Digital transformation is a trend that is dominating all sectors, and increasing numbers of businesses are becoming fully data-driven.
Greater portions of IT budgets are being allocated for digital transformation technologies, and the arrival of the cloud marks the most important tenet of this digital transformation.
The shift to cloud-native was a pattern already in motion before 2020, but Covid-19 has acted as a catalyst for this shift and the pandemic illustrated why the cloud is so vital for the operations of businesses to run efficiently in the 21st century.
As lockdowns necessitated workers to stay at home, organisations were impelled to move their infrastructure to the cloud to allow employees and customers to access data on demand from afar.
The use of tools that we have all become so accustomed to, such as distance learning, remote working, and virtual communications, are all systems facilitated by the cloud.
These tools have enhanced our labour productivity from home, and as a result, technology has permanently altered our way of working.
New working patterns, including our hybrid model of work-from-home and in-office, have accelerated the speed at which businesses are investing in the cloud, particularly within the finance industry.
On cloud nine
While initially slow to adopt digital technologies, banks are now reaping the rewards of embracing the cloud. First and foremost, data aggregation is made more efficient. Acquiring and storing large quantities of data is a high priority for banks, as is the ability for employees and customers alike to access this data automatically, anywhere, and at any time.
As we become increasingly inundated with data, cloud computing means that this onslaught of information can be analysed and managed easily. Relevant insights are easy to harness quickly and third-party applications can also be easily integrated.
Instantaneous access to data wherever we are in the world is something that we all take for granted, yet this would not have been possible ten years ago. Individuals want to manage their finances from wherever they are, and staff need to be able to deliver and maintain customer service processes remotely, too. The pandemic has highlighted the necessity of remote self-service technology. For banks, this will only increase with the gradual close of physical branches.
Shifting to cloud-native is helping new finance companies to progress ahead of their older, more established competitors. This is because the cloud is incredibly agile, far more so than traditional legacy technologies.
The cloud can therefore help financial companies to meet new trends or adapt to the ebb and flow of market demands, or adjust their strategy to world events such as the Covid-19 pandemic. Legacy technologies, on the other hand, are much less agile and cannot adapt as easily to new market trends and consumer demands. It is for this reason that the cloud is giving financial companies who are willing to embrace digital transformation a leg up – allowing them to progress against competitors who are slower to make the change.
Moving infrastructure to the cloud also allows greater flexibility and scalability. As fintech is a rapidly growing industry, banks need an infrastructure that can keep up with the pace of their growth. The cloud provides this necessary scope for scale.
Finally, there are the basic cost-savings of physical hardware upgrades and legacy platform management. While financial companies used to spend huge amounts of time and money installing and updating their services, now they can have Software-as-a-Service (SaaS), which automatically updates them with the latest software as soon as it is available. Therefore, business improvements can be made instantly.
Overcoming obstacles to cloud adoption
So, what, if any, obstacles remain which prevent fintech firms from moving to the cloud?
There is still a clear element of distrust around the cloud, coupled with long-standing loyalties to legacy technology.
There is also a significant difference in acceptance of these technologies by various regulatory agencies around the globe. While countries like the USA and UK are showing significant openness towards cloud technologies, emerging markets like India, the Middle East and Africa are still assessing the risks.
Within the pandemic-driven remote-working world, digital transformation has become of utmost importance. Transformational technologies, including the cloud, are creating a more flexible financial world, one that is more accessible worldwide.
While there still remain wider challenges around creating business cases for cloud adoption with regard to return on investment, it is abundantly clear why businesses are drawn to this technology. For future success, financial institutions must continue to embrace the promise of the cloud.