A critical element of the digital revolution, Cloud computing is transforming the banking, financial services, and insurance (BFSI) industry. The blog should cover the key drivers for cloud adoption, business value, and benefits. The blog should also analyze the different cloud models and their suitability and highlight aspects that must be considered for different business functions before adopting them.
Would like the blog to focus on the different Cloud deployment architecture models (Multi-Cloud, Hybrid, etc.), Cloud application development options (Native apps, serverless, containers, etc.) from the data security perspective, and how it can be achieved
Cloud Computing in BFSI: Decision Guide to Choosing the Best Cloud Model for Finance Enterprises
Just about everyone is talking about the cloud. It is driving agility for enterprises, and everyone from business leaders to forward-thinking CIOs is using it to support their business and operating strategies and improve performance and returns. The banking, financial services, and insurance (BFSI) industry are also leveraging the cloud to address specific requirements and unique challenges.
Cloud is a game-changer for businesses, and COVID-19 has further accelerated cloud adoption. Today, most finance enterprises have eagerly embraced cloud-based systems to enable remote working, upgrade customer-facing software, prevent frauds, and increase efficiency. It aids operational activities such as new account opening, fund transfers, loan approvals, insurance advice policy renewal, and more. All you need is a cohesive cloud strategy to realize its business value fully.
As per a Google Cloud survey1, 83 percent of respondents said they were deploying cloud technology as part of their primary computing infrastructures, with hybrid cloud being the most popular (38 percent),, followed by single cloud (28 percent) and multi-cloud (17 percent). It, therefore, becomes imperative to understand the different cloud deployment models and options and define your objectives to create a roadmap for cloud adoption.
Finance and banking in the cloud
The financial sector is far from full adoption as far as core, back-office workloads are concerned. BFSI companies have adopted cloud technology for various reasons, including Data and IT security, regulatory reporting, fraud detection and prevention, data reconciliation, and underwriting activity.
Those who have embraced cloud adoption unanimously agree on its benefits that include:
Ø Adapting to changing customer behaviors and market trends
Ø Enhancing efficiencies and operational resilience
Ø Enabling innovation to upgrade product and service portfolio
Ø Enhancing data security capabilities
Ø Eliminating silos to ensure connectedness and transparency
Ø Scale up or scale down capacity to manage diverse workloads and activities
Ø Driving integrated decisions by integration of business units to share data and respond quickly
A cloud computing environment is just what you need in the current scenario. But you need to first understand the influencing factors and the cloud compositions and service models to decide which one's right for you.
Factors to consider
BFSI enterprises often embark on a cloud journey with infrastructure-as-a-service (IaaS) models to later evolve to platform-as-a-service (PaaS) and software-as-a-service (SaaS) models as they mature. To choose the right model and devise a strategy, you need to be very clear about your objectives.
Your business case for adopting Cloud
Critical applications are often built on legacy technologies, and moving them to the cloud usually entails high costs. Also, migration is not easy until they undergo a bit of a revamp. A detailed cloud strategy and roadmap, therefore, becomes essential to initiate cloud adoption.
I*ntended customer experience & service differentiation*
A differentiated service experience is a key to the success of a Cloud implementation. You can either build your custom solution for max flexibility or use an existing Off-The-Shelf (OTS) or SaaS solution with their out-of-the-box features. OTS and SaaS solutions are suitable when the time to market is key - A custom solution works better to deliver a differentiated CX
Government regulations
The modern regulatory framework requires enterprises to comply with stringent privacy, security, and regulatory standards in regards to capture, storage, and sharing of customer data. Understanding these requirements is essential before choosing between on-premise, private, or public cloud to host systems.
Choosing cloud deployment and service models
Financial institutions vary in their business functions and technology priorities. Feasibility analysis, cloud migration assessment, and strong decision-making capabilities are necessary to choose the right deployment and service models.
A leading investment bank is using a public cloud for its regulatory reporting solutions. In contrast, a prominent Norwegian bank has adopted the PaaS model to transform its peer-to-peer mobile payment application using microservices on the public cloud. The bank has captured nearly 80% 2 of the market, ensuring high application availability and scalability to service more than 2M customers. While doing so, it was able to increase transaction processing throughput by 10x and reduce infrastructure setup time from 60 to 6 days and release time by 3x.
A major North American bank specializing in cards, wealth management, and investment services had spectacular results after migrating to the cloud. It leveraged the IaaS and PaaS models on the private cloud to modernize its channels by enabling digital identity, push notifications, e-wallets, behavioral biometrics, etc. The bank saw a 40% improvement in time-to-market, an increase in active mobile user base by 20%, and a drop in annual infrastructure cost by 15%.
Chinese banks3 such as Minsheng Bank, Ping An Bank, Industrial Bank, and Beijing Zhongguancun Bank are using cloud-native SaaS platforms to strengthen their anti-fraud systems and increase the responsiveness of the front-office and agility of the back-office.
Clearly, cloud adoption differs significantly in scope and value for every organization. While some banks have adopted PaaS and SaaS models to modernize their channel and teller applications, many adopt low code SaaS offerings for sales, customer relationship management, onboarding, and enterprise resource planning systems.
Cloud computing deployment
Cloud service models
Choosing the right cloud service model is easier if you recognize its potential in furthering your business objectives. The model you select should evolve based on your needs and the business functions you want to support.
Distinctions exist among all, especially when you evaluate them with a risk-based approach. Here are the top 3 popular ones:
Infrastructure as a Service (IaaS)
It offers IT infrastructure (servers and storage) that can be managed online via a pay-as-you-use basis without getting into the complexities of purchasing and managing physical servers. It is dynamic and flexible, and the services are highly scalable. Resources are available as a service, and it allows enterprises to carry out automated administrative tasks.
Platform as a Service (PaaS)
It allows enterprises to develop, test, run, and manage applications since it is accessible to multiple users through the same application development . It can be integrated with web services and databases and supports diverse languages and frameworks. Its ability to 'auto-scale' gives it an edge.
Software as a Service (SaaS)
It is an on-demand software that hosts applications. Applications can be accessed easily via an Internet connection and a web browser from a central location. It is hosted on a remote server and available for use on a pay-as-per-use basis. Users do not have to oversee hardware or software updates since updates are applied automatically.
Winning with Cloud power
As the needs of modern finance enterprises evolve, mature cloud services will continue to emerge to help manage different business functions. Cloud adoption can help deliver compelling value propositions to customers and innovate along the way. Cloud power is the way forward to enhance capabilities and enable end-to-end automated processing. However, the key to successful cloud adoption lies in the cloud model you choose and the service provider you decide to work with.
Top comments (0)