How traditional banks are embracing the shift from legacy tech to cloud-native

Digital transformation is a trend that is dominating all sectors, and more and more businesses are becoming entirely data-driven.

Digital transformation has become of paramount importance across industries

Larger portions of IT budgets are devoted to digital transformation technologies, and the arrival of the cloud is the most important tenet of this digital transformation.

The shift to cloud-native was a pattern already in effect before 2020, but Covid-19 has been a catalyst for that shift, and the pandemic has made clear why the cloud is so important for corporate operations to run efficiently in the 21st century.

As lockdowns have forced workers to stay home, organizations have had to move their infrastructure to the cloud to allow employees and customers to access data on demand from afar.

The use of tools we are all accustomed to, such as remote learning, telecommuting, and virtual communications, are all cloud-facilitated systems.

These tools have boosted the productivity of our work from home, and as a result, technology has permanently changed the way we work.

New business patterns, including our blended model of working from home and in the office, have accelerated the pace at which companies invest in the cloud, particularly in finance.

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While banks were initially slow to adopt digital technologies, they are now reaping the fruits of cloud adoption. First of all, data collection has become more efficient. Capturing and storing large amounts of data is a top priority for banks, and so is the ability for employees and customers alike to automatically access this data anywhere, anytime.

As we are increasingly overwhelmed with data, cloud computing means this onslaught of information can be easily analyzed and managed. Relevant insights are easy to take advantage of quickly and third-party apps can also be easily integrated.

Instant access to data wherever we are in the world is something we all take for granted, yet this was not possible ten years ago. People want to manage their finances from anywhere, and employees need to be able to offer and maintain customer service operations remotely as well. The pandemic has highlighted the necessity of remote self-service technology. For banks, this will only increase with the gradual closing of physical branches.

Switching to a cloud-native operating system is helping new finance companies get ahead of their older and more established competitors. This is because the cloud is incredibly resilient, much more so than older traditional technologies.

So the cloud can help financial companies meet new trends, adapt to the ebb and flow of market demands, or adjust their strategy to global events such as the Covid-19 pandemic. On the other hand, legacy technologies are less flexible and cannot easily adapt to new market trends and consumer demands. For this reason, the cloud gives financial companies willing to embrace digital transformation a step further – allowing them to advance against competitors who are slower to make change.

Moving infrastructure to the cloud also allows for greater flexibility and scalability. As fintech is a fast-growing industry, banks need infrastructure that can keep up with their pace of growth. The cloud provides this necessary scale for measurement.

Finally, there are substantial savings in the costs of physical hardware upgrades and legacy platform management. While financial companies used to spend huge amounts of time and money installing and updating their services, they can now have Software as a Service (SaaS), which automatically updates them with the latest software as soon as it becomes available. Therefore, business improvements can be made immediately.

Overcoming cloud adoption hurdles

So what, if any, are the barriers preventing fintech companies from moving to the cloud?

There is still an obvious element of mistrust around the cloud, along with longstanding loyalties to legacy technology.

There is also a great deal of variation in the acceptance of these technologies by various regulatory bodies around the world. While countries such as the USA and the UK are showing great openness towards cloud technologies, emerging markets such as India, Middle East and Africa are still assessing the risks.

In the pandemic-driven world of remote work, digital transformation has become of paramount importance. Transformative technologies, including the cloud, are creating a more resilient financial world, one that is accessible worldwide.

While there are still broader challenges around creating business cases for cloud adoption in terms of return on investment, it is quite clear why companies are drawn to this technology. To achieve future success, financial institutions must continue to embrace the promise of the cloud.

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