Cloud Computing and Its Advantages in the BFSI Sector – Analytics Insight

Cloud computing has garnered massive traction in recent years. As one of the crucial and rapidly developing technologies, cloud computing has enabled many other disruptive technologies such as big data, artificial intelligence, the internet of things (IoT), and others. It has revolutionized many core banking processes, offering a myriad of advantages, including cost savings, usage-based billing, business continuity, agility, interoperability and secure storage, among others.

Earlier, players in the BFSI ecosystem were reluctant towards cloud infrastructure, particularly owing to privacy concerns, security, regulatory requirements, and the complexity of internal and third-party legacy systems integration. With increasing banking services such as payment gateways, online transactions, digital wallets, and omnichannel customer services and more, financial institutions are actively exploring cloud computing applications.

The banking, financial services and insurance industry deals with voluminous amounts of data for an effective banking experience. Rapid technological innovation and digitization are driving the digital revolution in the sector. That being said, banks are investing heavily in cloud environments, public, private and hybrid clouds to make banking processes easier as well as convenient.

The adoption of cloud computing in BFSI delivers substantial advantages to financial services and insurance providers.

By integrating the cloud, financial institutions can capitalize on modular capabilities, thwarting the underutilization that often accompanies the expansion of physical architecture. It can minimize a large up-front capital expenditure by lessening the need for investment in dedicated hardware and software along with the staffing to maintain them. Additionally, it allows banks and insurance companies to focus on core customer-focused functions.

With cloud computing, BFSI companies will be able to respond quickly to changing markets, customer needs and technological demand. It also enables applications to be built, tested and rolled out in a fraction of the time compared with traditional, on-site environments. Integrating the cloud also makes access between parties and institutions easier. Eventually, it assists the banking, financial services and insurance companies to manage the distinct demands in the banking landscape.

Cloud computing offers a complete data backup to information, making it a highly reliable technology in BFSI. As the emerging landscape of fintech across the globe is changing the traditional norms of the BFSI sector, banks are looking to address the pain points of customers from a fresh perspective. Among the challenges is data privacy. By leveraging the hybrid cloud model, banks can secure their data while enjoying the improved flexibility and scalability of the cloud.

Keeping data safe and secure from unauthorized access or damage has always been a significant concern for the financial services industry. Using the cloud can lower risks associated with doubts around data security and traditional technology, such as capacity, redundancy and resiliency concerns. It can give banks more control over security issues.

Banks perform a large number of works, from email to application development and testing, and customer management to data intelligence and storage. However, these processes are more time-consuming and error-prone. Cloud computing significantly removes all the redundant time for such processes, giving more time to employees to work on valuable tasks, hence bolsters productivity.

Moreover, cloud computing has a regulatory advantage. As vendors can completely secure the data or provide partial access to selected data, it can ensure the regulations in databases.