Storing data within on-premise hardware is quickly becoming a thing of the past. Across all industries, businesses are turning to innovative cloud computing technologies that allow for reduced costs and increased scalability.
Old tech stacks are costly to maintain and no longer provide businesses with the flexibility they need to keep up with an ever-growing industry. By integrating cloud computing technology, banks are able to meet the needs of their customers while cutting back on unnecessary spending associated with legacy technology.
Why financial institutions are adopting cloud computing
Cloud computing is more than just data storage. It’s an innovative way for businesses to stay agile and satisfy customer needs in a cost-effective manner. In comparison to other industries, banks are making the switch to cloud computing technology at a much slower rate. In fact, the International Data Corporation (IDC) identified that only 25% of businesses in 2022 had an optimized cloud strategy.
Customers have a strong need for services right at their fingertips, and that’s where the cloud becomes a key player. Cloud technology gives FIs the opportunity to provide their clients with smooth customer experiences while remaining secure and becoming more agile across business functions.
Legacy technology that utilizes on-premises or third-party solutions fail to cater to the needs of the evolving digital landscape. Older technology doesn’t always achieve the promised result, making them an added expense that wastes your effort.
An optimized cloud strategy can allow banks to see new insights, use data processing tools, and apply machine learning technology for automated workflows. By effectively incorporating cloud-based solutions, FIs are able to gain a new understanding of customer interactions while preparing for the future of banking.
Benefits of cloud computing for financial institutions
From loss prevention to boosting internal functionality, cloud computing is changing the way banks provide services for their customers. Further, modern solutions for banking operations are cost-effective without compromising security.
Let’s explore the most notable advantages for FIs looking to move their technology to the cloud.
Efficient internal operations
When FIs adopt cloud software, they can provide their customers with on-demand services anytime and anywhere. Moving tech stacks to the cloud allows for banks to focus their time on customer satisfaction rather than maintenance of old operating systems. Internal efficiency and productivity are key features of a successful FI, and cloud computing carves a path for businesses to thrive.
Enhanced collaboration
The financial industry is a growing ecosystem, and banks need to be able to keep up with any incoming changes. To thrive in such a crowded field, collaboration is key.
Fortunately, a cloud-based payment technology stack can help FIs stay connected and in the game. By using this powerful tool, they can be sure to make their mark in the ever-evolving financial ecosystem.
Stay ahead of market demands
Old hardware is unable to keep up with the demands created by a digital landscape. With agile cloud-based technology, FIs can quickly shift needs to meet the requirements of customers and perform at rates that legacy tech isn’t capable of. A dynamic platform allows for banks to process transactions faster than before while easily storing large amounts of data where it can be accessed securely at any time.
Resiliency against damages
A key feature of cloud computing is disaster recovery. Documents, data, and account information are saved to a server where needed information is readily available. Human error and software outages can cause problems locating important data, but a cloud-based tech stack provides a strong shield to prevent these problems from occurring.
Legacy technology is likely to fail as they age and damages will only take more time to repair. Only an experienced team with the necessary skills can thoroughly repair such tech, which may be a considerable cost for banks looking to trim down their expenses.
The cost-benefit analysis of switching to cloud computing
Cloud computing for banks allows for institutions to focus their resources in areas that reap more benefits, like customer satisfaction and centering on improved skills among team members. Migrating to cloud software cuts out the need for expensive on-site infrastructure, slashes operating costs, and boosts adaptability as the needs of the business change.
Dynamic provisioning
Legacy hardware is expensive to implement and even more expensive to maintain. IT departments require certain skills to keep those old systems running, and training employees on these systems can take a significant amount of time.
Cloud computing offers pay-as-you-go pricing options so banks only pay for the amount of usage that they actually need. If the FI needs more space on the server, they simply need to opt for a larger subscription plan. With this in mind, FIs can predict the operating costs of cloud computing software each year.
This way, you aren't paying for resources to sit idle when you don't need them, and you won't face concerns about not having support when your demand spikes. You always have access to and pay for the exact right amount of capacity and power.
No need for specialized IT workers
A prohibiting factor in the adoption of advanced technology is the need for experienced IT professionals during a time of high demand for such hard-to-find skills. Finding IT professionals with the right skills for legacy technology is very challenging, meaning filling these roles can be a huge expense as employees request high salaries for a valuable position.
Instead, cloud-based software providers offer 24/7 maintenance for any issues that might come up with cloud integrations. This extinguishes the need for hands-on assistance when switching to advanced cloud computing systems.
Increased capabilities
As institutions grow, the tools they use must be able to grow with them. In the past, expanding a business required physical groundwork that was often limited by space or financial resources.
Instead, cloud computing allows for banks to seamlessly scale their efforts to meet the needs of their customers. If they choose to move into new markets, this modern technology provides an efficient solution that promotes adaptability across a larger server.
How cloud computing improves security and compliance standards
A large concern among FIs is how well cloud computing can provide security for valuable assets. Data security and regulatory compliance are easily maintained with cloud-based software systems for banks.
Strengthened security features
It comes as no surprise that as more business processes shift to cloud computing, there is a greater risk of cyber attacks on sensitive data.
The agility offered by cloud computing means there are more features to mitigate the risks of security breaches, such as single sign-on capabilities or encryption tools. API usage on a cloud-based server often requires authentication credentials that pre-approved digital identities can access.
Improved compliance standards
Regulatory requirements are often changing. With dynamic cloud-based tech stacks for banks, large FIs can easily change the way they manage personal identifying information to stay on track with compliance standards. Businesses that have not switched to cloud computing practices will likely struggle to keep up with competitors as regulations shift to meet the needs of digital banking.
The impact of automation in the cloud on financial institutions
In the past, depending on legacy technologies and out-of-date spreadsheets wasted time that could be better aligned with the success and growth of financial institutions. Now, automation is a widely used tool for its ability to improve efficiency and make day-to-day tasks easier than ever before.
Amplified efficiency
Automation allows for resources to be managed swiftly and diminish the occurrence of human errors. Smart technology can automatically process data and fulfill workflows without the interference of humans. This saves time so employees can focus on their tasks while the cloud completes internal processes.
Smart business decisions
With the introduction of automated processes, time spent completing tasks is greatly reduced. Instead of manually inputting data into spreadsheets, the data can immediately be analyzed. More time spent on analysis means FIs can make more informed decisions for their businesses and for their customers.
Finding an appropriate cloud provider for your financial institution's needs
An all-in-one solution for banking functions is the key to success in a highly dynamic industry. Cloud computing for banks brings unmatched resiliency and enhanced opportunities for growth that are required to be successful in today’s digital economy.
Episode Six is a global provider of enterprise-grade payment technology and ledger management infrastructure for banks that need to keep pace with disruptors and evolving consumer preferences. Tritium®, our PCI-compliant core platform, is 100% cloud-based and accelerates digital transformation by removing the limitations of legacy technology and enabling our customers to drive the future of payments.
We help with every step to support your needs as you modernize your payments technology stack. Get in contact with an E6 team member today to get started!
