The adoption of cloud computing has drastically increased over the last couple of years in the banking, financial services, and insurance (BFSI) sector. Nowadays, most fintechs and innovative financial institutions rely on cloud infrastructure for storing and managing their data.
According to a survey conducted by Statista in 2021, nearly 38 percent of respondents from the BFSI industry reported using a hybrid cloud environment, whereas only 17 percent of respondents stated relying on on-premises solutions. However, in the same survey, 88 percent of respondents who are not yet using any cloud strategy consider adopting one in the future.
Cloud computing is one of the most sought-after technologies but still continues to be misunderstood and underutilized in the BFSI sector. These misconceptions can hinder the business, operational, and economic benefits of the cloud. Banks and financial institutions must familiarize themselves with the benefits of this advanced technology and understand the prerequisites for successful cloud implementation.
Here are the five common misconceptions about cloud in financial services:
Misconception 1: Cloud can be easily breached
Truth: Cloud is much more secure than on-premises systems
Data security is one of the major concerns for banks and other financial institutions. Banks usually rely on on-premises infrastructure, considering it to be safe. But in the last couple of years, these financial institutions have realized that on-premises data centers can be easily hacked and pose a significant risk.
With digital advancements and innovation, banks have realized that security depends on collaborating with renowned cloud providers rather than relying on on-premises data centers. They not only provide top-notch security features, including data encryption and masking but also continuously work on ever-evolving security threats.
Misconception 2: Data location and ownership cannot be trusted
Truth: Data stored in the cloud can be easily accessed and traced by the administrator
Many believe that the location of data in a cloud infrastructure is untraceable. For banks, safeguarding the data is very critical in order to maintain their integrity and their customer’s privacy. They fear that implementing cloud solutions will lessen their control and ownership of the data as they would not be able to trace the data location.
However, this is not true with the cloud. Data stored in the cloud is much more secure and can be accessed from any part of the world. Most banks struggle to maintain consistent data backups. But with the cloud, financial institutions can regulate automated backups to ensure that all the data can be recovered in the event of any disaster. Also, with admin access, banks can know the exact data location and control it from anywhere in the world.
Misconception 3: Cloud set-up is expensive and time-consuming
Truth: Cloud set up saves money and is a quick process
Financial institutions have a large amount of data stored with them. Migrating everything over the cloud is time-consuming, and an expensive process is one of the biggest misconceptions that stop organizations from trying this advanced technology.
Implementing a cloud solution and migrating the data does not take much time or money. Since no buying and installation of any heavy equipment is involved, banks do not make any up-front capital expenditure. Financial institutions can choose from myriads of pricing models available, including pay-as-you-use. Also, cloud providers strive to migrate data seamlessly and as quickly as possible.
Misconception 4: Cloud solutions are not flexible
Truth: Wide range of cloud solutions are available to choose from
Many believe cloud solutions to be rigid and incapable of accommodating the needs of a growing business. However, this does not stand true. Cloud solution providers offer a variety of cloud computing choices for banks to choose from.
Cloud solutions are flexible, and financial institutions can always change the storage capacity based on their business requirements without always investing in new hardware. Another good thing about the cloud is that it can be used on a modular basis, i.e., banks need to pay only for storage being used. Not only does this give you better control over the resources but also the full freedom to scale up or down, depending on your needs.
Misconception 5: Get stuck in the cloud
Truth: Data can be easily moved in and out of the cloud.
Many believe that once businesses opt for cloud migration, there is no going back. Retrieving the data in the same format, once deployed to the cloud servers, is quite difficult, is another common misconception, hampering the growth of cloud solutions in the financial services industry.
Although, this is not the case as most cloud providers offer seamless cloud integration services that allow banks and financial institutions to move data in and out of the cloud easily.
Many of these misconceptions are a result of failed cloud strategy or cloud implementation gone wrong. However, these misconceptions can never overpower the positive business impacts of cloud in financial services. Banks and financial institutions are always working on adopting disruptive technologies to drive financial inclusion and offer improved customer experience.
For banks looking to digitally transform their operations, they can explore opportunities with Arttha, a unified fintech platform. This omnichannel platform enables banks to leverage endless growth possibilities with digital banking and stay relevant with the new-age generation. To know more about Arttha, connect with our team now.
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