How Digital Banking on Cloud Delivers Value for Financial Institutions

Both traditional and non-traditional financial institutions (FIs) are aware of the urgency to reimagine the banking experience. In the retail banking industry, there’s this mounting pressure to deliver services personalized for the consumer and to adopt an increasingly “branchless” framework. This essentially means catering to consumers demanding 24/7 availability and reliable, on-the-go banking services. With this, FIs are turning to the cloud in an effort to improve their capacity to provide convenient, efficient, and value-adding services.

In particular, moving to a cloud-based digital banking solution can significantly transform an FI’s front-end and back-end operations, allowing it to deliver highly beneficial services tailored around the consumer. To illustrate, here are some of the reasons why making that move is a wise decision that will deliver value to FIs as well as the lives of their customers:

Provides a Cost-Effective Modernization Solution

Cloud-based platforms operate on a subscription-based model, which means that the cloud service provider (CSP) handles the server and maintenance costs. FIs would only need to pay the subscription fee in line with a pay-per-use framework. Migrating software to the cloud also doesn’t require rewriting code, making the migration process easier for IT teams.

With cloud providers’ unique “as a service” billing model, FIs are allowed to pay for only what they need and cut unnecessary operational and maintenance costs, ultimately leading to significant savings in the long run.

Offers a Flexible Platform for Managing Traffic and Integrating Updates

Cloud platforms have an “elastic” quality that allows them to automatically scale up or down, depending on the demand for resources. This autoscaling element allows the distribution of workload in line with peak times such as end-of-the-month paydays.

Additionally, cloud platforms support a microservices architecture, which is the key to the smooth rollout of updates. A microservices infrastructure allows IT teams to rapidly make changes or integrate add-on features without affecting the whole enterprise. This can help FIs quickly roll out new products, implement software updates, and add in-app features.

Such on-trend features that a flexible cloud platform can support include peer-to-peer (P2P) payments via external channels and the bundling of products (i.e., insurance policies) based on user preferences. Some cloud-based banking solutions also support the integration of analytics-driven features such as budget planners, expense trackers, and credit risk-prediction tools that consumers can use to improve their financial management strategies.

Optimizes Staff Workload

Usually, legacy on-premises infrastructure requires groups of IT professionals to handle a myriad of tasks ranging from fixing bugs to rewriting code. By contrast, cloud platforms allow IT staff to automatically roll out updates, deploy procedures, and launch new and innovative projects that will highly benefit FIs and their customers.

Beyond the IT department, the rest of the enterprise can also benefit from the flexibility of the cloud. Because cloud technology eliminates disjointed data silos, employees can streamline internal communications as well as external collaborations with business partners.

On top of that, the highly accessible nature of cloud environments allows work to be done anytime, anywhere, and from any device. As such, employees can virtually collaborate with teammates and have more agency over their time through remote work.

Helps Ensure Business Continuity

Generally, CSPs take on the responsibility of directly managing their cloud-based solutions. This includes ensuring the availability of data backups in secure, geographically separated locations. Reputable cloud service providers also store data on impenetrable, security-compliant data centers and have power redundancies in place.

All these measures that are done by CSPs help FIs maintain business as usual even during emergencies or periods of troubleshooting. This also keeps customers happy, as they’ll still be able to access their much-needed banking services. All in all, this ensured business continuity will prevent FIs from losing revenue due to system downtimes.

Supports Fraud Detection Capabilities

Reputable cloud providers have their products rigorously tested by international regulators before such products go to market. By choosing to partner with a CSP that complies with the latest standards in data security, FIs can future-proof their systems as threats become more sophisticated in a data-driven world.

Cloud architectures have the capacity to support emerging capabilities like analytics, artificial intelligence, and machine learning, which are all useful tools for delivering real-time threat alerts in case of suspicious account activity. Moreover, some CSPs support next-level security and identity verification features such as selfie and video verification, touchscreen signatures, and other biometric techniques to level up Know Your Customer (KYC) processes.

Allows FIs to Serve Customers at Any Time of Day

Capabilities like analytics and AI are proven to be highly beneficial for automating tasks and speeding up banking processes for consumers. For one, most FIs use AI chatbots and helpdesks to assist customers in case human agents aren’t available to address their concerns. Automation can also help FIs roll out self-service features, which can be useful in account enrollment and loan applications.

All these innovations greatly improve the customer experience and make such FIs stand out from traditional ones that have yet to catch up.

Generates Insights to Improve Customer Experience

Speaking of improving customer experiences, such next-gen technologies can also be used to gain insights into consumer demands and behavior. Analytics tools can collate large volumes of consumer data to generate comprehensive reports that will help analysts and leadership teams identify system vulnerabilities, determine needs for software updates, and get ideas for game-changing products.

Maximizing the Cloud to Deliver Value

Besides helping FIs keep up with current tech trends, cloud migration also plays a role in mitigating everyday risks. From minor nuisances like transaction delays to devastating scenarios like theft, these risks can overburden legacy in-house banking systems that are often inflexible and incompatible with other platforms.

But while digital banking on the cloud is certainly built to prevent such problems, it still takes sufficient planning and strategizing to figure out how to best make this platform work for industry- and company-specific operations.

At the end of the day, cloud technology already has the potential to improve banking institutions’ processes and market posture. What’s important is that these institutions have the savviness to make sound decisions and the right cloud partner to make the most of the technology’s potential.

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