The Scope and Impact of Cloud Computing in Financial Services

With the rise of technology, everything has now taken a different direction, including computing. Technology has made everything easier than before, from a smooth running of businesses to efficiency in information storage. Since the introduction of cloud computing, things have become easier in the financial sector, unlike in the past days when everything was cumbersome.

The introduction of this cloud-based software has given companies from all industries several benefits. Platforms such as dropbox and google drive have become popular even for those who use them for personal purposes. The software usage is seamless regardless of your device, be it from a browser or native app.

Of all the sectors, the financial industry has been the most beneficial from cloud computing technology.

What is cloud computing?

Cloud storage or cloud computing is a heterogeneous technology that aids in data storage and recovery. This hybrid technology computes various services such as networking, servers, storage, analytics, and databases. It grants companies an opportunity to reduce costs and have better customer service.

Companies that offer these services are cloud providers and often charge for the services based on their usage. The technology can be used and blended with all the banking system services, decreasing the customer’s and bankers’ efforts and time. Cloud computing has made most things in the banking and finance sector easier, such as 24/7 access, interoperability, and secure storage.

The services are offered on-demand through the internet with a pay-as-you-go costing hence reducing costs in the long run.

Categories of Cloud Computing

Cloud services are based on three main computing models, each with its role. The three compositions of cloud computing are as discussed below.

a)Public Cloud

This is a cloud computing environment offered to clients mostly without a fee. A cloud becomes public when its environment of the public cloud is partitioned and provided to several clients.

Public Clouds are characterized by not being under end-user ownership, but they exist through information technology infrastructure creation.

Unlike the traditional public cloud, today's public cloud provides on-premise data center services to its customers. Examples of public cloud include Microsoft Azure, Google Cloud, Alibaba Cloud, IBM Cloud, and Amazon Web Services (AWS).

There are several cloud computing services associated with the public cloud; they include Saas, PaaS, and IaaS.

b)Private cloud

This is a computing resource and is used solely by individuals or private companies. The Private Cloud in such parties exists through running firewalls of the company. For cloud computing to become private based, its IT infrastructure or environment should be dedicated to a sole customer who will have private access.

c)Hybrid Cloud

Hybrid clouds are designed to allow apps and data to move across two cloud environments. In other words, a hybrid cloud is a combination of public and private clouds’ IT infrastructure strategies. The connection or transfer of data under the hybrid cloud is made to run through Virtual Private Networks(VPNs), Wide Area Networks (WANs), APIs, and Local Area Networks (LANs).

A hybrid Cloud may exist if;

more than two private clouds are connected
One or more public clouds is connected to 1 or more private cloud
Virtual or Bare-Metal Environment is connected to either one or more private cloud or public cloud
more than one public cloud is connected

The scope of cloud computing in financial services

Cloud storage allows bankers to link directly to their customers. These services maintain good customer relationships anytime, anywhere via cloud computing. Thanks to today’s internet, most services like managing, storing, and accessing data have become easier for customers and bankers.

Since cloud computing is a simple technique, it is easy to use and integrate with all the bank system services. Therefore, users will have less effort and time.

With the help of cloud computing, banks and other financial institutions can now focus more on client-centered design and digitalize wealth and trading. It creates a multichannel relationship with its users in every aspect of its services. It helps financial institutions in backing up, recovering, and storing vast amounts of company data.

Moreover, besides storing data, cloud computing technology has made other services like data transfer, data recovery, and updating easier than before. Due to the integration of cost-efficient solutions, cloud computing has helped in increasing banks’ turnover.

Cloud computing ensures that the customer’s and company’s financial security and confidentiality are upheld. It does so by ensuring a secure payment processing with no discrepancy. The software is tailored to provide several safety layers and pinpoint any deceptive acts without jeopardizing the user experience.

The way consumers are interacting with banks is tremendously changing, thanks to cloud computing software. Cloud computing services include digital wallets, secure online payments, online cash transfers, and payment gateways.

The finance sector should address the data in demand, which is ever-growing. There is a reason to explore the systems that do not depend on the system migration for easy infrastructure modification with no disruptions. While banks have been ignorant to adopting cloud computing due to the apprehensions regarding security, reliability, and regulatory risks, it has changed the way customers interact with banks.

Impact of Cloud in financial services

Cloud computing has impacted financial services in different ways.

a)Increased cost-effectiveness

Cloud computing in financial services reduces the capital expense of purchasing and setting up software and hardware data centers. Therefore, bankers concentrate more on financial services.

b)Improved bank operations and user experience

Cloud computing makes it possible for data to be secure and accessed from anywhere at any time by customers and bankers. Since there are no downtime restrictions, there will be improved services and a good user experience.

c)Increased speed, flexibility, and security

Expert cloud providers provide advanced encryption and end-to-end data security solutions that tightly secure the consumer’s information. Its architectures as well offer flexibility which makes information to be safe externally and internally.

d)Increase productivity

Cloud storage gets rid of time of racking and data stocking. This increases productivity as cloud computing saves time.

e)Security breaches

While cloud computing has positively impacted the financial sector, it has brought about security breaches. The security of cloud servers is regarded as an issue when it comes to cloud computing.

Conclusion

Cloud computing can transform the financial sector and its services by granting support for the industrial revolution. The technology has helped in keeping security, compliance, and regulatory arrangement in effect. However, before deploying it, financial institutions should only consider deploying it through trusted cloud service providers.