Cloud Computing: Enabling Change for Financial Sector
Although financial services companies see significant benefits in cloud-based systems, the adoption of this technology is still slow-paced for the industry. The reason? For highly-regulated institutions there are significant legal and regulatory challenges that must be considered and dealt with before migrating to the cloud.
However, no industry can afford to ignore cloud computing any longer and its impact is strongly felt within the financial services sector.
Adapting to a New Business Model
To successfully overcome post-crisis market challenges and stay competitive, financial institutions need to look to a smarter approach for challenges concerning:
Customer trust and engagement – financial sector needs to deal with its perceived lack of transparency and fairness;
Customer behavior – increasing need of changing customer behavior through the use of web, mobile and social connectivity and emerging new technology;
“Banking without banks” – the sector is facing a new paradigm shift in the market due to the quick rise of services like Google Wallet or Paypal
As financial institutions adapt to these changes in their competitive and technology environments, cloud computing plays a significant role. Its combination of low cost and high scalability, unlimited processing power and storage, great agility and speed to market, and variable pay-per-use cost structures supports the development of competitive advantages financial organizations need in the future.
The Cloud and the Benefits it Provides
Transforming the customer experience – Customers are increasingly attracted by cloud-based personal financial management applications. Financial institutions should be aware they need to enhance their two-way relationships with customers in order to gain traction and improve trust.
Optimizing Costs – Financial businesses can turn a large up-front capital expenditure into a smaller, ongoing operational cost. There is no need for heavy investments in new hardware and software. In addition, the unique nature of cloud computing allows financial institutions to pick and choose the services required on a pay-as-you-go basis.
Providing Business Continuity – With cloud computing, the provider is responsible for managing the technology. Financial firms can improve data protection, fault tolerance, and disaster recovery processes. Cloud computing also provides a high level of redundancy and backup at lower price than traditional managed solutions.
Enhancing Flexibility and Focus – Financial institutions will experience shorter development cycles for new products. This supports a faster and more efficient response to customers. Cloud computing allows new product development to move forward without capital investment. Companies can move non-critical services to the cloud, including software patches, maintenance, and other computing issues. This way they can focus more on the core financial services, not IT.
Were you involved in a cloud migration process for a financial institution? Are you aware of other benefits and challenges involved? There are many opinions on the matter, so feel free to share your own!
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