Cloud Adoption in Financial Messaging Services
Why adopt the cloud?
The fact that the financial services facing serious problems with the rise of digitalization and the new and different needs coming with it naturally drive them to find a solution to help them adapt to this new environment which is the cloud computing. Before digging into the details of why and how cloud is beneficial or risky for the sector, let’s have a look at the pain points that the financial institutions were suffering from:
- High costs
- Security problems (cyber security)
- Inadequate IT capabilities (slow, inflexible and inefficient)
- Competition in the market
- Change in customer behavior and expectations
- New and more rigid regulations on the protection of personal information
So, what the financial services need was a long-term solution that will provide innovation together with promptness, flexibility and efficiency. The cloud offered all these while on the other hand it enabled them to save time to focus on the matters that will be valuable for the business and its customers.
Benefits of cloud adoption
Cloud adoption is the most advantageous solution that can both improve the abilities of the former system and increase the speed of the digitalization process of the banks, so it creates a highly profitable, win-win situation.
There are 3 main steps that the banks should follow to be able to benefit from the cloud fully:
- Creating an extensive process by first specifying the requirements and administrative issues and then successfully transforming their business models
- Comprising the regulation and security related topics required for full cloud adoption
- Preparing and developing a new approach and structure that will embody the requirements, policies and governmental processes necessary
The main benefits of adopting the cloud for the financial services are lower costs, increased security, agility, automation, mobility and improved customer experience.
- Lower costs
Since the cloud service providers are responsible for the maintenance and hosting costs, it is more wisely for the banks to adopt a cloud-based IT infrastructure which they need to pay as long as they are using the service in comparison to traditional ways of data storing.
- Higher and integrated security levels
The most common concern of the financial institutions for insisting on a private cloud for a long time and hesitating to adopt a public cloud is the security. They might be right in their concerns for the conditions earlier; however, with the improved and high-tech systems of public clouds, this concern is not valid anymore. Acknowledging the gap and the need in the system, the public cloud providers focused heavily on the security issue of their platforms and eventually, they came up with solutions by providing necessary levels of security, privacy, control and transparency.
- Agility and scalability
Agility, as one of the most helpful and appealing feature of cloud computing, enables financial institutions to increase their capabilities easily and quickly without the limitations of tradition data storage methods.
Scalability refers to the possibility for the banks to expand their scale of services or create new services based on the needs and move them to the market very quickly. The best part is they do not need to spend extra cost to build the infrastructure and to work on the maintenance thanks to the cloud service they are using.
It is obvious that manual work is not that fashionable when it comes to financial issues: in terms of cost, time, efficiency and accountability, an automated system is more preferable for financial institutions. Also, automation can be integrated into many financial processes like accounting, reporting, billing, planning, budgeting etc.
The possibility to access the data from everywhere regardless of the place is another advantage of the cloud systems. This also gives flexibility to the employees of the financial institutions to use their own devices which in turn help improve productivity and speed of the processes.
- Improved customer service
The cloud services may also help institutions to create better customer experiences and insights thanks to the possibility of creating more personalized customer services.
Looking at all the 6 motivations for adopting the cloud, one may expect to see the cost reduction as the main motivation for the banks as they are financial institutions after all. However, according to the banks, it is the agility, flexibility and the capacity listed as the main motives for adopting cloud computing.
What are the risks?
Although the cloud offers the best solution to the most issues of the banks coming with the digital change, there are still some concerns when it comes to adopting the cloud system fully and transforming the financial services in a full-scale.
One of the main risks that the banks are concerned about is the regulation because there is a lack of certainty in this area of regulations and they are unsure about the way the regulators look at the increase in the use of cloud. However, many cloud vendors are actively co-working with the regulators.
Another concern of banks about cloud adoption is the security. They may have thoughts like maintaining cloud security is too hard or data should be physically handled to be secure. These are most of the time barely perceptions that rooted in the traditional way of understanding because most of the cloud service providers proved that the cloud is more secure in many ways than an on-premise data center.
Data protection is one of the higher concerns of the banks since it is getting more serious everyday with GDPR regulation. They want to know exactly where their data is stored (in which country) because they are well aware of the fact that a breach in personal data storage would cost them (both financially and juridically) a lot higher than the profit they will get with the adoption of the cloud. Although the cloud service providers provided them with enough confidence about the security, it can be understood that they are still concerned about this area.
To sum up, the adoption of cloud is as advantageous as it is becoming more and more necessary for the financial institutions. And obviously, the benefits are outweighing the perceived risks or concerns because the transformation from traditional services to the cloud computing offers more innovative, agile, secure and cost-effective system. Therefore, banks focusing on the digital by placing the technology at the heart of their businesses can definitely stand out in the industry and it may become possible with the adoption of a cloud system for their processes.
Fineksus offers a global SaaS platform for Fineksus products and solutions. Fineksus consultants would be pleased to help if you have further questions and a need for financial technologies. Contact us to learn more about the solutions.
Ahmet Vefik Dincer, CEO