Why is cloud banking the future of the financial sector?

Banks increasingly turn to cloud based services not just to modernise their systems but also to integrate a variety of different solutions within a single platform. Cloud banking is fast becoming an indispensable element in the growth strategy of financial institutions, allowing them to quickly adapt to changing market trends and boost operational effectiveness. Let’s have a look at how contemporary institutions tap cloud technology to shape the future of finance.

Cloud banking

Cloud services: advantages of implementation in financial institutions

But why are companies so interested in the cloud? It’s not just a passing fad, but the effect of a growing awareness of the potential benefits of this technology, which can range from improvements in flexibility and scalability, through cost reduction, all the way to better data security and faster innovation. For banks, cloud computing represents not just a quick fix to current problems, but also a strategy of survival and growth in a dynamic business environment.

Cloud and data security

Data security is a key aspect of banking. Nobody would want all the data on their income, spending or savings to end up in unauthorised hands. Fortunately, every type of cloud, be it public, private or hybrid, ensures the most stringent security standards. Cloud providers offer advanced security mechanisms to protect financial data against cyberattacks.

Cloud service providers

Practically all cloud service providers:

  • Enable artificial intelligence (AI) and machine learning (ML) features to automatically adapt to security threats and respond to adverse incidents;
  • Use autonomous features to scale up security measures, prevent threats and eliminate errors;
  • Proactively protect data using access control, manage user visibility and risks, and employ threat detection and classification tools;
  • Work in the co-responsibility model to share cloud security measures between the customer and the service provider;
  • Consider security issues in architecture design.

Cloud security aspects

The high level of security inherent in cloud technologies helps financial institutions meet security requirements and ensure legal compliance. Cloud security mechanisms include many security layers across all aspects of the technology, such as:

  • Prevention control mechanisms, which block unauthorised access to sensitive data and systems;
  • Detection control mechanisms, designed to detect unauthorised access to data and systems and their unauthorised modification through audits, monitoring and reporting;
  • Automated control mechanisms, designed to prevent, detect and respond to vulnerabilities (both regular and critical);
  • Administrative control mechanisms, designed in accordance with security principles, standards, practices and procedures.

Machine learning and artificial intelligence are key factors in the development of context awareness in the field of cloud computing security features. These technologies enable the automated recognition and analysis of the context of cloud events which, in turn, helps create more effective and dynamic safeguards.

Using AI for security in cloud banking services

Through the use of machine learning and artificial intelligence, security systems are able to analyse data in real time, identify untypical behaviour patterns and detect potential threats with greater accuracy and speed than would be possible with traditional methods. This allows companies to quickly respond to dynamic conditions and effectively ensure the security of various aspects of the cloud infrastructure.

As part of cloud models such as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), context-aware technologies ensure comprehensive protection. They encompass not just networks and equipment, but also integrated circuits, the operating system, mass storage devices and applications. As a result, financial companies can be sure that their entire cloud portfolio is properly protected against various threats, be they external or internal.

As a result, when used for cloud security purposes, machine learning and AI solutions contribute to greater security, better performance and a lower risk of security incidents. This in turn makes it easier and safer for institutions to use the cloud, helping them achieve their business goals while maintaining adequate data and infrastructure protection levels.

Cloud banking: lower operating costs

Another important aspect is connected to costs. Most people believe that new technologies, especially those recently rolled out and growing in popularity, are very cost-intensive. However, when it comes to cloud computing services, this belief is simply false, and cloud solutions, when used properly, may even bring substantial savings for companies and institutions.

Cloud computing offers a number of benefits; for instance, it eliminates the need for in-house infrastructure, which would have to be purchased and maintained, and allows companies to pay only per actual resource use. For many institutions that have gone through the expensive and time-consuming process of IT system installation and maintenance, the benefits of the cloud are undeniable.

Public cloud and cost optimisation

Following cloud migration, companies delegate the responsibility for the infrastructure to the service provider, which may substantially decrease their administrative burden and expenses. In addition, changing the payment model from capital expenditure (CAPEX) to operating expenditure (OPEX) improves their financial management, while reduced electricity use and the allocation of resources as per need adds another important level to their expenditure control.

Quote from "The green behind the cloud", Accenture: “An analysis of the largest public cloud providers shows that cloud migration can lead to an impressive 65% reduction in energy use and an 84% cut in CO2 emissions.”

In light of these benefits, more and more companies are deciding in favour of cloud computing migration, mainly hoping to reduce costs and increase operational effectiveness. It is, then, not unreasonable to look at the cloud not just as a new technology but also a potential source of savings and business process optimisation.

Flexibility and scalability in the cloud banking industry

For all organisations, campaigns are a key element of business strategy, which correspond to periods of heightened customer activity (while other business periods remain relatively stable). In this context, cloud computing solutions are a great, dynamic scaling tool allowing companies to adapt their resources to current business needs.

Thanks to the cloud, organisations can flexibly change their computing power whenever they need to and without any restrictions. This level of flexibility allows them to optimally tap their resources at times of peak activity and ensure stability and effectiveness in less intense periods.

Tapping cloud computing scalability for competitive advantage

One of the key benefits of cloud scalability is customer satisfaction. Since they can now immediately access resources whenever they are needed, organisations are able provide their customers with excellent service quality without having to worry about resource unavailability due to system overload. This, in turn, translates into greater customer trust and a better customer experience.

Today, with instant access to information and the role of social media, satisfied customers are more crucial than ever for maintaining company reputation and success, including the financial sector. If banking products and services are not available, negative customer reviews may follow, causing a snowball effect that may increase customer frustration and negatively affect the bank’s image.

Cloud banking service availability

A high level of availability of banking products and services is extremely important for customer satisfaction and societal trust in financial institutions. For cloud platforms, high availability and reliability are key features that can be achieved thanks to various mechanisms.

Of course, occasional failures are unavoidable, but cloud solutions allow financial institutions to minimise the negative effects of such incidents. Data redundancy and replication, widely available on cloud platforms, help companies quickly restore services in the event of a data centre or server failure. This eliminates the risk of disruptions and ensures service continuity in the face of unpredictable events or in situations of increased infrastructure load.

High availability of services in the banking sector

In fact, high cloud banking services availability may be considered one of the main advantages of cloud computing. For financial institution, where each second of downtime costs money and carries potential risks for customers, this feature is especially crucial. Thanks to cloud solutions, banks can now be confident that their services will remain available even in crisis situations, which contributes to greater customer trust and satisfaction.

Cloud banking and tech innovation

Cloud computing services do more than just enable business continuity – they also serve as a powerful catalyst for innovation in the financial sector. Thanks to the cloud, banks can bring new solutions up to a level higher than ever before.

In consequence, deploying new products and solutions has never been as safe and easy as it is today. Cloud platforms offer a wide range of tools and technologies that expedite the process of developing, testing and rolling out new solutions. Sandbox platforms allow companies to carry out isolated tests of new concepts without disrupting core production systems.

Cloud banking: data analytics

In addition, cloud-stored data can be used to personalise customer offers and services. Thanks to advancements in artificial intelligence, banks can automate processes and forecast future customer behaviour. This then gives them a better insight into customer needs and enables more effective customisation.

Cloud banking: easy integration

Moreover, open API interfaces enable integration with different external platforms and applications to create comprehensive digital systems that offer a wide range of services available from one place. Banks can now provide their customers with comprehensive solutions that are easy to access and flexibly tailored to changing needs.

Apart from enabling banks to maintain their competitive edge and high service availability, cloud services are also engines of innovation that fuel the development of the financial sector and improve customer experience.

The sky is the limit.

The opportunities are endless and the cloud opens up new and exciting avenues for banking and other industries.

Why is cloud technology a game-changer in banking and finance?

Today, banks and other financial institutions use cloud technology as a powerful and highly targeted tool for business expansion. Since they can now skip the costly and time-intensive process of IT infrastructure building and directly launch their services in new regions, banks can enter new markets more quickly and effectively.

Cloud infrastructure is flexible and scalable, which means it can also be adapted to local laws and specific regulations. By using local data centres, banks can ensure legal compliance and optimise performance in different countries. This means they are able to act in accordance with local laws and regulations, while ensuring consistent and reliable services around the world.

Banks have caught on to these huge opportunities and advantages, both in terms of costs and innovation, and are increasingly turning to cloud solutions. As a result, they are more responsive to changing market conditions, able to deliver new products and services more effectively, and increase their global presence without having to invest in costly IT infrastructure projects.