We are currently living in an age of rapid innovation and transformation in the banking sector. And there’s no going back. The proliferation of technologies like AI, ML, and IoT will only fuel this change further, but not like the cloud has done.
The cloud has been an important enabler in facilitating and accelerating this transformation. It has become a vehicle for next-gen banks and financial institutions to provide scalable, agile, and innovative solutions.
Advantages of Cloud Banking Platforms
Here are some of the benefits you get when you transition to a cloud banking platform:
- Faster Processing Speeds: Cloud platforms can comfortably tackle the data deluge associated with banking, facilitating swifter data processing and customer interactions, which is crucial for meeting customer expectations effectively.
- Data Security: With a design centering around data security, cloud banking solutions offer continuous analysis and rigorous updates to address vulnerabilities, ensuring the integrity of financial systems.
- Improved Customer Experience: Leveraging real-time data analytics, cloud banking enables personalised customer service, which is instrumental in enhancing customer satisfaction rates and building loyalty.
- Cost Efficiency: Cloud-based core banking eliminates the need for extensive on-premise infrastructure, reducing costs related to maintenance, security, and storage while negating the necessity for specialised teams focused on these areas.
- Flexibility and Scalability: A cloud-based architecture allows banks to scale their services up or down or integrate a new feature or service without downtime. This makes it easy to respond to changing demands and market dynamics.
Cloud migration has become inextricably linked to front-to-back process modernisation and transformation, which many banks and financial institutions are undergoing. In fact, around 83% of financial institutions have already adopted cloud banking platforms or considered doing so.
To help you make the right choice for your cloud transition, let’s understand the types of cloud banking solutions available, as well as the many benefits they bring to core banking.
What are Cloud-Native Banking Platforms?
Cloud-native platforms are engineered specifically on cloud environments and for cloud environments. This allows banks to harness the cloud’s full array of features, including microservices, containers, and APIs.
Cloud-agnostic banking platforms aren’t tied to a specific cloud ecosystem (cloud-agnostic) and can be deployed across multiple cloud environments. This facilitates an easy transition to a new ecosystem, should the need ever arise.
Built with modularity, cloud-native solutions enable financial institutions to tailor functionalities like lending, onboarding, and payments to their customer requirements. It facilitates seamless operation across multiple clouds, avoiding vendor lock-in and enabling workload portability.
All of this translates to reduced CAPEX on servers and hardware and streamlined infrastructure management. Operational expenses are also optimised, as it’s the cloud providers who oversee the routine maintenance and iterative updates.
What are Cloud-Ready Banking Platforms?
Cloud-ready applications are designed to be compatible with cloud platforms but are not developed exclusively for the cloud. This means that banks can essentially move their core banking applications from their physical servers to the cloud with minimal or no code adjustments.
By adopting a cloud-ready banking platform, banks can access enhanced processing capabilities and improved system reliability offered by cloud service providers. Also, banks can adopt cloud functions incrementally, an approach that can significantly reduce risks during the transition.
Cloud-ready solutions are typically integrated with existing cloud services and security protocols, offering a balance between the reliance on legacy systems and the modern advantages of the cloud.
What are Cloud-compatible banking platforms?
Cloud-compatible solutions are programs or services that can be hosted on an existing cloud provider but aren’t necessarily suited for it. While cloud-compatible solutions offer a high degree of flexibility and scalability, they are constrained by the performance and availability of the underlying cloud platform. The benefit of utilizing a cloud-compatible solution is that transitioning between cloud providers is simplified because you don’t have to totally rewrite the application code to make it function on another cloud platform.
One disadvantage of choosing a cloud-compatible solution is that the application’s performance and availability may be constrained by the underlying cloud platform. Certain features and capabilities offered on the cloud provider’s platform may be restricted to the application.
How Are Cloud-Native Banking Solutions Better Than Cloud-Ready/compatible Solutions?
A cloud-native platform is a better choice than a cloud-ready/compatible platform mainly due to its design, which is optimised for the cloud from the outset. It fully embraces the cloud’s flexibility, security, and scalability, allowing for a more seamless integration.
Also, when you’re looking to replace your ageing infrastructure with flexible and future-proof technologies, you might want to go all the way in. That’s because demands are always fluctuating, and customer expectations are always changing. Having a cloud-native solution by your side that can scale up or down based on varying volumes can help you provide consistent customer experiences while keeping costs at bay.
All in all, cloud-ready core banking solutions may be a great stepping stone for banks to migrate to hosted offerings, but when it comes to long-term cost efficiency and superior scalability, you should opt for cloud-native solutions.
Important Things to Consider When Choosing a Cloud Services Provider
With the boom of cloud computing, the market is flooded with numerous cloud banking platforms. To ensure that you get the best value out of your investment, here are some things to consider before making the purchase decision:
- Security Protocols: Evaluate the cloud provider’s security measures, including access controls, encryption protocols, and backup and disaster recovery plans.
- Service-Level Agreements (SLAs): Check the guaranteed response times for support tickets, penalties for service disruptions, and performance metrics.
- Technical Support: Evaluate the responsiveness and availability of the service provider’s support team. Ideally, they should provide 24/7 support through various channels like email, phone, or live chat.
- Performance and Speed: Assess the cloud provider’s network infrastructure, including the availability of content delivery networks (CDNs) and multiple data centers. These modules contribute to reduced latency and faster response times.
- Compliance and Regulation: Based on your location and industry, you may need to comply with specific regulations and data standards. Ensure your cloud service provider has processes in place to meet these requirements.
Leverage Cloud the Right Way with iGCB’s Digital Core
If you want to embrace the full range of the cloud’s capabilities, iGCB’s cloud-native, AI-powered Digital Core can streamline your digital transformation and drive cost optimisation, customer satisfaction, and operational excellence for your bank.
To learn more, click here.