With the inception of cloud computing, banking looks very different than it was a decade ago. As a result, most financial institutions have adopted emerging technology such as cloud computing to stay on par with the changing digital environment, consumer requirements, and new and improved business models.
According to a 2020 report, cloud computing is one of the top five powerful tools to improve customer insights, revenue generation, limit costs, and monetise data assets. Another survey reveals that the global cloud market is estimated to cross over $832.1 billion by 2025.
Before we get into the significance and risks associated with cloud computing technology in banking, let’s quickly understand what cloud computing is.
What Is Cloud Computing?
Cloud computing is the delivery of IT solutions over the internet. With cloud computing, individuals and organisations don’t have to buy, own, and maintain physical data servers. Instead, one can use such robust technology services as needed from cloud providers.
Cloud computing services are divided into the following models:
- Infrastructure as a service (IaaS) – Organisations can purchase IaaS resources from different service providers or invest in software, types of equipment, or servers.
- Business Process as a Service (BPaaS) – This business model is ideal for different business operations like payroll, human resources, and billing.
- Platform as a service (PaaS) – PaaS eradicates infrastructure complexities and offer a platform to businesses for developing and managing their applications.
- Software as a service (SaaS) – It houses business software and gives users access to different data through a browser.
A cloud is available both in public and private. A private cloud is a data centre that provides IT resources and permissions to a limited audience, while public cloud services are available to everyone on the internet.
Why Is Cloud Computing Important In Financial Sectors?
Undeniably, there are many advantages of cloud computing in the banking segment. It is an excellent option for banks to store data and manage resources efficiently. Here are some added benefits of adopting the cloud infrastructure:
- Increases Efficiency
Just as academic tools such as a word counter or an APA referencing generator improve students’ efficiency, cloud computing streamlines different banking operations. It simplifies payment processes by connecting the customers with the sellers on a specific application and makes transactions fast and easy to track.
- Cost Cuts
When banks don’t have to invest in premium-quality hardware and software and skilled specialists, they can enjoy cost benefits by shifting to cloud. Since most cloud service providers offer cloud and IT infrastructure updates for free, banks will have to pay only for the used technology for different operations.
- Faster Customer Service
Today, whether you are looking for an assignment maker for customized Assignment help or an online assignment writer for an urgent paper, you want swift service. Thanks to cloud computing, banks can use customized cloud technology to develop and launch bundled products and services. Furthermore, it allows banks to understand their client requirements better and quickly meet the growing demand for customized solutions.
- High Flexibility and Scalability
Cloud computing technology enables banks to keep up with the changing tech trends and meet customers’ needs more efficiently. With the ability to scale technology, financial institutions can quickly respond to their client’s needs and gain a competitive edge.
- Enhanced Business Agility
Flexible cloud-based operating models can allow the banking segment to shorten the development phase and provide faster banking solutions. Moreover, as it enables organisations to shift from non-critical services, businesses can transform necessary operations and improve business growth.
- Long-Term Business Continuity
Cloud computing technology improves data protection and increases a financial institution’s fault tolerance and disaster management abilities. It also offers a high level backup at a lower price than traditional methods, increases productivity, and boosts ROI.
Challenges of Cloud Computing in Banking
Although there are several notable benefits of adopting cloud technology in banking services, many banks still hesitate in implementing it because of the following reasons.
- Breach of Data Privacy
Data security is one of the biggest challenges of technology – and cloud computing is no exception. Banks possess a large amount of critical datasets. Banks need to keep it safe from cyber breaches or any third-party intrusion. Although data breach cases are common in today’s time, it’s also preventable.
- Lack of Control
Not all organisations feel comfortable in sharing their data and business applications with a cloud service provider. Giving a third-party control over such a large volume of data raises control concerns. Organisations must choose the right partner to address and overcome this challenge.
- Compliance Concerns
Banks need to comply with specific regulatory standards. For example, there are compliance regulations that restrict intermixing data on public databases. So, banks need to understand where their datasets are stored in the server.
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Cloud computing technology has a prominent role in managing large datasets and improving services to meet the changing demands of modern customers. Shifting to cloud indeed has its challenges, but using old infrastructure can hinder overall service. Therefore, organisations must adopt digital initiatives and find ways to mitigate the challenges for quicker and safer banking services.
Karen Hamada is an experienced academic writer, dedicated to helping students with customised essay outline and Assignment writing service help, on behalf of MyAssignmenthelp.com. Also, she is a freelance ad copywriter and travel blogger, coming all the way from Glasgow, the United Kingdom.