One of the next industries to start to utilize the cloud could be banking. Consider the tech making this possible.
According to FinTech Magazine:
Across all facets of society, the pandemic has accelerated the shift towards digitalisation – perhaps by entire decades. Banks are no exception to this. Today, those institutions taking a leap forward with their tech are seeing the potential of cloud-native platforms to transform customer experience delivery, business continuity, operational efficiencies and resilience become reality.
Legacy banking IT systems are increasingly unattractive to financial institutions in the modern world. Institutions of all sizes are looking to evolve and modernise their services to deliver better and more personalised customer experiences, and that means shedding outdated, bulky and ineffective technology. After all, implementing new cloud systems can now be done swiftly, with minimal disruption and in a modular way.
Innovation and agility: The Cloud is key
Cloud systems are rapidly paving the way to innovation, opening doors to significantly more flexibility when it comes to creating new products and offerings. Based on an API-first strategy, these cloud-based systems enable institutions to curate their own partner ecosystem as well as leverage the best of breed integrations as part of the solution. As a result, banks are empowered with endless levers and combinations to create new propositions to suit their clients’ specific needs.
So, what’s holding some firms back? The reasons behind large financial institutions’ incumbency often comes down to their enduring reliance on legacy systems that they still have in place. Sometimes dating back to the early 90s, these complex systems greatly reduce banks’ flexibility and capacity for innovation. Deeply ingrained into their ways of working, institutions often fear potential ‘downtime’ or other technical issues caused by replacing these systems with cloud alternatives. While this may be understandable, the transformation process is becoming increasingly less disruptive to every-day operations – delivering almost 100% system uptime in our case.
In addition to this, banking on cloud-native platforms is more accommodative to emerging AI capabilities. This empowers banks to increase the efficiency and customisation of their client services. For example, in mortgages and loans, documents like IDs and payslips which are considered unstructured data can be interpreted using AI, while connections into other data outlets like credit rating agencies can enrich application information. This capability to organise unstructured data means that we are getting ever closer to the age of one-click mortgages, improving customer experiences, and simplifying their financial lives. And as such solutions become increasingly mainstream, banks must keep up with tech in order to keep their customers.
Reducing costs and improving sustainability
Some financial institutions are still working with outdated legacy systems, relying on slow, bulky on-site local servers – and even excel powered datasheets in some cases – to run their processes. The cost of maintaining such systems or enhancing them to meet new regulation can be immense. Those institutions taking up a tech-first approach, however, are quickly waking up to realise they are losing out in relying on them.
Decommissioning old IT systems and switching to a cloud-native platform can enable significant cost reductions. What we’re seeing already are cost reductions of up to 40% amongst those of our clients who have made the leap towards the cloud. Data, server storage and performance power have become on-demand services, which give institutions the ability to scale up and down as needed.
The wider financial industry is also starting to look harder at their strategy and processes through another lens: sustainability. Running legacy systems perpetuates the tricky disadvantage of bearing a larger carbon footprint. According to research by ShareAction, Europe’s top 25 banks are failing to meet their sustainability pledges. Financial institutions are certainly starting to feel the pressure from all fronts to implement more sustainable models– from their own internal stakeholders, to prospects and wider society.
In 2022, it’s therefore more important than ever for financial institutions to take tangible steps towards reducing their environmental impact, and cloud banking can play a key role in achieving this. AWS figures show that institutions can reduce the carbon emissions emitted by their systems by 80% when they switch to cloud-based IT alternatives, pulling them closer to their net zero targets. Additionally, cloud systems remove the need for heavily airconditioned server rooms and the unnecessary waste they produce, providing instead far more efficient software applications and direct integrations with third parties.
A future in the clouds
For all institutions – but especially large incumbents – cloud-native systems open the door towards greater innovation. Not only do they provide a disruption-free entry point towards more efficient technology, but they also empower institutions to tackle unknown future challenges – issues which legacy systems will struggle to solve quickly – while simultaneously putting the customer’s needs first.
All in all, the cloud offers institutions a way to cut costs, reduce energy consumption, deploy AI in more efficient ways and prepare for future technologies. For customers, this means benefitting from quick and easy solutions for complex financial processes and accessing the innovative developments in financial services. Customers will benefit from AI-powered instant services, such as loans and mortgages that are tailored to their personal requirements, all the while being kinder to the climate. From 2022, reaching for success must mean reaching for the clouds.