How cloud technology can transform the financial services sector
Over the past year, traditional financial services companies have woken up to the possibility of change. Though historically slow to embrace new technologies, the sector has been at the forefront of corporate transformation efforts as it looks for ways to retain and engage customers in the face of lockdowns and a rise in competition from more agile fintech players.
A plus for the industry is that the pandemic has dramatically increased the need for its services—digital banking and payments, insurance, and customer support services. The challenge is of course meeting those expectations.
Around a quarter of consumers have abandoned in-person banking, with more than 70% banking digitally every week. There is the sense that traditional institutions will need to become more agile and fast-track innovations to survive this shift. This year we can expect to see a rush to capitalise on emerging technologies to automate manual processes, develop more digital products and deliver better overall service.
Central to this new model will be IT infrastructure built on hybrid and multi-cloud solutions. Adoption of the hybrid cloud is growing across industries but the regulatory and security requirements specific to financial services make it especially helpful in this environment: while the public cloud offers flexibility and agility, the private cloud offers high levels of control and security.
Happily, governments and the public in Asia-Pacific want this all to work. Financial services industry transformation is a focus in terms of government policy in key markets including China, Hong Kong, Singapore and Japan. China’s ongoing FinTech Development Plan is an example of this, while Japan’s Ministry of Economy, Trade and Industry has joined hands with the Financial Services Agency to drive financial services transformation this year. And customers are showing themselves to be more willing to share their financial data in exchange for more tailored services, such as a better mortgage or savings rate.
To succeed, financial services companies need to be as agile and open minded as their customers in their use of technology, which is set to drive everything from the creation of new business and economic models to personalisation and data analysis. Hybrid and multi cloud strategies will underpin this adoption.
Our recent Financial Services Enterprise Cloud Index Report shows that most companies are looking at IT more strategically due to the pandemic. As part of this, more than half are investing more in hybrid cloud services. They are also putting in place a hyperconverged infrastructure (HCI), which will make cloud technology easier to implement and scale. HCI simplifies the task of data center modernization and enables the unification of private and public clouds.
Around half our respondents said their companies have HCI fully deployed or are in the process of doing so, while another 38% expect this to happen within the next one to two years.
They see a modern IT infrastructure as an enabler of speed and security as well as a cost-saving mechanism. Their priorities are to gain more control over IT resource usage (59%), to gain speed (58%) and flexibility (55%), and to save money (31%). In one example, an Indian bank, through the adoption of private cloud technology, has seen call-centre staff efficiency rise by 35%, and reports that its applications and databases run five times faster. Database administration is reportedly 90% more efficient, and the technology has helped speed-up the marketing of new services, with tangible customer benefits during the pandemic.
Whatever turn Covid-19 now takes, the financial services sector’s upgrade is well underway. Its newfound focus on technology points to an appetite for innovation that is likely to extend well beyond the current situation that we find ourselves in. To ensure the momentum continues, hybrid and multi cloud should be top priorities for any IT strategy in this space.
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