Cloud Banking – The future of the banking industry
The changing needs of consumers, emerging technologies, and alternative business models have become the main driving force for banks to adopt cloud technology.
Cloud computing technology has been penetrating into every aspect of life, making banking and capital market leaders increasingly realize that the “cloud” is no longer a public concept. technology, which is really a strategy that can help banks enhance customer satisfaction and bring products and services to market faster, allowing them to maximize their return on investment.
Current technology is giving customers the desire for new service experience and can be done anytime, anywhere, instantly.
According to market research conducted globally in 2019, about 4 in 10 consumers expect to be able to open a bank account immediately, despite the fact that only 1/3 of the bank transmits it. The system can accommodate the service. Therefore, if traditional banks cannot meet this demand of customers, they will face the risk of losing market share.
Why Cloud Banking?
Completely complying with regulations on the security of information systems in banking operations.
In the past, most banks were worried about security when putting data on the Public Cloud (public cloud, provided by a third party).
However, according to the survey of all AWS customers – the largest Public Cloud provider in the world, the most important reason for organizations to move to the Cloud is because the leadership is aware that the Public Cloud is safe. more secure than the systems they develop on their own.
Although the bank’s system is based on the Cloud, they still have full authority to manage, process, and always clearly understand their data. With the Vietnam market, AWS and some other Public Cloud providers ensure compliance with the Law on Cyber Security and the regulations of the State Bank.
Cut the cost
According to IDC, a bank that moves the system to the Cloud of AWS will save an average of 31% in information technology infrastructure costs.
Moreover, with the Pay-as-you-go payment model (use as much as you pay) will help the bank minimize risks and test costs with new products and services.
With SaaS software’s Subscription fee model, it allows banks to allocate expenses annually or even monthly, reducing operating and maintenance costs according to the traditional technology model.
The bank can focus entirely on creating new products that meet customers’ desires and business growth.
Speed up the development of new products and new services, easily expand markets and improve labor productivity
With the current traditional technology system of most banks, the time to launch a new product takes 9 months or more. With Cloud Banking, products are brought to market quickly, taking time in weeks.
Especially, when configuring or modifying products and processes, the sales team can do it themselves without relying too much on the team of technology experts. The leadership of the bank is also assured because the technology of Public Cloud providers and of SaaS is always updated.
Moreover, the Cloud platform provides banks and financial institutions with a range of third-party products and services. This Plug and Play model makes it easy for banks to use the latest innovations of technology financial companies (Fintech) and to easily expand into new markets.
According to an IDC report, AWS is helping thousands of organizations, including banks such as DBS, NAB, Capital One, Standard Charter …, businesses like Coca-Cola, GE, BP, Enel, Samsung, NewsCorp, Twenty-First Century Fox … successfully migrated most of the system to Cloud. These organizations have significantly saved IT costs, as well as improved their labor productivity to an average of 62%.
Improve the ability of sustainable development and more transparency for banks
By using data analysis tools, artificial intelligence, machine learning, Internet of Things platform, face recognition, natural language processing …,
Cloud Banking helps businesses get closer together through sharing data, using data analysis to quickly solve customer problems, improve customer experience …
It is this creativity and cohesion that helps the bank retain talented people, increase the ability of consistency in the organization, create a creative and transparent working environment.
How to transform traditional banks into Cloud Banking?
Joseph D. Giarraputo, Editorial Director of Global Finance, said: “With the rapid development of today’s financial services industry, to be the best bank in the world requires a special combination of Safe and innovative.
DBS Bank is showing the way to the future of the entire financial services industry, which is digital transformation, strong finance, and global citizenship. ”
Since 2014, DBS has embarked on a digital transformation program that is considered to be the most comprehensive for a bank, from information technology systems to management thinking, culture, and effective evaluation methods. labor.
The transition from DBS’s traditional system to Cloud Banking may take up to 5 years.
The future of the entire financial services industry is digital transformation, strong finance, and global citizenship.
In Vietnam, the bank’s leaders, business, and technology departments are familiar with a data center system located in the country and managed by the bank’s information technology team.
They see the potential of Cloud Banking, but upgrading or replacing the traditional system with the Cloud system is not easy, even a lot of difficulties and barriers to the law, people, and the adaptability of the system. current management system. So how should banks in Vietnam begin to move?
Thankfully, the banks are able to approach this transition gradually. They can combine the current system in Vietnam with different Cloud providers or a Cloud provider, depending on the needs of the organization, the readiness, and the maturity of personnel and the system. Whatever the Cloud model is deployed, the Cloud storage model is still safer in the data center.
Let’s start with business solutions that have been developed in the Cloud, such as CRM, financial management, enterprise performance management (EPM) … Every business problem on the Cloud platform (Cloud Business Case) needs to understand and emphasize how banks can effectively exploit solutions developed on the Cloud, to promote the desired understanding and customer experience, leading to each customer the right products, help increase sales at low costs, find talented employees and create consistency for the operating platform of the business.
In addition, the bank should build a basic value assessment model provided by Cloud, then plan for changing resources to access the market, new price frames, and other business assumptions.
Finally, for every business problem on the Cloud platform, the bank needs to be well aware and script the governance changes. Cloud technology will change the role of employees, the steps to prepare them to fit the new culture and thinking of the organization.
Along with that, the transfer of bank data to the Cloud to take advantage of data analysis tools, machine learning, and artificial intelligence helps speed up the launch of new products and services important.
To do this, banks need to understand what types of data are allowed on the Public Cloud. Choose a Public Cloud service provider who has experience working with banks, because they can offer more flexible pricing and the Cloud platform allows migration to other Cloud providers as needed.
The multi-vendor strategy can be complex and challenging, so if it is not necessary, the bank should choose single suppliers to save conversion time, save costs, and take advantage of the complete advantage of a Cloud infrastructure provider.
Data security and compliance with the State Bank’s regulations on data and infrastructure is the bank’s first and foremost concern. Currently, Public Cloud providers can help banks ensure compliance with the Government’s Cybersecurity Law.
Cloud can also help banks and financial service companies meet growing regulatory reporting requirements in many jurisdictions (such as capital adequacy analysis and evaluation, solvency …).
Cloud can also help banks conduct liquidity and risk calculations during the day, exploit trade monitoring data to detect money laundering transactions and other fraud issues.
Currently, some Vietnamese banks have understood the importance of applying Cloud technology and are exploiting this technology for system administration, creating new services … and they have reduced costs. Executive, in some cases, costs are reduced by more than 50% and product launch time is only 20-40% of traditional system deployment time.
In the long run, this could determine whether banks win or lose in the race of the financial services industry.
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