Cloud migration has massive potential for financial institutions, representing an opportunity to offer greater agility, mobility, and ease-of-use to meet the ever-increasing expectations of customers. However, many organisations have remained reluctant to commit to migrating their key data and operations, preferring to play the waiting game and see how cloud performs long-term in terms of security and infrastructural integrity.
Nevertheless, the cloud is not just about customer focus; internally, its many benefits can also significantly improve the efficiency of an organisation. It can actually play a far more wide-reaching role in enhancing horizontal and back-office processes that do not directly involve the securing of customer data.
Indeed, it’s thought that poor return on equity and heightened consolidation demands will see banks increasingly driven towards the processing of transactions in the cloud, and they will therefore start to look at its cost-effective advantages in a fresh light.
With cloud’s huge data-handling abilities, flexibility and agility making for a striking contrast with legacy systems, it’s easy to see why this shift is expected to gather pace in the near future.
Those agile benefits in particular mean that financial institutions can quickly add functionality for heightened customer engagement and fresh competitive advantage, or explore new business opportunities and geographies without the huge costs typically associated with establishing a physical presence.
The analytical possibilities are also vast, integrating customer data to produce almost real time insights, while managed back-up ensures that critical data is rapidly recovered in the event of disaster.
Furthermore, the cloud’s ability to streamline operations, open up collaborative opportunities, and provide scalable storage solutions is significant, allowing it to align business, operations and technology, and thus drive faster enterprise growth.
And as for those security concerns that many institutions still harbour? Well, the inherent protection that global cloud providers now provide can, in many cases, be more robust than those found in banks’ internal systems.
It’s now a case of when, rather than if, traditional IT infrastructure will become obsolete. With new data-sharing rules set to be introduced from the end of this year, opening up the market like never before, legacy systems will come under even greater threat as competition is heightened.
This data-sharing framework is expected to encourage innovation and competition in banking, in turn making it easier for customers to shop around for the right financial products, driving better value, and allowing companies to share information electronically with their accountants.
The Open Banking Working Group is calling for information on banks’ products and customers to be more easily accessed by digital services, encouraging a more level playing field.
It would further mean that financial technology companies could use the data to provide targeted services and find new customers more efficiently. In other words, all bets would be off in this new innovation-focused, cloud-driven arena.
In such a context, the necessity of cloud migration becomes difficult to ignore. Unlike its meteorological namesake, the cloud isn’t just a passing phenomenon; for financial institutions, it looks set to be here to stay.