Banking has undergone seismic changes in recent years. From the advent of mobile payments to new methods of making deposits — such as peer-to-peer lending and crowdfunding — as well as new disruptors such as Bitcoin, the traditional banking model has come under intense pressure.

New technologies have allowed financial competitors to take a slice of the banking pie away from traditional banks and change the way we think about finance forever.

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Public Cloud Has Led to A Shakeup of Banks’ Obsolete Business Blueprints

Did you know, in 2021, many leading enterprises leveraged cloud computing to accomplish their crucial business operations seamlessly? 

In the public cloud, applications are stored on servers rather than on personal computers and are accessed through the internet instead of local connections.

This revolutionary method of information access has altered business practices in every sector of finance and banking, from investment to trading, wealth management, and everything in between.

Through the replacement of high-carbon physical equipment in banks with the virtualized cloud environment, the idle time of systems decreases, consumption of resources and energy is regulated, and the efficiency of the computing power steps up.

The energy footprint and carbon footprint go down as public cloud data centers handle the exact same workloads 5x faster and 10x more efficiently than any other organization.

benefits of cloud banking
Fig 1. Benefits of Cloud Banking

The How of Transformation: From Traditional Banking to Cloud Banking

The public cloud is disrupting the way banks view risk processing and operational functionality. It has restructured the foundation of the banking industry and turned traditional desk-side enterprises into web-delivered services, allowing them to focus on growing their customer base and strengthening their infrastructure.

It is one of the most viable solutions in today’s data-driven economy and provides a way of radically reducing the costs and completely moving to a flexible set-up.

Banks that embrace the new trends in finance such as cloud computing, while leveraging the power of technology, are coming out on top and achieving in a big way in the following aspects.

  • Deployment – Rapid, convenient and faster execution of applications from a central data center.
  • Operations – Simplified and virtualized practices, more diverse investment opportunities for clients, reduced costs and increased speed to meet client needs.
  • Data – Consistent and easy access to data, which in turn improves visibility into the financial status of customers.
  • Finances – Seamless management of funds, multiple bank accounts and credit cards from a single portal, that reduces operational costs, and more.
  • Disaster Recovery – Faster automated backup, quicker restoration times and faster provisioning of resources – all with lower total cost of ownership (TCO).
  • Technologies – Flexibility in utilizing leading-edge mechanisms to meet the requirements of customers and free up resources in existing infrastructure, thus reducing costs, mitigating risk and gaining agility.
  • Customer Behavior – Analyzing customer behavior through trends and patterns to create personalized services.
  • Support – Round-the-clock assistance for clients situated globally.
  • Defense – Detection of fraudulent activities and elimination of risk of data loss either due to hardware depreciation or personnel negligence.

As per the most recent reports, the retail banking market is growing at a rate of more than 10% year on year. As organizations seek to strengthen the data protection mechanisms with cloud services, standalone data centers are becoming less of an effective option.

The public cloud is consistently providing a way for firms to benefit from the efficiencies of IT without compromising on operational and security standards.

Comparison between Traditional and Cloud Banking

Fig 2. Comparison between Traditional and Cloud Banking

Public Cloud is Rebuilding the Outlook of the Financial Industry

Public Cloud presents the following benefits to the IT departments in financial organizations and the technologies they support.

Steadfast workload implementation

From organizational structure, development, deployment, and maintenance to outsourcing, the cloud’s abilities bring a surge in the performance of FinTech frameworks. By utilizing public cloud capabilities, these frameworks respond in nanoseconds and store, analyze, and manage vast amounts of financial data.

They also improve banks’ overall performance by eliminating the distance factor, enabling easier storage of and access to information, save costs, and help with better planning for business growth.

Financial institutions no longer face greater scrutiny from regulators and can easily solve complex consumer demands with the enhanced speed and scalability of IT systems.

Regular expenditure control

With traditional systems, you have to buy hardware on your own and pay for it yourself, too. In the cloud, these are variable costs. The moment you need more capacity or more power, you simply use a credit card to pay for it.

It starts with a basic plan, and from there, you can upgrade as much as you want. Public cloud allows financial enterprises to harness massive supercomputers without having to build them and relieving them of the enormous capital cost that’d be associated with such a solution, i.e., building a supercomputer.

Profitable performance

Cloud technology in the banking sector has gained popularity over a period of time. With the advent of cloud services and API-enabled ecosystems, banks can now efficiently utilize their resources and put them to optimal utilization to provide a customized and personalized experience for their customers.

It provides a cost-effective alternative for addressing business management challenges. It also enables financial institutions to implement efficiency in terms of consolidation, flexibility, customer experience, operational cost savings, and increased agility.

Regulatory compliance

Effective corporate governance and sound risk management enhances financial stability, which is often achieved through collaboration among market participants and regulators.

A cloud-based platform provides banks with an environment in which they can access these services from anywhere in the world via connectivity offered by the internet.

The cloud facilitates compliance with technical standards that are required by financial regulators, assuring banks of maintaining a level playing field for competition between banking institutions.

Modernized Data Centers 

An outdated data center environment is no match for modern-day cloud services. Public clouds provide a predictable and consistent infrastructure that can be easily scaled as per the requirements of your business when processing transactions, creating databases and troubleshooting issues in an efficient manner.

The rapid time frame helps banks respond more quickly by delivering better customer experience. Public cloud providers provide dynamic scaling as required by the business at any time, whereas traditional data center management often puts limitations on business growth driven by resource allocation issues. 

Cloud Security Controls 

Banking is changing rapidly. The financial services industry is seeing an increasing number of users and customers using fintech applications like electronic payments and mobile banking instead of traditional banking methods. 

With this expansion, however, comes an incredibly complex array of threats and vulnerabilities. Financial institutions can implement cloud security controls such that sensitive customer data gets the highest levels of protection possible.

By leveraging public cloud providers and platforms, banks can meet their desire for efficient and resilient infrastructure while maintaining the highest levels of network security by utilizing the latest in cloud firewalls, cloud backup, and other networking tools and techniques.  

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