Banking on the cloud in the face of COVID-19 and beyond
As coronavirus (COVID-19) continues to significantly affect the world around us, financial services organisations are playing a key role in supporting societies around the globe.
In light of the pandemic, however, many financial services businesses must adapt to shifting customer and market landscapes. This new environment is putting pressure on existing systems and, as a result, the need for resilient, flexible and secure systems and applications to ensure operational resilience has become vital. Even before the pandemic, discussions between technology providers and financial firms have increasingly become focused on what business issues the cloud can solve.
How is it already aiding savvy banks and their fintech counterparts?
This conversation is now more important than ever, as firms adjust to new realities, including more remote workforces and more digital interactions with customers. So, how can the cloud help financial businesses in the face of COVID-19 and beyond? And how is it already aiding savvy banks and their fintech counterparts?
Cloud in a COVID-19 era
Providing remote work capabilities for employees as well as scaling secure and reliable IT infrastructure without incurring significant costs has been a significant priority for many financial institutions, especially now. Cloud technologies provide additional compute and analytics capabilities, ensuring infrastructure can handle increased traffic spikes and support compute-intensive workloads securely and at scale.
For banks experiencing an increased demand in mobile and online banking services, artificial intelligence (AI) can help predict credit and loan defaults while helping them comply with liquidity stress testing and capital planning requirements. For insurers, the cloud can assist with increased demand for online support, advisory services and claims.
Ensuring business continuity during unprecedented times requires a reliable, resilient infrastructure. And for financial services organisations, modernising IT infrastructure will become more important than ever. While many mission-critical workloads run on mainframe architecture, moving to the cloud offers increased business agility, reduced operational risk and access to new technologies — such as data analytics and AI — that improve insights, increase security and foster faster innovation. For firms looking to operate hybrid cloud environments, managed tools such as Google’s Anthos can help facilitate a multi-cloud environment with less operational complexity.
The current pandemic has driven a further need for financial services organisations to invest in cloud technology. For some, this new environment has led to new first-of-a-kind services. Over to the insurance sector, AI/machine learning tools on the cloud are enabling companies like Brit Insurance to develop new solutions such as its first-ever digital Lloyd’s of London syndicate, Ki. The platform is set to modernise the industry and significantly ease complex processes for insurance brokers.
The cloud already in action
There’s already numerous instances of banks and other financial services firms who are harnessing cloud technology in all areas of their operations, from assessing risk and understanding market fluctuations, to developing new products and transforming customer experience.
One example of utilising cloud-based tools to accelerate digital transformation efforts is through processing vast amounts of data to reduce development and roll out of new and innovative financial products. For Atom Bank, the UK’s first mobile-only bank, success depends on having agility and scalability to develop new solutions and experiences quickly in response to customer demand, while keeping costs low. By embracing the cloud, the challenger bank has been able to move on from on-premise hosted data centres, becoming more responsive to the needs of its customers through new app features or entirely new products and also building more software-as-a-service (SaaS) and resilient architectures for future innovation.
Similarly, the cloud has also helped other challenger banks who have seen exponential increases in transactions and demand for services in recent years. Revolut turned to the cloud to scale at speed without sacrificing stability. Tapping into cloud technology has allowed the organisation to automate updates and maintenance and redesign its slow and costly backup system, whilst maintaining resilience and control over security.
AI and machine learning models can be used by traditional banks to tackle fraud and money laundering, much like their challenger counterparts are already doing, too. Consolidating transactional and behavioural data can assist with detecting fraud patterns and simultaneously evading expensive false positives more effectively. Data warehousing, analytics and database tools in the cloud can extrapolate and store features for models in real-time.
Likewise, cloud-based technologies are being harnessed for banks’ risk-management to calculate liquidity and exposure more efficiently, in order to carry out mark-to-market remodelling and for more precise accounting in general. Even older, more established banks, are using the cloud to calculate their liquidity in a significantly reduced time.
For many financial services businesses, the cloud has become an essential part of business continuity and reliability during the unique operational environment that COVID-19 has created. Looking forward, it will become a key ingredient for financial firms well beyond core infrastructure as they formulate their exit and recovery strategies following the pandemic. It’s not also just banks and insurance firms that benefit from a cloud-first approach, customers also stand to reap the rewards with more tailored services and products.
What is clear is that COVID-19 has accelerated the need for digital services and the cloud will be front and centre for financial services firms adapting to the new “normal” and develop new business models.
