Retail banking, insurance and the capital markets are fast adopting cloud computing in the quest to grow revenues, reduce costs and increase responsiveness to perceptions of risk. The financial sector is struggling to overcome uncertain growth of the economy, increasing regulatory pressure as well as customer cynicism to maintain profitability and enhance customer confidence in their product offers.
Against a background of increased wariness of tech-savvy customers, the need of the hour is higher interaction levels such as instant access to information online and delivery of products and services through handheld and desktop devices.
[easy-tweet tweet=” Retail banking, insurance and the capital markets are fast adopting cloud computing” user=”comparethecloud”]
Strategic Deployment of Cloud Computing
While many financial services companies have been responding to the new challenges by modernising their legacy applications and infrastructure up gradation, a number of forward-looking institutions are deploying cloud computing strategically with an intention to transform how the entire organisation operates. They are scanning and selecting from different models of cloud computing that will enable them to successfully meet the challenges and to improve their business agility. Business agility is the competence of an organisation to cost-effectively and swiftly adapt to environmental changes, according to the leading consulting firm, McKinsey & Co. When a company is agile, it is reflected in increased growth of revenue, greater reduction of cost, and more effective handling of business risks and threats to reputation.
Revenue Growth Challenge
[easy-tweet tweet=”Significant impact has been made on American financial services by the Dodd-Frank Wall Street Reform”]
Uncertainty of economic recovery, the highly-competitive environment and increasingly tightening regulatory framework are posing immense challenges to the growth of revenues. Significant impact has been made on American financial services by the Dodd-Frank Wall Street Reform and Consumer Protection Act. This, together with other imminent acts, are really squeezing the fee income of retail banks making it imperative for them to quickly devise new product and services that will provide the necessary revenue growth. Companies operating in the capital markets as well as debt relief companies are also coming under intense pressure to provide additional services to boost the diminishing revenues.
The situation is identical in the insurance sector with companies facing increasing challenges to provide customers with a variety of products and services through an assortment of channels, especially Internet and app-based. Companies that are agile are able to quickly devise appropriate products and services, activate new delivery channels, improve the quality of customer engagement, boost revenues and swiftly adapt to the changing competitive and regulatory environment.
Responsiveness to Reputation and Risk Threats
[easy-tweet tweet=”Businesses that are agile can react to changing environmental conditions and face new financial risks”]
The financial sector crisis in recent times has ignited a great deal of distrust and ill will among customers and provoked governments to conduct detailed industry reviews. This has led to increasing regulatory stringency that together with extensive media coverage of data breaches has further been the cause of concern of customers about data confidentiality and security of their financial transactions. Customers have also woken up to the need of increasing the monitoring of their accounts. Retail banks, as well as insurance companies and capital market companies, need to quickly respond to the changing regulations and customer concerns with improved data security and making available information on a variety of channels, including mobile devices. The organisation must also quickly generate the reports required by the regulatory authorities as well as comply with the changing accounting standards that necessitate them to process larger volumes of data to generate reports of increasing complexity. Businesses that are agile can react to changing environmental conditions and face new financial risks as well as threats to their reputation. They can not only anticipate the imposition of new regulations but adapt quickly to changed circumstances. Business agility also proves to be vital for reacting to data security threats or market shocks.
Cost Reduction
[easy-tweet tweet=”One of the biggest differences that cloud has made to the financial sector is reduction of operating costs.”]
One of the biggest differences that adoption of cloud computing has made to the financial sector is reduction of operating costs. The ability to discard old technology and adapt quickly to changing competitive and regulatory environments with the adoption of cloud computing technology is enabling companies to dramatically reduce their costs of making available product and services as well as regulatory compliance. When customer expectations are on the rise against a background of severe market churn, there is nothing better than cloud computing to improve service delivery while maintaining efficient and cost-effective services. Companies are also better poised to cater to customer demands of information and transaction abilities on mobile and other hand-held devices.