Cloud Banking Is in the Forecast

November 12 , 2020

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You don’t need a meteorologist to tell you that cloud technology is firmly in the forecast.

Cloud technology, the on-demand delivery of data storage and computing power, enables digital experiences across nearly every vertical. Perhaps the most important industry where cloud technology has innovated years of stale processes is banking and financial services.

Financial institutions, like banks, are the vessel of capital and in this modern digital banking and e-commerce environment and they must stay relevant to compete. Enter cloud banking.

What is cloud banking?

Cloud banking is the enablement of bank products and services over the internet. Instead of buying, owning, and maintaining physical data centers and servers, banks can access technology services, such as computing power, storage, and databases, on an as-needed basis from a cloud provider.

The leading cloud providers offer innovative products and services to help banks meet the demand of modern consumers. With these cloud technologies serving as the backbone of the banks’ offerings, financial institutions can improve revenue generation, lower operating expenses, and gain valuable data and insight while delivering market-leading solutions to their customers. 

By combining these massive data sets through cloud technology, banks and financial institutions are able to break down barriers between risk, finance, customer service, regulatory obligations, product, and design. Breaking down these crucial silos and combining the data on the cloud empowers banks to provide a better user-centered banking experience

This level of advanced synchronicity can only be borne out of a digital bank that embraces the cloud technology powering the modern global economy.

Types of cloud banking technologies

There are a few main types of cloud banking technologies that fit within the open banking framework. For the purposes of this article, let’s focus on the three main types that can bring a bank to the cloud: Infrastructure as a Service (data storage), Platform as a Service (deriving insights from data warehouse), and Software as a Service (data-driven experiences).

Infrastructure-as-a-Service (IaaS)

Infrastructure-as-a-Service (IaaS) contains the basic building blocks for cloud IT. It typically provides access to networking features, computers (virtual or on dedicated hardware), and data storage space. 

Platform-as-a-Service (PaaS)

PaaS removes the need for banks and financial institutions to manage underlying infrastructure  —usually hardware and operating systems. It enables the institution to focus on the deployment and management of its applications.

Software-as-a-service (SaaS)

SaaS provides a complete, out-of-the-box, product that is run and managed by the service provider. In most cases, people referring to SaaS are referring to end-user applications (such as web-based email). 

With a SaaS offering, the bank does not have to think about how the service is maintained or how the underlying infrastructure is managed — they focus on what they do best, and only need to think about how that service interacts with the broader technology stack.

Why banks are moving to the cloud

An estimated 2.4 billion consumers currently access digital banking services worldwide. That number is projected to grow to 3.6 billion consumers by 2024. Simply put, banks that have not started to migrate to the cloud are lagging behind.

Deloitte breaks down the benefits of moving to the cloud into two categories: above the line and below the line. Above the line values can be described as “new business frontiers” whereas below the line values help to “optimize the organization.” This framework fits for just about any business, but banks can take specific tactics from values both above and below the line.

Let’s focus on the four factors that are most likely driving banks to the cloud.

Digital transformation

Every bank and financial institution will say they value digital transformation; some may even go as far as to say it is their number one priority. However, many of these large institutions fall short in many ways. Cloud banking enables banks and financial institutions to quickly and inexpensively tap into disruptive technology like artificial intelligence, machine learning, and blockchain while streamlining customer data collection, management, and analysis. 

Leading banks have already developed this technology-first mindset and have implemented these solutions over the last decade. In addition to tripling its technology staff since 2011, the leading financial institution has spearheaded an effort to migrate the bank’s back-end software development tools and infrastructure to the public cloud, enabling Capital One to “get software products to market faster, more easily and with top-notch security.”

Supplementary to accelerating digital transformation, cloud banking enables a level of cost-savings that allows banks to free up resources to be more innovative. 

Cost savings

Perhaps the most appealing benefit of cloud banking technology is the ability to cut down on costs for technology spend. Some financial leaders suggest that banks could eventually save approximately 50% by moving operations to the cloud.

Building data storage centers requires a massive amount of upfront investment from the financial institutions and can be limiting as markets and strategy shift. Also, quite frankly, building data storage centers isn’t the strength of most banks. For example, outsourcing and moving your storage to the cloud enables cost savings by making it easier for financial institutions to create cost efficiencies. This is done by eliminating maintenance and utilizing dynamic pricing that many cloud providers offer. 

Simply put, why pay for something you’re not using or are not an expert in maintaining? 

Cloud technology helps to facilitate spending control across business units while improving the analytics and insights gathered from the data. Banks are better understanding how upfront investment in cloud technology will help their long-term financial projections. IT technology spend has decreased by 4.7% from 2019 to 2020, with many of these financial institutions reevaluating their technology spend and moving to the cloud during a global pandemic.

Security

In PwC’s 19th Annual Global CEO Survey, 69% of financial services’ CEOs reported that they are either somewhat or extremely concerned about cyber-threats, compared to 61% of CEOs across all sectors. What many of those CEOs are starting to realize is that the best way to safeguard their security is to rely on the experts. 

Security breaches are a PR nightmare for financial executives and security in the cloud can provide a lot of the expertise and peace of mind they are looking for. Many security layers in the cloud are owned and maintained by the providers.

Deloitte’s report goes on to assert, “with thousands of organizations now hosted in the cloud and testing its security—many with extreme security standards—cloud providers have established a strong track record of supporting very secure environments. As a result, cloud environments can be as secure or even more secure than those on-premise—but only when implemented correctly by a skilled and trained security team.”

Bottom line: if the cloud is secure enough for the CIA, it’s probably safe for a leading bank.

Smarter operations

Optimizing the operations of a financial institution is front of mind for many executives. Synchronizing the organization behind optimized operations can play a huge part in increasing revenue and market share. The cloud enables this for banks at scale.

Banks are aligning business units across risk, finance, customer service, regulatory, product, and design to more closely connect data sources to drive decision making and innovation. The cloud enables this type of operational optimization by centralizing mass amounts of data under one safe, secure, and accessible roof. From enabling better remote work to powering cutting-edge user applications, the examples are everywhere.

Global banks are using Google Cloud and AWS services for “storage, analytics, machine learning, and security, to develop new digital products and support security and compliance standards for millions of personal banking customers worldwide.” 

The right way to move to the cloud

Ultimately, this movement towards cloud computing and technology in the banking industry is enabling greater access to vital banking products and services. It’s crucial for banks and financial institutions to build products and services that are inclusive and allow for greater access across the financial wellness spectrum. 

Most of these banks and financial institutions will leverage a network of partner providers to solve these challenges. Finding the right partner can make or break any cloud banking innovation.

Amount is powering the future of modern cloud banking by combining modern digital banking experiences with the expertise and insight from over $7.5 billion in lending transactions. By leveraging data integrations and proprietary models to identify risk, Amount’s platform empowers your financial institution to grow the right way. 

Built by lending industry veterans, Amount helps partners go digital in months—not years—with a suite of proven platform solutions for credit decisioning, fraud prevention, account verifications, servicing engines, and CRM solutions. With Amount, you can catapult your growth and bridge the cloud divide without disruption.

LEARN MORE

Footnotes

The information in this post is provided for informational and advertising purposes only. Amount's service may vary for each customer. For more information, email us – media@amount.com.

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Gino Rodriguez

Gino manages customer success for bank partners at Amount. With a background in information systems and economics, he is passionate about fusing technology and personal finance to lead to better financial outcomes.

Cloud Banking Is in the Forecast

Posted by Gino Rodriguez on November 12 , 2020
Gino Rodriguez
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You don’t need a meteorologist to tell you that cloud technology is firmly in the forecast.

Cloud technology, the on-demand delivery of data storage and computing power, enables digital experiences across nearly every vertical. Perhaps the most important industry where cloud technology has innovated years of stale processes is banking and financial services.

Financial institutions, like banks, are the vessel of capital and in this modern digital banking and e-commerce environment and they must stay relevant to compete. Enter cloud banking.

What is cloud banking?

Cloud banking is the enablement of bank products and services over the internet. Instead of buying, owning, and maintaining physical data centers and servers, banks can access technology services, such as computing power, storage, and databases, on an as-needed basis from a cloud provider.

The leading cloud providers offer innovative products and services to help banks meet the demand of modern consumers. With these cloud technologies serving as the backbone of the banks’ offerings, financial institutions can improve revenue generation, lower operating expenses, and gain valuable data and insight while delivering market-leading solutions to their customers. 

By combining these massive data sets through cloud technology, banks and financial institutions are able to break down barriers between risk, finance, customer service, regulatory obligations, product, and design. Breaking down these crucial silos and combining the data on the cloud empowers banks to provide a better user-centered banking experience

This level of advanced synchronicity can only be borne out of a digital bank that embraces the cloud technology powering the modern global economy.

Types of cloud banking technologies

There are a few main types of cloud banking technologies that fit within the open banking framework. For the purposes of this article, let’s focus on the three main types that can bring a bank to the cloud: Infrastructure as a Service (data storage), Platform as a Service (deriving insights from data warehouse), and Software as a Service (data-driven experiences).

Infrastructure-as-a-Service (IaaS)

Infrastructure-as-a-Service (IaaS) contains the basic building blocks for cloud IT. It typically provides access to networking features, computers (virtual or on dedicated hardware), and data storage space. 

Platform-as-a-Service (PaaS)

PaaS removes the need for banks and financial institutions to manage underlying infrastructure  —usually hardware and operating systems. It enables the institution to focus on the deployment and management of its applications.

Software-as-a-service (SaaS)

SaaS provides a complete, out-of-the-box, product that is run and managed by the service provider. In most cases, people referring to SaaS are referring to end-user applications (such as web-based email). 

With a SaaS offering, the bank does not have to think about how the service is maintained or how the underlying infrastructure is managed — they focus on what they do best, and only need to think about how that service interacts with the broader technology stack.

Why banks are moving to the cloud

An estimated 2.4 billion consumers currently access digital banking services worldwide. That number is projected to grow to 3.6 billion consumers by 2024. Simply put, banks that have not started to migrate to the cloud are lagging behind.

Deloitte breaks down the benefits of moving to the cloud into two categories: above the line and below the line. Above the line values can be described as “new business frontiers” whereas below the line values help to “optimize the organization.” This framework fits for just about any business, but banks can take specific tactics from values both above and below the line.

Let’s focus on the four factors that are most likely driving banks to the cloud.

Digital transformation

Every bank and financial institution will say they value digital transformation; some may even go as far as to say it is their number one priority. However, many of these large institutions fall short in many ways. Cloud banking enables banks and financial institutions to quickly and inexpensively tap into disruptive technology like artificial intelligence, machine learning, and blockchain while streamlining customer data collection, management, and analysis. 

Leading banks have already developed this technology-first mindset and have implemented these solutions over the last decade. In addition to tripling its technology staff since 2011, the leading financial institution has spearheaded an effort to migrate the bank’s back-end software development tools and infrastructure to the public cloud, enabling Capital One to “get software products to market faster, more easily and with top-notch security.”

Supplementary to accelerating digital transformation, cloud banking enables a level of cost-savings that allows banks to free up resources to be more innovative. 

Cost savings

Perhaps the most appealing benefit of cloud banking technology is the ability to cut down on costs for technology spend. Some financial leaders suggest that banks could eventually save approximately 50% by moving operations to the cloud.

Building data storage centers requires a massive amount of upfront investment from the financial institutions and can be limiting as markets and strategy shift. Also, quite frankly, building data storage centers isn’t the strength of most banks. For example, outsourcing and moving your storage to the cloud enables cost savings by making it easier for financial institutions to create cost efficiencies. This is done by eliminating maintenance and utilizing dynamic pricing that many cloud providers offer. 

Simply put, why pay for something you’re not using or are not an expert in maintaining? 

Cloud technology helps to facilitate spending control across business units while improving the analytics and insights gathered from the data. Banks are better understanding how upfront investment in cloud technology will help their long-term financial projections. IT technology spend has decreased by 4.7% from 2019 to 2020, with many of these financial institutions reevaluating their technology spend and moving to the cloud during a global pandemic.

Security

In PwC’s 19th Annual Global CEO Survey, 69% of financial services’ CEOs reported that they are either somewhat or extremely concerned about cyber-threats, compared to 61% of CEOs across all sectors. What many of those CEOs are starting to realize is that the best way to safeguard their security is to rely on the experts. 

Security breaches are a PR nightmare for financial executives and security in the cloud can provide a lot of the expertise and peace of mind they are looking for. Many security layers in the cloud are owned and maintained by the providers.

Deloitte’s report goes on to assert, “with thousands of organizations now hosted in the cloud and testing its security—many with extreme security standards—cloud providers have established a strong track record of supporting very secure environments. As a result, cloud environments can be as secure or even more secure than those on-premise—but only when implemented correctly by a skilled and trained security team.”

Bottom line: if the cloud is secure enough for the CIA, it’s probably safe for a leading bank.

Smarter operations

Optimizing the operations of a financial institution is front of mind for many executives. Synchronizing the organization behind optimized operations can play a huge part in increasing revenue and market share. The cloud enables this for banks at scale.

Banks are aligning business units across risk, finance, customer service, regulatory, product, and design to more closely connect data sources to drive decision making and innovation. The cloud enables this type of operational optimization by centralizing mass amounts of data under one safe, secure, and accessible roof. From enabling better remote work to powering cutting-edge user applications, the examples are everywhere.

Global banks are using Google Cloud and AWS services for “storage, analytics, machine learning, and security, to develop new digital products and support security and compliance standards for millions of personal banking customers worldwide.” 

The right way to move to the cloud

Ultimately, this movement towards cloud computing and technology in the banking industry is enabling greater access to vital banking products and services. It’s crucial for banks and financial institutions to build products and services that are inclusive and allow for greater access across the financial wellness spectrum. 

Most of these banks and financial institutions will leverage a network of partner providers to solve these challenges. Finding the right partner can make or break any cloud banking innovation.

Amount is powering the future of modern cloud banking by combining modern digital banking experiences with the expertise and insight from over $7.5 billion in lending transactions. By leveraging data integrations and proprietary models to identify risk, Amount’s platform empowers your financial institution to grow the right way. 

Built by lending industry veterans, Amount helps partners go digital in months—not years—with a suite of proven platform solutions for credit decisioning, fraud prevention, account verifications, servicing engines, and CRM solutions. With Amount, you can catapult your growth and bridge the cloud divide without disruption.

LEARN MORE

Topics: Insight