Up, up, and away: why banks should accelerate plans to migrate to the cloud
Whether by developing products to support customers, or integrating tools to streamline how they are accessed, banks have often led the way for change in the financial sector.
When it comes to embracing new technologies however, including the cloud, uptake until recently has been relatively slow.
Fast forward to 2022 and over a quarter of UK banks are planning to migrate 50 percent or more of their business operations to the cloud. Compared with two years ago when 80 per cent of banks had migrated just 10 per cent of their business, this increase is astounding. Where banks would once question why to move data into the cloud, they are now asking “why not?”.
And it’s no surprise. With its myriad of advantageous solutions, moving to the cloud presents a wealth of benefits for businesses in terms of agility, reduced costs and greater security.
The ability to grow
As a primary motivator, cloud migration allows financial institutions to evolve and grow with the changing market landscape. By hosting operations in the cloud, banks can easily adapt to comply with changing requirements or to support market initiatives on a continuous basis. Given the huge amount of personal data collected by banks on a daily basis and the vast amounts of associated admin and restrictions, it is unlikely that they could replicate that offering in-house.
Furthermore, the cloud can rapidly improve a bank’s flexibility and scalability. In an increasingly fast-paced market, customer-centric digital banks are making huge gains by acting quickly. The cloud streamlines the financial service pipeline: it empowers banks to scale processing capabilities according to market changes and customer demands on a global platform.
As well as an improved service, cloud migration can also bring down costs. Research from IT service management company GFT revealed that 81 percent of bankers adopted cloud technology to cut costs on data storage.
Cloud computing offers a cost-effective alternative to the onsiteIT systems, which are costly to install and maintain and require data storage fees. With the cloud, however, all the necessary infrastructure is hosted on the service provider. As a result, maintenance, storage and security costs can be slashed, with the option to tailor services to individual needs, only paying for those required.
Crucially, cloud migration can also fortify a bank’s cybersecurity defences. Financial services firms are a prime target for cyberattacks and ensuring protection against the wealth of threats they face isa vital yet time-consuming job. Cloud service providers include numerous levels of control and protocol in their network infrastructures to safeguard data against breaches.
For example, Microsoft has invested $1billion to secure the Azure cloud platform, and as a result is able to protect against a reported seven trillion potential cybersecurity events every day. From embedded security to automated data backups, the advantages for reduced data risk are extensive.
Moving a bank’s operations to the cloud is a powerful move in the push for modernisation within the financial services sector. Aligning a cloud solution with business objectives can create an enviable operational synergy. For instance, cloud capabilities can help reduce the time required for product development cycles, empowering banks to trial new innovations in real time.
Hosting information remotely can also enable banks to capture and harness customer data with a degree of personalisation that is not possible with legacy on-premise hardware.With a single keystroke, advanced analysis is immediately available to help banks understand and access insights through customer profiles. These insights can in form decisions to better serve their users, increasing conversion rates and boosting long-term engagement and retention.
At its core, the cloud offers better scalability, cost optimisation and cybersecurity than a legacy solution. In the future, cloud technology will evolve into the primary platform for banks aiming to modernise and scale their service in a cost-effective way. Legacy systems were useful for the first leg of the 21st century, but cloud migration will carry the financial sector onward to a hitherto unexplored peaks of innovation.