Cloud computing technology is creating new possibilities for banks and other financial institutions. But while industries like retail, healthcare, and agriculture have rapidly embraced cloud services, much of the financial sector still relies on on-premise legacy systems to manage data and run mission-critical applications.
These local computing solutions come with many limitations, from low security to costly maintenance and upgrades. Plus, given the rise in remote work due to the impact of COVID-19, employees need to be able to connect to software applications from anywhere in the world—a requirement that older legacy systems simply cannot support.
With a cloud-based system, business applications can be accessed through laptop computers, smartphones, and other devices—regardless of the user’s location—via a basic internet connection. This technology also enables lower operational costs, better data security, and more scalable workflows.
In other words, migrating legacy systems to the cloud is essential for growing financial organizations that are looking to leverage modern, cutting-edge tools and improve their bottom line.
Let’s take a closer look at the key benefits of cloud computing in fintech.
Future-proofing your financial organization means setting up a technological ecosystem that can seamlessly adapt to market changes and grow alongside increasing demand.
As you expand your customer base and add more innovative technologies to the mix, such as AI and IoT, your cloud environment should be able to support necessary changes—without resulting in excessive costs, operational limitations, or other challenges. For growing businesses that still use on-premise infrastructures, storing additional resources and data often requires costly, time-consuming upgrades.
Sophisticated data management
Financial organizations rely on data to effectively verify identities, manage accounts, understand customer spending habits, run marketing campaigns, and so on. But under legacy systems, it can be difficult to access certain information or implement new data resources.
With a modern system for capturing and analyzing large amounts of data, your business will better understand its customers and therefore make smarter decisions when updating internal processes and the overall client experience. Cloud infrastructures allow you to easily connect disparate solutions—from marketing websites, to social media, to public record databases, and everything in between—so that the data from each source can be accessed and managed on a centralized platform.
As mentioned earlier, the need for remote-work technology is greater now more than ever, especially as an increasing number of banks are closing physical branches and replacing them with online services. So the ability to access data and applications from a distance is probably the cloud’s biggest advantage. Cloud infrastructures enable employees to manage accounts, build reports, oversee processes, communicate with customers, and perform other critical tasks as quickly and efficiently as possible—without physical location playing a role.
Cloud environments are extremely adaptable, meaning they can support both old and new tools when applicable. In recent years, innovative technologies like AI, ML, IoT, and VR have been leveraged by financial institutions to modernize the customer experience, improve data management, streamline internal processes, and ultimately maximize revenue. Legacy systems, on the other hand, we’re not designed to support such innovations.
When managing sensitive information like a customer’s banking credentials, social security number, home address, and so on, financial institutions must take every step necessary to protect data from cybercriminals. Fortunately, cloud computing enables businesses to leverage the most advanced software for data encryption, fraud detection, and user verification and authentication.
Top cloud service providers for financial organizations
Choosing the right cloud solutions will depend on the unique goals and requirements of your business. As of 2022, these are the top cloud service providers in the fintech space:
These services are trusted by many of the biggest financial institutions in the world. Each of them offers a pay-as-you-go model, which means your business will only be charged for the amount of data it ends up using over a given period of time. So if you have a slow month, you don’t have to worry about putting funds toward unnecessary data storage.
Best practices when migrating to the cloud
Once you’ve decided to embrace cloud computing for your business, certain factors should remain top of mind throughout the legacy migration process. Here are some best practices that all cloud migration strategies should follow to maximize value:
- Protecting data: Before moving data and applications over to the cloud, it’s important to understand your service provider’s capabilities regarding data encryption and access control. This often requires going through various use cases, technologies, and processes to see where any vulnerabilities may exist.
- Maintaining compliance: Financial institutions are required by law to protect customer information. So before you decide on a cloud computing service, make sure you understand the measures each provider takes to help their users maintain compliance with various government regulations.
- Having a disaster recovery plan: In case something goes wrong, it’s crucial to have all of your business’ data copied and stored in a secure location. All reputable cloud providers have disaster recovery plans, but they’re not all the same—so it’s important to understand how each one works, as well as which is the most reliable and cost-effective for your business.
Getting started with cloud computing in fintech
Many stakeholders at financial institutions—while they may be aware of the undeniable benefits that cloud computing provides—simply don’t have the time, resources, or technical expertise to pull off the migration in-house. That’s why teaming up with a legacy modernization partner like Codal is so important.
Our award-winning team has over a decade of experience digitally transforming banks, brokerages, insurance companies, and other enterprises in the financial sector. And in that time, we’ve developed partnerships with industry leaders, as well as expertise around modern fintech solutions and other innovations that are paving the way for the future of finance.
While you focus on running your business, our team will plan and execute a cloud migration strategy that focuses on lowering costs, driving internal efficiency, enhancing data security, and establishing long-term scalability. With respect to your timeline and budget, we’ll identify and integrate cutting-edge, cloud-based technologies that allow your financial organization to thrive in the digital era.
Interested in learning more about the benefits and implementation of cloud computing in fintech? Get in touch with a member of our team today!