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Financial institutions are dealing with a lot of change—new customer expectations, emerging technologies, and alternative business models, to name a few. Now these institutions need strategies that unleash the power of cloud to prepare for a post-pandemic future.
The financial services industry in Europe is going through an upheaval. COVID-19 continues to significantly affect various regions and industries, and many financial institutions are being forced to adapt to changing customer and market demands. This has been further compounded by a sharp rise in credit needs, owing to the abrupt halt imposed on many small and mid-sized businesses. As a result, banks are being forced to respond with new lending capabilities that are not supported by their legacy environments.
Enter: the cloud
Cloud is helping financial institutions unlock great sources of value, both ‘above the cloud’ creating new business frontiers and driving business innovation, and ‘below the cloud’ focusing on building resilient operations, IT security, and cost-efficient models.
Some banks are using cloud-based tools to process vast amounts of data, enabling them to accelerate digital transformation efforts by reducing the development cost and time taken to roll out innovative financial products. Cloud has enabled many banks to move from on-premises hosted data centres to environments that support premium application features, new products, and resilient architectures. As a result, they are more responsive to the fast-evolving needs of their customers.
Leveraging cloud technology has given financial firms the edge to increase service availability to “three nines” (99.9%) by integrating automated updates and maintenance, whilst maintaining resilience and control over security. It has empowered banks and financial services firms to meet ever-evolving regulatory reporting requirements (like Comprehensive Capital Analysis and Review, Solvency II) in multiple operating jurisdictions, a critically important capability in an industry where cross-border transactions are the norm.
Before the pandemic, discussions between technology providers and financial firms were increasingly focused on what business problems the cloud could solve. This past year, financial services firms in Europe have expanded their capabilities by adding digital channels and new functionality to digital portfolios—the aim to provide resilient, flexible, and secure systems for customers to establish trust and experience. As such, the cloud has become something of a quintessential technology across all the solution themes that banks were expected to embrace.
Here is what cloud can do:
• Cloud can enable remote work capabilities for employees. This includes hosting secure collaborative spaces—internally as well as externally—so organisations can connect with customers and prospects for business continuity.
• Cloud provisions additional compute and analytics capabilities on-demand, giving banks the infrastructure they need to handle spikes in online traffic whilst supporting compute-intensive workloads securely and at scale.
• Cloud encourages banks to find customer-centric solutions, such as designing new customer experience journeys through video banking for those who do not want to visit branches, and the delivery of tailored services and products enabled through cloud-first approaches.
• For banks experiencing a surge in demand for mobile and online services, cloud-based artificial intelligence (AI) can help predict credit and loan defaults, whilst helping them comply with liquidity stress testing and capital planning requirements.
• Cloud offers a technology debt-free environment that is compliant with diverse banking regulations. It eliminates the need to run and maintain data centres and keep pace with software currency. In effect, it delivers business continuity assurance through reliable and resilient infrastructure.
• Cloud promises increased business agility, reduced operational risk, and access to new technologies such as data analytics and AI in an on-demand, pay-as-you-go model that improves insights, increases security, and accelerates innovation.
• Banks can envisage and create 360-degree digital banking or new monetisation models on cloud, with its readymade services and hundreds of additional capabilities made available through the cloud marketplace.
Risk does not end with the pandemic
Chief Risk Officers know this, and they will remain on their toes to insure from future ‘black swan events’ like COVID-19. Enterprises will continue to renew their strategy around principles like agility, resiliency, security, and innovation. Financial services organisations will accelerate their digitalisation journeys focusing on lending and risk management, fraud and data breaches, real-time payments for non-card instruments, digital identities, AI-enabled LOS and know your customer (KYC), robotic process automation (RPA) and machine learning (ML)-assisted servicing, and more. Infosys Cobalt, for example brings these technology elements to accelerate that journey.
I see the cloud playing an even bigger role in banks and financial institutions acquiring such capabilities in quick time, whilst providing a stable operating environment will become a key factor for financial firms beyond their core infrastructure as they formulate exit and recovery strategies once the pandemic is truly over.