Cloud Computing is most likely the technology that has altered corporate structures, production processes, and whole industries more than any other since the dawn of digital. In this piece, we’ll look at one of the most crucial sectors that affect us all: banking.

Let’s start with a simple question: what role does cloud technology play in the banking industry? And, most importantly, how significant will it be in the future?

According to a survey conducted by “The Economist,” up to 74 percent of experts believe that the cloud would be one of the most important areas of concentration for businesses over the next five years. Only 15% of people think it’s moderately important. According to an IDC survey, banking is one of the top three industries expected to invest more money in cloud services in the coming year, possibly as much as $20 billion.

We’ll also look at the positive effects of cloud technology on numerous industry sectors and procedures, particularly in terms of cost savings, flexibility, customer interactions, and security.

Cost Cutting

To begin with, Cloud Computing equates to targeted and intelligent cost savings as well as total cost reduction. Why?

The solution is straightforward: Using cloud service providers eliminates the need to purchase expensive hardware and software, which takes up space and costs time and money to administer and maintain (including specialist employees). Then there’s pay-per-use and on-demand optics. Translated: massive (and previously unimaginable) processing power and storage capacity, available on-demand and at a low cost, with no responsibility for managing or maintaining it. Instead, this responsibility is delegated to an external cloud provider, who can give a degree of specialized competence that internal workers cannot match.

It’s no accident that cost reduction was rated as one of the most important components of the cloud transition by roughly 60% of those polled in The Economist’s study mentioned above.

The significance of adaptability

As previously said, the cloud allows businesses to dramatically decrease expenses while enhancing performance, thanks to its on-demand strategy.

That’s not all, though. Flexibility and scalability expand dramatically as a result of this “on-demand” approach.

This is more vital than ever before in an ecosystem that is continually changing owing to continuous technological innovation. Such innovations are causing significant shifts in the market and client expectations. Financial institutions must be able to quickly react to these changes; however, this can be difficult if you are dependent on “physical” and local infrastructures. This is true in all businesses, but it is especially true in the banking industry.

Consider the time it takes to launch new products and services: with the cloud, the necessary IT resources are activated on-demand, eliminating the need for large upfront investments in IT.

Then there are some uncommon circumstances, such as those involving intricate banking processes that occur infrequently. These are frequently very delicate conditions in which errors or malfunctions cannot be tolerated: such scenarios may necessitate a large amount of computer power focused in a short period to handle aberrant peaks in operations.

These extreme and “emergency” events may be managed with simplicity in the cloud, without the need to over-allocate IT resources. The cloud makes it simple to immediately return to normal management once the peak period has passed. You can appreciate how important this is.

Personalized Communication

How crucial is your customer relationship to you? The majority of businesses recognize the need of increasing numerous customer-focused activities, including communication, customer experience, and CRM (Customer Relationship Management). To answer these questions, we’ll look at industry data.

First, according to a 2017 Gartner poll, 81 percent of enterprises across all industries expect Customer Experience to be a competitive advantage.

Let’s get back to banking: enhancing the Customer Experience, according to McKinsey, raises the possibility of customers renewing their purchases (or buying more) by 30 to 50 percent.

So, how can you strengthen your customer relationship?

There could be several, intricate, and multifaceted explanations. But they all revolve around one central idea: that the most successful method to strengthen client relationships is to get to know them better, to anticipate their wants and needs, and to communicate with them in a personalized manner. Being in the right place, at the right moment, with the correct proposal is essential.

It was previously impossible to apply this to large audiences in industries like banking. However, because of digital transformation and Big Data analysis, this is now possible. We all leave digital traces, both online and through the various gadgets we use daily, that help organizations understand who we are, our traits, how we behave, and – more importantly – how we will behave in the future. Companies can segment their audience into increasingly specialized targets by studying these tracks in-depth, allowing them to be targeted with customized actions.

All of this, of course, necessitates a massive amount of data processing, storage, and interpretation capability, which only Cloud Computing platforms can provide.

You can go even further, to the point of personalization, by addressing each individual in a unique and participatory manner, with a one-on-one conversation.

Saftey

If security has become a top priority in many industries as a result of digital transformation, it is even more so in the banking industry. The reasons are obvious: we’re dealing with significant sums of money, life savings, and highly sensitive personal information. Let’s be clear about one thing straight away: Cloud Computing technologies give the highest level of security; the only requirement is that you rely on trustworthy and dependable providers.

But why is a cloud-based system more secure than an on-premises system?

To begin with, it’s a monetary issue: cloud system providers spend a significant amount of time and money to continually upgrade and improve their security mechanisms. Individual banks would be hard-pressed to achieve this level, and the cost would be prohibitive in any case.

Another essential aspect is that the financial sector has been shedding the strict and closed structure of previous years for several years. This is mostly due to digital transformation: user-specific online and mobile apps, as well as the necessity to be always-on and multichannel. All of this increases the system’s vulnerability to cyber threats, which are continually evolving and becoming more refined.

As a result, it is extremely difficult for a local security system to compete with the continually updated systems put in place by cloud service providers.