Industries: Cloud computing in financial services
In this five-part series, we’ll take a brief look at particular industries to see how the cloud brings about cost and operational efficiencies for the players involved. Previously, we took a look at the construction industry. In this installment, we’ll dive into what cloud computing can do for financial services providers.
Business is all about adding value. Have a business concept, pour capital and sweat equity into it, then skim off profit from the top. By making something faster, more convenient, more robust, or more precious, businesses convert added value into money. If a successful business person claims to have made something from nothing, now you know that that’s just a figure of speech.
What’s also important to note here is flow: money only grows when it flows. In fact, cash kept under the mattress loses value to inflation. But commerce — the exchange of value — allows for wealth creation. This is why firms that help money flow, be they banks, brokerages, or clearinghouses, make money themselves. And if they can make money flow in faster, in larger volumes, and more securely, the greater their profits will be.
This is where information technology (IT) comes in. IT powers the flow of capital for local and global trade. However, with it also comes newer and more pernicious threats to wealth creation, such as cybercrime. There's one IT development that is helping the financial services industry reach its full potential while also mitigating risks: the cloud. Below are its biggest benefits:
Enhanced internal productivity
Cloud services come in three tiers of complexity. The first is Software-as-a-Service (SaaS), which lets firms affordably subscribe to cloud-hosted programs instead of shelling out large sums for lifetime licenses for their local machines. Productivity apps such as those offered in Office 365 are SaaSes that enjoy continual updates, enable mobility, and include real-time collaboration features.
More efficiencies can be realized with cloud-based enterprise resource planning (ERP), a tool that brings separate departments such as sales and marketing, accounting, finance, and human resources under one solution.
The financial services industry is rife with inefficiencies, such as the SWIFT system for money transfer communications. While slowdowns may be the case between financial institutions, it doesn’t have to be so within your own organization. Cloud ERP streamlines internal and customer service processes by winnowing unnecessary procedures, minimizing friction between teams, and automating workflows. It also enables analytics that provides visibility into performance metrics, process bottlenecks, and opportunities for optimizing budgets and financial plans.
The second tier of cloud service is Platform-as-a-Service (PaaS). This lets firms build, test, and deploy their very own line-of-business applications that will run in the cloud. These apps deliver service innovations such as online and mobile banking, digital wallets, secure online payments, and online fund transfers, among many others.
The third and last tier is Infrastructure-as-a-Service (IaaS). It enables firms to establish data centers that are taken care of by cloud service providers (CSPs). These data centers keep sensitive data safe through the following:
- Up-to-date hardware and software– Reputable CSPs such as SimplyClouds are able to anticipate the latest cybersecurity threats and keep their infrastructure and systems secure for their clients. Few financial firms are able to maintain and upgrade their in-house data centers at the same pace as CSPs. Those that do so find that it’s more cost-effective to let CSPs help them handle sensitive data via hybrid cloud solutions.
- Business continuity and disaster recovery– Cloud providers are able to create and implement strategies that allow banks and financial institutions to get back up and running quickly if a natural disaster or a massive cyberattack occurs. Reliable CSPs can also recover crucial data via redundant and continually updated backups.
The financial services industry produces mountains of data, and it is only natural for businesses to pan for golden insights. CSPs are able to help you crunch big data into high-view snapshots of market trends down to granular observations on individual investment preferences and purchasing behaviors.
Behavioral analytics in particular helps firms create investment products and financial services that are tailor-made for their clients. It can also ensure data security through fraud detection. By identifying transaction attempts that are out of the norm, a firm can nip problems in the bud.
Lower costs, greater capabilities
SaaS, PaaS, and IaaS solutions cost money, but thanks to economies of scale, CSPs are able to provide them at far lower costs compared to doing everything in-house. Providers have better infrastructure, larger pools of IT talent and expertise, and greater bandwidth for systems maintenance and upgrades.
With the right CSP as your partner, you’ll be able to focus more on your core competency, namely propagating the flow of money across markets and industries.
Want to learn more about how cloud computing can benefit your financial services firm? Talk to us. Let SimplyClouds help you realize amazing returns on your cloud investments.
Tags: cloud services, disaster recovery, finance, cloud providers, hybrid cloud, business continuity, ERP, financial services industry, Software-as-a-Service, SaaS, Platform-as-a-Service, PaaS, business intelligenceShare