The financial services industry has been slower than other sectors to adopt cloud computing. Many financial companies still rely on on-premises IT, legacy mainframes and monolithic applications.
Migrating and refactoring these resources can take considerable time and effort — enough to keep IT leaders from making the switch. However, things are picking up steam, thanks to the many ways in which cloud technology has evolved.
Today's leading cloud service platforms, like Amazon Web Services, offer a multitude of tools that make it easier to leverage best-in-class technology with minimal IT management. This is great news for financial services organizations that need to create value, innovate, and cut costs. The world is changing faster than ever, and one of the best ways to keep up is to embrace the cloud.
What's on the horizon in financial services?
It's increasingly clear that the cloud offers numerous benefits for financial services companies. Looking ahead, those who use the cloud effectively will separate themselves when it comes to:
- Using big data to inform decision-making;
- Keeping consumers safe via robust fraud detection and security; and,
- Bringing personalized products to market quickly.
Big data analytics
The cloud unlocks big data in multiple ways. On the cloud, financial services companies can ingest, store, process and analyze data at massive scales. This data can include banking statements, customer portal log data, marketing engagement metrics, real-time spending information and much more.
Financial institutions no longer have to be bound to the limits of their on-premises IT or in-house technical capabilities. Instead, they can now offload that infrastructure and work through the cloud, where computing and storage are available on-demand under pay-as-you-go pricing models.
What's more, all the financial data that companies keep is safer in the cloud. That's assuming data engineers configure their cloud environments appropriately. Cloud platforms like AWS provide solutions that automate security assessments and simplify access control. They also make it easier to maintain regulatory compliance at a time when governments worldwide are adopting stricter policies for data management.
In the future, big data analytics will be even more accessible to financial services organizations than it is today. The question that teams will be asking when it comes to big data is "what" to analyze, rather than "how."
Better fraud detection
On a related note, fraud detection — powered by big data — in the financial industry will grow increasingly important. Through the cloud, financial organizations can build, train and deploy advanced artificial intelligence and machine learning algorithms that have the ability to identify patterns that would otherwise be invisible to human analysts. These patterns may represent fraudulent activity, biases or human errors.
Going forward, fraud detection capabilities on the cloud will get smarter and faster. Companies will be able to catch bad actors or problems in their algorithms quickly. The key will be learning how to maintain and fine-tune ML models over time.
As we're learning, ML models do degrade, which means AI isn't a "set it and forget it" type of technology … yet. Fortunately, cloud platforms like AWS recognize the power of AI and ML and continue to invest in solutions to make the technology easier to manage.
Personalized financial products
Another way the cloud will continue to shape the financial services space is by empowering companies to deliver more personalized offerings to customers. The abundance of data available today can be used to create products that cater more to individual needs, rather than broad demographic groups. Organizations will be able to create better customer experiences and focus their marketing efforts to maximize ROI.
Additionally, engineering teams will have more freedom to innovate. They will be able to automate crucial parts of their IT infrastructure and development processes, ultimately reducing time to market. And organizations that want to give users more control over their accounts will be able to build useful self-service portals.
The age of efficient personalization in the finance industry is here. Enterprises only need to figure out how to build agile and integrated cloud environments in which everything works together to improve the customer experience.
The financial services sector has been lagging behind in adopting cloud computing due to the effort involved in migrating and refactoring their legacy systems. However, advancements in cloud services are encouraging more organizations to transition to the cloud.
With the cloud, financial institutions can manage vast amounts of data more efficiently and securely, with automated security assessments and simplified access control, complying with increasingly stringent data management policies. Furthermore, cloud technology promotes innovation and streamlines the development process, enabling financial organizations to offer more personalized products and services, marking the advent of an era of efficient personalization in the finance industry.
