In the modern digital world, the banking industry is significantly shifting towards the digital-only approach. The sector is becoming more competitive than ever using advanced, digital technologies. In this way, cloud computing is one such technology that promises business agility, efficiency and speed at lower costs. As banking processes rely heavily on the internet, cloud infrastructure delivers robust computing services over the internet, including servers, software, networking, and analytics.
Cloud technologies help banks create a multi-channel relationship with the customers in every aspect of the service. This is where the term Cloud Banking comes in. It assists in storing, backup and recovering voluminous data of an organization. It also delivers the software, shares the data, updates and recovers data efficiently.
Since the banking industry needs to meet the ever-growing data input demands, there is a need to explore the systems that do not rely on like-system migration so that infrastructure can be adapted without any disruption. In fact, financial institutions have always been reluctant in adopting new technologies, including the cloud, as there are apprehensions regarding reliability, regulatory and security risks. But the increasing rise of cloud computing is changing the way consumers interact with banks.
On the other side, FinTech (financial technology) maintains considerable growth and keeps that growth relentlessly by leveraging cloud technology. FinTech has the potential to help banking service providers by reducing the CAPEX and OPEX budgets, and enhancing the service portfolio and the user experience. Over the last few years, fintech startups have been dominating the banking sector with its vast nature of technological adoption. They are, however, representing a very small market share but their digital strengths and speed that they bring have fascinated customers as well as industry stalwarts.
Using cloud banking, financial institutions can get the option to move from a capital-intensive approach to a more flexible business model that minimizes operational costs. Meanwhile, there has been significant growth of cloud service providers that are offering supporting tools and frameworks which enable banks to quickly and easily make the transition to the cloud.
Today, banks have moved from legacy banking solutions, heavily investing in digital transformation and new offerings. For instance, Bank of America offers extensive digital solutions, including the Erica chatbot, and has had noticeable upticks in digital usage and engagement. Financial services company BBVA (Banco Bilbao Vizcaya Argentaria) has focused on taking advantage of APIs in banking, by offering the BBVA Open Platform, a Banking-as-a-Service platform. Conversely, JPMorgan Chase has also experimented with blockchain technology and is reportedly planning a digital-only launch in the UK.
Moreover, cloud banking has also the potential to assist financial institutions in delivering more personalized services. In a report, it is found that there will be 3.6 billion digital banking users by 2024, up from 2.4 billion in 2020. This banking model has created the way to a successful alternative that delivers a protective solution to data. Hence, when big banks leverage cloud-enabled solutions and engineering, they can boost themselves into competitive demarcation, giving acceleration to customer services at a lower cost.