The banking industry is now going through the major shift. More and more banks are starting to see the cloud as the future of banking and here is why you should too.
The first who left the footprint and started new era back in 2015 were Capital One – one of the U.S. largest banks that offers credit cards, checking and savings accounts, auto loans, rewards and online banking services for consumers and businesses and World Bank – an international financial institution that provides loans to countries of the world for capital programs.
Cloud computing cuts out the high cost of hardware. You simply pay as you go and enjoy a subscription-based model which keeps your cash flow in a much better shape. The infrastructure size needed for operation strictly depends on the number of data being processed which is reflected by the number of people using the system and number of data stored in the system. When setting up the on-premise infrastructure and making a costly up-front investment into hardware you need to get it all ready to handle your growth in the next 3-4 years to be able to amortize the machines before replacing with new ones. In the cloud, you only pay for the processing power and storage you use and it scales up automatically as you grow and scales down when you sleep. How much Capital One and World Bank saved you can find at the end of this article.
Security is a matter of using the right tools. No matter if it is on-premise or cloud infrastructure specific steps need to be taken. But what makes one significant difference is that cloud services, out of the box, offer many of the tools either working by default or being ready to be used instantly, without a need to find, install and configure them. Finally, it would be hardly possible for any bank in the world to hire as many security engineers as Amazon or Microsoft has.
Disaster recovery is yet another cost for the organization. To be well-secured bank needs to build a copy of the infrastructure (ideally in a different location) to be able to start using it instantly when the primary one fails. Everything needs to be synchronized and backed up regularly so yet another costly project to run. In the cloud, backups and disaster recovery are the basic features offered by Amazon and other big players.
Banking is crowded and highly competitive industry, customers are more and more connected and more and more demanding. To keep them engaged banks must quickly adapt to the changes, provide new solutions and build new systems. On premise, however, to build and launch a new application or tool, IT team would need to buy, install (and later maintain) an expensive hardware. 9-12 months later new system would be available to use and… already obsolete. But in the cloud, new servers can be setup in a matter of minutes.
Finally, not only the organization benefits here, the environment gets a little love too. When your business sleeps, your server capacity scales down and it only uses the energy it needs so you don’t leave oversized carbon footprints.
These are the reasons that were also driving us to build the first cloud-based core banking solutions designed exclusively for the Philippine market. More on: http://nextbank.ph