.

The Ultimate race to the Cloud

Three trends in banking that will make a race to the cloud inevitable for banks:

The incorporation of AI –AI-based technologies are having a major influence on banks’ capabilities in areas like fraud, risk management, marketing and service delivery. But unless and until sufficient quantity and quality of data is poured in, AI tools and technologies are pretty much waste. Banks by default have to depend on data sources from third parties, partners, and vendors to feed their AI appetites. Bringing all that data in-house will not be a viable option. Therefore, cloud computing will become more unavoidable and necessary.
The platformification of banking – According to a survey, more than half of mid-sized financial institutions accept the fact that fintech partnerships are important to their business. The path to ecosystem development in banking will be hastened by the materialization of firms engaging platform business strategies. The cloud will be a requirement for banks and financial institutions to involve and benefit from these platforms.
IT costs – Amazon’s cloud computing services prices declined at roughly 5% between 2009 and 2013. After Microsoft came into cloud computing, Amazon’s price decline for computing and storage services doubled. The need to bridle in IT expenditures will put more stress on banks to adopt cloud computing.

Conclusion

Cloud computing lets people use the internet to tap into hardware, software and a range of related services on demand from remote computers. Cloud computing gives the advantage to banks that they do not have to invest heavily in dedicated hardware, software and related manpower. The cloud allows banks to respond quickly to changing market, customer and technological needs. Cloud allows banks to scale up and scale down technology according to requirement. And this ability to respond quickly will be an important competitive advantage. The standardization intrinsic cloud computing will make it easier to integrate new technologies and applications in the future and thus the cloud gives banks a golden opportunity to drive out complexity.