We shop online, we date online, we work online… As the world continues to gradually transition from the physical to the digital space, one might wonder why banks are slow to embrace cloud computing. This is even more surprising because cloud computing is widely regarded as the future of finance.
While the banking industry has embraced tech and digitalization into their operations, they have been a bit reluctant about cloud computing. In this article, we get to explore why banks are slow to employ cloud computing. Will this reality change in the near future?
Before we address why banks are slow in cloud computing areas, let’s briefly explore the meaning of cloud computing. To put it simply, cloud computing is the practice of providing various services over the web. Common examples of resources that fall under the category of cloud computing include servers, databases, data storage, networking, and software.
In a nutshell, this is how cloud computing works. Instead of storing data on a private or local server, cloud-based storage allows data to be kept in a central database accessible via the internet. As long as a computer or any other electronic device can connect to the internet, it will have access to the information and applications it needs.
Clearly, this appears to be an amazing initiative for various businesses, including those within the financial industry. Generally, cloud computing offers businesses a lot of benefits, including reduced expenses, raised output, improved velocity and power, and strengthened security.
So, given such immense advantages, why are banks slow to embrace it? Why can’t they adopt it in their internal activities and offerings to customers?
Why Banks Are Slow to Use Cloud Computing
The truth is that banks and other financial institutions have some concerns about cloud computing. These worries are not based on a lack of confidence in the technology. Rather, they are based on the need to tread carefully around matters of risk, which is very important when it comes to the financial industry. It is common knowledge that commercial banking involves dealing with a lot of sensitive information. This includes personal information of customers and vital company information – not to mention the massive amount of money being transacted on a daily basis.
However, despite the risk involved, there is still a high potential for cloud computing. Apart from speeding up the level of efficiency and productivity, cloud computing is also a vital element in attracting and keeping customers. The presence of digital processes has largely influenced clients’ decisions in recent years. Keeping current clients and attracting new ones depend on a retail bank’s ability to quickly introduce new and helpful services to their customers.
While there may be challenges involved in transitioning to the cloud, financial institutions can successfully identify the risk involved. After that, they can also strategize on how to manage them effectively.
Embracing Cloud Computing
Transitioning from a physical-based model to cloud computing has many uses and advantages. However, particularly for the banking sector, the following are the main advantages of integrating cloud computing:
1. Customer Relationship Management (CRM): Banks can employ cloud-based CRM systems to keep track of customer information and communications. Implementing cloud computing will enable banks to record and monitor all contacts with customers, regardless of their location or time zone, saving time and money. Banks can more easily cater to individual customers’ wants and needs with the help of the cloud.
2. Fraud Detection: Banks may also use the cloud to detect and prevent fraud by processing massive volumes of data from numerous sources. This will aid financial institutions in identifying potentially damaging fraudulent behaviour early on.
3. Data Analytics: A growing number of organisations are turning to cloud-based advanced analytics to better understand consumer behaviour. This can also be adopted by more banks and financial institutions. Banks can better serve their consumers by responding to their demands after observing their behaviour with financial goods.
In the end, in order for financial institutions to effectively take advantage of the cloud, they must first have a thorough understanding of the risks that affect their industry. They also have to put in place efficient risk management procedures. This can allow them to spot and counteract dangers as soon as they arise.
The good news is that with Tarya Fintech, both banks and non-financial institutions can employ effective risk management solutions to help them reduce risks and increase revenue streams. Because by implementing proper procedures and processes, cloud computing is sure to take banks to the next level of finances.