Why are banks deploying cloud platforms?
Technological development is constantly changing the format of our work, providing new convenient solutions. With the advent of cloud platforms, users have discovered the possibility of remote data storage. Cloud storage uses a computer resource in the form of an online service, and all data is remotely accessed on Internet servers. Banks also use such systems for reliable and efficient operations. In this blog, I will look at the reasons why traditional players are adopting modern developments.
1. Convenience and economy. For banks, the issue of customer service in automatic mode is a tool to reduce risks. It becomes less profitable to maintain your own infrastructure of software and servers because of upgrades, staff maintenance, troubleshooting. These situations generate additional costs. Storage, processing, and interbank exchange of customer data can be safer, cheaper, and faster thanks to cloud technologies.
2. Competitiveness and relevance. Today, about 95% of banks in the U.S. and Europe already use cloud services in one form or another, and there is a 30% increase in investment in this area. The major players have long moved their servers to the cloud infrastructure, and PayPal is one of them. Banking startups are scaling rapidly and taking market share from more traditional banking organizations. The big banks see this as a threat, so they are also investing in modern technology.
3. New opportunities. The introduction of cloud services will be in demand among banks focused on innovation, technology, and development. A majority of financial institutions are stepping up the pace of new product development and implementation. For rival banks, the cloud has become part of their technology development plan. An example is the American bank Capital One, which has reduced the number of data centers from 8 to 3 thanks to cloud technology. Competition forces banking organizations to test technological innovations in order to keep up with more progressive startups and be able to compete for customers in the market. That said, the cost of cloud technology is lower than in-house infrastructure, especially when you consider ongoing expansions, costs for upgrades, software and innovation, and maintenance of in-house servers.
4. Security. Another reason for determining the need to switch from in-house servers to cloud services. The architecture allows for load balancing of servers, thus controlling resource consumption. This structure also encourages fintech to make changes or updates to their developments, while not affecting other system elements. This can be extremely beneficial for large companies with multiple projects. An additional hedge could be the use of multiple cloud services to distribute the load on servers.
Cloud technology opens the door to enhanced bank capabilities for several reasons at once. Constant relevance, because unlike physical servers, the cloud does not become obsolete, nor does it require additional resources or a large staff to maintain operability. Increased efficiency, as multifunctionality becomes available thanks to new software solutions. Gaining an advantage over competitors due to the simplicity, efficiency, and security of new technological solutions. For the banking sector of Ukraine, this is something to strive for and be guided by the positive experience of successful states. After all, cloud services may well move from the rank of “promising innovation” to “a prerequisite for survival” soon.
