Cloud computing technology is a hybrid technology that can compute several services like software, servers, storage, networking, analysis on the internet, and many more. It is easily deployable with the banking system. Banks and other financial institutions can easily integrate Cloud technology into their infrastructure.

Cloud computing and banking

Since its initiation, cloud computing has increasingly gained momentum in the banking sector. This is because cloud computing technology may offer matchless security, quickness, and the capability of handling a large number of consumer data. Though not now, a day will come when cloud computing and banking industry will be complementary.

Some benefits of cloud computing are.

▷It reduces the capital costs

▷It improves operational speed.

▷Cloud computing provides matchless security

▷It also boosts productivity.

The infrastructures of the traditional banks are old, inflexible and it is costly to install new technologies in those infrastructures.  So, the banks or other financial institutions should take the help of cloud computing to provide better-quality customer service at a lesser cost in real-time.

Banks have to collect and process numerous data in real-time. So, the banks should modernize their outdated operating systems and infrastructure to stay in the competition.

Examples of cloud computing in banking

Cloud computation has an impact both on the front office and back office. Front office jobs are everything you face. It may be interaction with the individual client or a corporate client. Payment gateways, fund transfer, online payments, and digital wallet services are the best examples of cloud computing in banking. 

Back-office functioning is behind the screen. The staff working in HR are responsible for seeing that the employees get paid. They process loan applications and recover the amount from the customers. Cloud computing guarantees secured customers’ data and provides banks a disaster recovery. It also ensures that the customers’ payments are processed securely.  Cloud technology can scan thousands of transactions in a second to improve security against fraud.  This is known as scalability.

Besides, other examples of cloud computing in banking are, Know Your Customer, Management of Card, Net Banking, Mobile Banking, Kiosk service, etc.

Cloud computing for rural banking

The rural banks play a significant role in the upliftment of the villagers as well as the country. This is because rural banks were set up in villages to give the people better services. 

The rural banks provide loans to farmers or small business people that bring revenue to the bank. Therefore, you cannot overlook the contribution of a rural bank. 

The primary purpose of Cloud computing for rural banking is that bank customers need not go to the bank and can operate their accounts from net banking from home. 

It uses the modern cloud computing varieties for rural banking to fill in the several technological gaps in village areas. Banks may offer various new services and products to their customers with the help of new technologies. This would help improve the economic activities of banks and bring revenue.

Benefits of cloud computing in banking sector                                   

The benefits of cloud computing in banking sector are numerous.  The banking business is like a large vault where massive consumer data is kept. The bank is always enthusiastic about delivering its customers the best services in no time.

Cloud computing technology provides scalability, which is very vital for any financial institution. This means the cloud can scan a thousand transactions in a second.

Financial institutions with no cloud computing try to connect and automate the back office, which takes time and hamper customer experience. But Cloud computing can bring multiple data and operational systems together in less time. As a result, Bank staff may spend this time on more creative analysis and decision-making.

The significant benefits of cloud computing in the banking sector are a feasible alternative to the legacy system.

The outdated legacy system is exposed to data tampering or cyber security risk. Cloud technology can instantly identify the breaches by its embedded security and thus save banking data. It also can afford a high level of backup so that disaster recovery is possible.

Challenges of cloud computing in banking industry

                           

Adapting to Cloud Technology, banks may cut the reap.  Yet many banks are cautious about adopting cloud technology. In a recent study, 61% of the financial administrators admitted that they are in the formative stage.

What are the challenges of cloud computing in banking industry?

Cloud computing is facing these challenges.  The banking data is extremely precious and also vulnerable. So keeping the information protected is of extreme importance for the banks. To keep them to the third party, i.e., to the cloud, is a task of mammoth pressure, and the bank administrators think twice. 

Cloud technology is a new technology, and the primary concern of adopting it is security. Handing over the data to a third party is a major concern. Cloud technology is also complex to understand and apply. Deficiency in expert cloud engineers is a concern for the institutions. There is a skill gap that blocks the road. To remove these obstacles, banks should give proper training to their staff before shifting to the cloud.

It is tough to hand over the customers’ sensible and vital data to a third party. If customers’ data is leaked or exposed, it could cause severe disruption to the business. But the customers will sustain the loss most.

Again, if the banks do not adopt new technologies, they will be lagging. So, the bank authority should frame a policy. Bank authorities should decide what to shift in the cloud and whatnot. Banks can keep the critical data to their premises and shift the lesser dependencies, lesser important applications to the cloud to reduce risks. Also, you can perform migration in a phase-wise manner. To take the service of an eminent provider is the best.

How many banks use cloud?

Still now, how many banks use clouds, might be told in one breath because the number is so small.

ICICI bank is the pioneer bank that has handed over some of its applications on Microsoft Azure Cloud.

HDFC bank started to work with cloud technology with Oracle Cloud in 2019. The stated its planning and budgeting using Oracle cloud. Moreover, the bank will shift its user acceptance testing to Oracle Cloud Infrastructure in India’s data center, shortly.

State Bank of India, has preferred Office 365 to be powered by Cloud solutions. This is to improve teamwork among its workforce and address the gigantic requirement of renovating it into a modern workplace.

Banking cloud architecture

A Banking cloud architecture highlights many problematic areas and thereby helps banks to redress them. It enables a multi-channel customer experience such as customer onboarding, lending, and payment processing, etc.  Decision-making in banking services is done by using insights from data and artificial intelligence.

Customer onboarding gives customers hassle-free banking. Loan origination is important because it brings revenue. Implementing this architecture can improve customer relationships and reduce operational risk.

Financial frauds are the cause of financial loss and damage to reputation. The frauds are always active. Thus the Machine Learning architecture helps in detecting frauds.