The banking industry, a sector notorious for antiquated systems and resistance to change, is getting a full makeover with the arrival of cloud computing capabilities.
From the exception to the expectation
Banks worldwide have been slow to adopt innovation and technology into their closed-off, siloed systems for decades, but that tendency is shifting with the introduction of cloud computing. A combination of innovative financial startup offerings and shifting customer profiles are driving legacy institutions to leverage cloud technology.
A 2020 Accenture report forecasts cloud computing to continue growth within the baking industry by 15% on a yearly basis through the early and mid-2020s. The same report notes that banking clients converting from legacy to cloud infrastructures save 10-20% in total operational costs and increase provisioning speed by 40-50%. There is no other sector where “time is money” and vice versa more than banking, and the cloud’s early results dazzle.
The cloud meets key efficiencies and evolving customer demands
“Our collective pandemic experience revolutionized the demands of consumers not only in banking but across industries. Demand for digitization from food and grocer services to virtual healthcare offerings leaves customers wanting the same from their banks,” says Connie Testa, CSS TEC Managing Director.
Cloud computing’s enablement of mobile banking is especially intriguing to customers. Integrating mobile cloud accessibility allows customers to manage their money by accessing, transferring, and depositing with mere swipes of a finger. Mobile cloud infrastructure streamlines new offerings and promotions for preferred customers as well.
On an enterprise level, the cloud allows banks to leverage proprietary data. In a world where data is power, this capability cannot be overstated. Cloud services allow banks to personalize the customer experience and service delivery through advanced analytics. Real-time data acquisition and updates give banks agile capability to iterate customer offerings and spot anomalies instantaneously.
The biggest barrier to implementing cloud infrastructure revolved around security concerns, but cloud agility combined with blockchain data tracking alleviates this fear. Zero-trust security models built with the aforementioned technologies require data inscription both in transit and at rest. Multi-factor authentication (MFA) adds yet another layer of data protection to keep your bank and its customers safe from cyberattacks.
Innovative companies are disrupting the market triggering responses from industry veterans
Fortune favors the bold (and in this case new and small) as fintech startups are threatening legacy banks with greater organizational agility and cloud-based, digitized offerings to a new generation of bankers. Fraugster, a startup using artificial intelligence and machine learning to detect payment fraud is taking untapped market share away from legacy banks slow to modernize their cybersecurity departments. Just earlier this year, a Florida-based modern core banking provider by the name of Nymbus added New Jersey-based ConnectOne, a bank with over $8 billion in assets as a client. These partnerships can offload functions from legacy banks, but also take full control over said functions building dependence.
Making the leap
The flurry of fintech startup activity in cloud computing has pushed some larger institutions to take the leap of faith to the cloud deploying new infrastructure and data agility. In 2021, JP Morgan Chase announced it would replace its U.S.-based retail legacy tech platform with a cloud-native core banking system. Bank of America has already disclosed savings of $2 billion a year by building its own cloud ecosystem and infrastructure. Turning an aircraft carrier takes much more time and energy than a startup rowboat but once its course is shifted, the waves will shake oceans.
Challenges to overcome
Integrating major legacy operations into the cloud does not come without growing pains. Challenges will arise around data security and service outages among others, but those who troubleshoot and iterate the quickest will reap the richest rewards. Here are a few obstacles of note on the ascent to the cloud.
Security measures – Securing a fully digital, open highway of information between bank and customer will be no small feat. Investment in cybersecurity infrastructure and the talented technical professionals who build and monitor it will be pivotal to keeping customer funds and data safe in the cloud.
Latency – Early performance issues may occur in the process of moving operations from physical data centers to the cloud. This problem may persist if a bank commits partial operations to the cloud to begin, but steady monitoring and AI predictive analytics can alleviate this pain point.
Learning and development – Cloud integration in a sector as historic as banking will require investment in learning and development. Learning how to use new systems, where to find reorganized data, and even who to contact with questions or issues are all areas in need of attention for employees accustomed to legacy systems.
Traversing these obstacles will pay major dividends once cloud capabilities are realized. Road closures and detours during road construction pave better highways for all once completed.
Partner with CSS Tec to transform your banking operations with cloud technology
Transitioning operations from legacy systems to cloud platforms will take tons of technical capability and advisory, and CSS Tec has the staffing power to connect big banks with the finest technical resources. With talent placement expertise in application, data analytics, digital communication, QA and QC testing, infrastructure and support, and technical PMO, CSS Tec provides full-scope staffing for any cloud integration operation. Connect with CSS Tec today to utilize the best technical talent on the market!