Financial institutions are in a time of evolution. Thanks to the rapid generation of data, these entities are looking for efficient, secure and instantaneous methods to optimize information management. In this regard, the cloud seems to be the most viable solution, and we will tell you why and what advantages it offers to financial services!
Modern challenges in financial services
A report prepared by Invigorating Banking, mentions that 83% of the leaders of financial institutions consider that old technology can no longer meet their needs. While 89% think that the modernization of processes and the integration of an IT area will be the best solutions to prevent the decline of users.
The point is that financial services have been digitizing, which has required companies to revamp their systems to take advantage of data management through the use of the cloud. However, this transition has generated several challenges, such as the ones we will share with you below.
1. Complying with policies and regulatory requirements
The success and sustainability of the financial sector revolves around trust. So to achieve and maintain that trust, financial services companies must work hard to comply with external regulatory requirements and internal policies, such as corporate social responsibility.
The rapid proliferation of data, combined with the evolving regulatory landscape, has placed firms under enormous pressure to modernize their systems. Issues such as data retention and security standards in information distribution are of major concern to today's financial leaders.
2. Ensuring data quality
Having a lot of data is often considered a good thing, but not all data is useful. When data comes from many different sources, it's only a matter of time before conflicts start to arise. When that happens, poor data quality becomes a serious challenge that leads to flawed analysis.
To overcome challenges related to data integrity and data quality, financial services firms must work to reduce and integrate their data streams. The ultimate goal is to have a single source, or centralize each source.
3. Maintaining information security
When a company has not covered the issue of data security, it becomes an easy target for hackers and cyber attackers. Dusty data, which is unstructured data stored in company databases that has not been analyzed and processed, is inherently more vulnerable to attack. So cloud-based management can prevent this kind of risk.
4. Avoid information silos
Financial services companies often have a distribution of data to different systems, departments and units, which often generates a lack of information control and, therefore, data silos. This is not an easy or cheap challenge to address, since if the institution still works under a traditional scheme, it will require time and investment to extract data from those old systems and translate them into a format that is ready for modern analysis.
5. Train and hire professionals with data expertise
Big data analytics is a relatively new and emerging area, brought about by the rapid and unprecedented proliferation of digital assets. In fact, the technology has evolved at such a pace that companies have struggled to keep up with developments. As such, there is a growing shortage of people with the skills and experience needed to deal with big data effectively. So it is important for companies to train and add IT-experienced contributors to their team.
Why is the cloud important in financial services?
Cloud computing is used within financial services for a variety of purposes, including:
Customer relationship management:
Financial institutions use cloud-based CRM systems to manage customer data and interactions. This allows companies to track all customer interactions, regardless of location. Using the cloud also makes it easier for banks to provide personalized service based on customer needs and preferences.
Fraud detection:
Financial firms employ the cloud for fraud detection and prevention by analyzing large amounts of data from multiple sources. This helps detect suspicious activity before a theft or scam is committed.
Data analytics:
Banks are increasingly using the cloud for advanced analytics to gain insights into customer behavior patterns and trends. By understanding how they interact with financial services products, organizations can create new offerings that meet their needs.
Now, let's see what advantages the use of the cloud could bring to financial institutions.
Advantages of using the cloud in financial services
Lower costs
Financial companies can save money by moving all information to the cloud, since they no longer need physical equipment or maintain their own servers. In addition, most providers of this technology offer flexibility by charging only for the space used, without forgetting that updates are free and automatic. This makes its adoption reduce costs.
Improved security
The public cloud is a more secure environment than most on-premises systems and offers multiple layers of protection against data breaches and other attacks. Also, financial services and data are backed up thanks to encryption, suspicious activity identification, antivirus, and other functions.
Streamlines processes
Cloud platforms are designed for fast performance and can handle large amounts of data quickly and easily. This helps banks improve transaction processing speed and reduce procedural delays. It also enables reporting and analysis to be done efficiently to promote results-based decision making.
Drives growth
A cloud platform can scale up or down as needed, providing the flexibility needed to better serve your customers within financial services. So if the amount of data and processes increases, the same system can remain in use and accommodate the institution's growth.
Manage the cloud of your system or software
Now you know the importance and advantages of using the cloud in a financial institution. If you belong to this sector and are looking to offer differentiated experiences, empower your employees, improve productivity, strengthen data security and improve customer service, then a cloud computing platform is a very viable solution for your company.
Modern challenges in financial services
A report prepared by Invigorating Banking, mentions that 83% of the leaders of financial institutions consider that old technology can no longer meet their needs. While 89% think that the modernization of processes and the integration of an IT area will be the best solutions to prevent the decline of users.
The point is that financial services have been digitizing, which has required companies to revamp their systems to take advantage of data management through the use of the cloud. However, this transition has generated several challenges, such as the ones we will share with you below.
1. Complying with policies and regulatory requirements
The success and sustainability of the financial sector revolves around trust. So to achieve and maintain that trust, financial services companies must work hard to comply with external regulatory requirements and internal policies, such as corporate social responsibility.
The rapid proliferation of data, combined with the evolving regulatory landscape, has placed firms under enormous pressure to modernize their systems. Issues such as data retention and security standards in information distribution are of major concern to today's financial leaders.
2. Ensuring data quality
Having a lot of data is often considered a good thing, but not all data is useful. When data comes from many different sources, it's only a matter of time before conflicts start to arise. When that happens, poor data quality becomes a serious challenge that leads to flawed analysis.
To overcome challenges related to data integrity and data quality, financial services firms must work to reduce and integrate their data streams. The ultimate goal is to have a single source, or centralize each source.
3. Maintaining information security
When a company has not covered the issue of data security, it becomes an easy target for hackers and cyber attackers. Dusty data, which is unstructured data stored in company databases that has not been analyzed and processed, is inherently more vulnerable to attack. So cloud-based management can prevent this kind of risk.
4. Avoid information silos
Financial services companies often have a distribution of data to different systems, departments and units, which often generates a lack of information control and, therefore, data silos. This is not an easy or cheap challenge to address, since if the institution still works under a traditional scheme, it will require time and investment to extract data from those old systems and translate them into a format that is ready for modern analysis.
5. Train and hire professionals with data expertise
Big data analytics is a relatively new and emerging area, brought about by the rapid and unprecedented proliferation of digital assets. In fact, the technology has evolved at such a pace that companies have struggled to keep up with developments. As such, there is a growing shortage of people with the skills and experience needed to deal with big data effectively. So it is important for companies to train and add IT-experienced contributors to their team.
Why is the cloud important in financial services?
Cloud computing is used within financial services for a variety of purposes, including:
Customer relationship management:
Financial institutions use cloud-based CRM systems to manage customer data and interactions. This allows companies to track all customer interactions, regardless of location. Using the cloud also makes it easier for banks to provide personalized service based on customer needs and preferences.
Fraud detection:
Financial firms employ the cloud for fraud detection and prevention by analyzing large amounts of data from multiple sources. This helps detect suspicious activity before a theft or scam is committed.
Data analytics:
Banks are increasingly using the cloud for advanced analytics to gain insights into customer behavior patterns and trends. By understanding how they interact with financial services products, organizations can create new offerings that meet their needs.
Now, let's see what advantages the use of the cloud could bring to financial institutions.
Advantages of using the cloud in financial services
Lower costs
Financial companies can save money by moving all information to the cloud, since they no longer need physical equipment or maintain their own servers. In addition, most providers of this technology offer flexibility by charging only for the space used, without forgetting that updates are free and automatic. This makes its adoption reduce costs.
Improved security
The public cloud is a more secure environment than most on-premises systems and offers multiple layers of protection against data breaches and other attacks. Also, financial services and data are backed up thanks to encryption, suspicious activity identification, antivirus, and other functions.
Streamlines processes
Cloud platforms are designed for fast performance and can handle large amounts of data quickly and easily. This helps banks improve transaction processing speed and reduce procedural delays. It also enables reporting and analysis to be done efficiently to promote results-based decision making.
Drives growth
A cloud platform can scale up or down as needed, providing the flexibility needed to better serve your customers within financial services. So if the amount of data and processes increases, the same system can remain in use and accommodate the institution's growth.
Manage the cloud of your system or software
Now you know the importance and advantages of using the cloud in a financial institution. If you belong to this sector and are looking to offer differentiated experiences, empower your employees, improve productivity, strengthen data security and improve customer service, then a cloud computing platform is a very viable solution for your company.