Financial services institutes are facing a multitude of business challenges, from flat or single digit growth, tighter margins, decreased customer satisfaction, and potential disruption from cloud native FinTech alternatives.
COVID-19 is also forcing organisations to quickly focus on other important priorities: preserve cash and optimise IT costs, support and secure a remote workforce, and ensure resiliency. Investing in cloud technology becomes a convenient means to address all these challenges and can increase the speed of product development and innovation, leading to higher customer satisfaction and avoiding disruption by more agile FinTechs.
In contrast to traditional on-premise IT, the cloud offers a user-led approach where impact and value are more tangible and therefore more easily appreciated by customers. Financial institutes can choose to quickly migrate their most compatible applications to the cloud, then analyse how the cloud can support innovation.
One example is Microsoft Cloud for Financial Services which brings together Microsoft solutions, unique templates, API’s and additional industry-specific standards, along with multi-layered security and compliance coverage to deliver differentiated customer experiences, improve employee collaboration and productivity, manage risk and modernise core systems.
Using these capabilities, retail banks can create a 360-degree view of the customer with greater insight and suggested next best action, embed digital collaboration into their process workflows to create real-time visibility to status and streamline hand-offs, enhance insights to help reduce fraud — all with the scalable and hybrid deployment options financial services organisations require to modernise their systems.
When it comes to choosing a cloud provider there is no one-size-fits-all approach. Therefore, cloud providers are making it easier for an organisation to use multiple services at once. From my own research, I have found that 60% of financial services firms expect multi-cloud to be the architecture of their IT environments in the next two years.
Gartner reported that by 2022, a cloud shift across key enterprise IT markets will increase to 28%, up from 19% in 2018. For financial institutions, a hybrid cloud approach that offers a mix of public cloud flexibility and private cloud security are a necessary tool for this highly regulated and sensitive market. With a hybrid architecture, the financial industry has the freedom to extend beyond their data centres and into cloud services.
Established Financial Institutions can no longer afford to maintain their own IT infrastructure and compete with agile Fintechs. Public cloud providers such as AWS, Microsoft, and Google offer more cost-effective service models and develop applications/tools at a much faster rate than financial institutes could ever do.
AI-based tools are making a positive impact on banks’ capabilities in many areas including risk management, fraud, and marketing. These tools rely on large quantities of quality data, and as the technology matures cloud computing will become more inevitable and necessary.
It is more important than ever to hire the right people who understand cloud technologies and concepts as they can suggest new approaches to technical projects and will ultimately impact the culture of the business. At the centre of any cloud adoption is great talent and a massive reskilling or upskilling of the technology workforce is required.
Adopting a cloud-native approach is an existential imperative for Financial Service institutions driven by the pace of customer expectations. The institutions with systems that have been built over decades are particularly vulnerable. It may have been their competitive edge in the past, but cloud computing is a different kettle of fish.