All You Need To Know About Cloud Banking

Nov 19, 2021 11:09:58 AM

The banks of today are witnessing sweeping changes at an unprecedented pace. Changing consumer expectations, new technology innovations, and unconventional business models are driving these changes in the banking sector. Banking officers operating in the technological sphere are realizing the potential of cloud banking to help them cope with these modernizations.

The cloud enables banks to run a more cost-efficient business model while providing agility in deployments for the banking infrastructure. The public, private and hybrid cloud models provide several options for the banking sector to reinvent itself to serve the consumer of the future. In about another decade, banking is expected to be completely digitalized and all its services shifted to the cloud.

Cloud computing is increasingly being seen as the route to achieving faster, smarter, and easier operational efficiency. Banks and non-banking financial institutions are converting their offerings into products-as-a-service. So these organizations end up controlling costs, optimizing revenue generation, and increasing customer insights while delivering the most customer-friendly products. 

In this article, we take a look at how cloud computing solutions are classified on the basis of the banking company's expenses and critical source of value. We will go on to discuss in detail the various steps involved in planning and implementing cloud banking solutions.

Classification Of Cloud Banking Solutions

Banking organizations implement cloud banking solutions for different areas of the business based on their revenue and expenses. These expenses are broadly classified as 'above the line' and 'below the line'. The income and expenses incurred by the company from its day-to-day functioning are known as above-the-line, whereas other operating expenses, interest, and taxes are classified as below-the-line. The following are the types of solutions offered by cloud technology for each of these revenue and expense models:

A)Above The Line

i)Enterprise Synchronization

Above-the-line operations need to synchronize their enterprise services with the cloud. This involves better integration of business units through data sharing. Integrated decisions are driven more efficiently, while customer problems are resolved proactively. More connected and common data sets in these operations enable more sophisticated and deep insights and analytics. New shared platforms and tools provided by the cloud increase the speed of decision-making.

ii)Enhanced Business Innovation

Cloud solutions help these organizations innovate and drive strategy to enhance customer relations and their banking experiences. Organizations create and market offers, optimize their operations and manage talent through technological tools such as machine learning, Internet of Things (IoT) platforms, image recognition, and natural language processing. This helps them increase revenue, cut above-the-line costs while making operations more consistent and retaining personnel.

iii)Develop New Workflows

New cloud enablements attract new workers and provide access to software development ecosystems. Pioneering workflows in fields of DevOps, agile, user experience, etc. emerge within the organization. Process improvements such as automation and human augmentation can be delivered to improve productivity and increase correctness and transparency.

B)Below The Line

i)Enhance Operational Resiliency

Operations teams taking care of physical server outages and other disruptions get overall optimization of overall operation resiliency. The company's data becomes more decentralized with the ability to replicate data and app services across more than one region and data center.

ii)Making IT More Secure

Cloud banking comes with extremely careful consideration for security standards. Because of their impeccable track record in terms of security, cloud operators are gaining preference in the below-the-line part of banking operations.

iii)Computing Cost Scalability

Instead of heavy up-front capital spending, a more operational-based transaction is encouraged in cloud banking. Organizations can easily pay for tech upgrades in a periodical manner, as and when changes are deployed. Changes in financial priorities and market demand can be gauged to respond quickly. Dynamic cloud pricing allows capturing cost efficiencies in line with computing capacity. This allows cloud banking operators to facilitate granular spending control.

Planning And Implementing Cloud Banking Solutions

Banking executives are accustomed to on-premise data centers and might find migrating to enterprise-level cloud solutions to be challenging. With growing cloud expertise, banks have the option of handling this transformation in small increments. They can do so in the following steps:

1)Choosing Cloud Deployment Models: Banking companies have the choice of going completely cloud-dependent and have the flexibility to mix and match between on-premise and cloud solutions. In addition, they can choose a combination among the types of cloud deployment models; private, public, and hybrid models.

2)Developing The Business Case: The cloud allows banking operators to quickly build new capabilities and service catalogs to cater to business imperatives. Solutions in customer relationship management, finance and enterprise resource management are all becoming more cloud-based. A business case for the cloud should detail how the bank can cost-effectively implement cloud-delivered solutions. It should focus on how the bank can provide more consistent enterprise operating platforms for delivering its services.

3)Solution Design And Execution: Banking and financial institutions might find that executing cloud strategies and migrating entire workloads to the cloud might be a high-effort task. The main objective should be to build a reliable solution design before the execution of such strategies. This helps better leverage business-building technologies such as advanced data analytics and machine learning. 

4)Vendor Allocation: Financial and banking organizations should ideally stay away from vendor lock-ins for ensuring better platform flexibility. This way they can adapt better to marketplace changes without having to re-platform every time they move from one vendor to another. This will allow the organizations to move workloads from one cloud to another when they are met with business needs. They can apply best practices that were designed on a legacy enterprise ecosystem and to another platform provided by a new cloud vendor.

5)Ensuring Data Security: Cloud technologies can help enhance the ability of banking and financial institutions to detect and address new risks and vulnerabilities. The responsibility of security can be shared equally between the cloud provider and the company when the ecosystem is platformed on the cloud. Native tools that cloud providers offer can protect several layers of a banking enterprise right from the authentication layers to the lower-level infrastructure layers.

6)Regulatory Adherence: Ever-evolving regulatory reporting requirements have driven banks and financial services firms to reassess their compliance strategies. Cloud banking is the best bet for these firms in ensuring regulatory compliance, especially for cross-platform and multidisciplinary transactions. Intraday liquidity reconciliation and risk calculations can also be conducted seamlessly with the cloud. Native cloud tools also help mine trade surveillance data to detect and weed out laundering and fraud issues.

ALSO READ: 5 Ways AI can Transform Fintech Industry

Seamlessly Migrate Your Banking Services To The Cloud

The most vital market mover for banking and financial services is technology spend and growth projection levels. These institutions are leveraging private, public, and hybrid cloud solutions to design a plethora of alternative financial products and services. To know more about how your bank or financial institution can use cloud technologies for enterprise-level success, book a free consultation with us today.

Allen Victor

Written by Allen Victor

Writes content around viral technologies and strives to make them accessible for the layman. Follow his simplistic thought pieces that focus on software solutions for industry-specific pressure points.