When cloud computing meets banking

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One of the biggest trends in the use of technology has been ‘the cloud’, which for many of us is now ubiquitous in our daily lives – from storing personal data on our smartphones to business cloud storage solutions.

In most cases cloud computing offers a convenient, cost effective and secure method of storing a wide range of data for both personal and business use. However, up until relatively recently, it was typically only thought to be appropriate for these uses. But recent reports from the likes of IBM suggest that cloud computing is now expanding into the realms of banking, with financial software companies like Misys, continuously looking to drive innovation and strive for banking inclusion and improved banking services for all parties.

Adapting to a changing landscape

Over the past few years, the banking industry has witnessed unprecedented changes in how they operate and the services they provide. They are now looking at a shift in power where customers are dictating the services provided, not the banks themselves. Much of this is down to the increased used and reliance on technology in our daily lives, which has resulted in customers having higher expectations and demands for quicker, more convenient and efficient banking services. Therefore, the banking industry has had to re-evaluate their business models with regards to operations and IT systems to find new and innovative ways to adapt to and satisfy changing customer requirements.

As a result, more and more banking systems are making the transition to third party cloud banking solutions to offer a better, customer-focussed service. But this move from using their own secure servers to third party ones has raised concerns over security and the potential impact that customers could experience.

The benefits of cloud banking

Naturally with any business decision it’s important to analyse the pros and cons of introducing a new system; and when it comes to cloud banking solutions there are a number of advantages and disadvantages that need to be taken into consideration.

The key advantage of utilising cloud banking systems is the cost savings that can be delivered by outsourcing to a third party. This directly impacts the bottom line, allowing the revenue savings to be reallocated into improving operational areas of the business. The premise of cloud computing allows businesses to buy on demand, only paying for the hardware and software they need, which results in less need to plough significant capital into developing internal IT systems with robust hardware, software and worker resources.

Furthermore, cloud computing can improve banking adaptability to market demands and improve efficiency, which all works to improve the service they provide and build stronger relationships with their customers.

The challenges for cloud banking

However, in order to maximise the effectiveness of a transition to cloud computing, banking systems must ensure they are compliant with industry regulations and offer the highest levels of security at all times. In most cases this will require several different systems that work for internal and external cloud computing purposes, which means finding an effective means of facilitating interoperations between the two with a single management interface is essential. Furthermore, different countries have varying data protection laws in place, which also need to be accounted for with multi-national operations.

Taking all these elements into consideration and outlining a clear and rigorous security structure within cloud banking systems will ensure that even without direct control over their security practices, there is a coherent system in place. This may help to overcome the challenge of security and reliability that will concern customers.

Without demanding and implementing the highest safety and security measures from their cloud computing partners with Service Level Agreements in place, banking systems could compromise security for the end user, and in turn reduce customer confidence.

Sources:

http://www.bankingtech.com/236322/six-reasons-why-cloud-computing-will-transform-the-way-banks-serve-clients-and-the-five-hurdles-to-overcome/

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