Expert opinion

Banking in the Clouds: How to Boost Customer Loyalty

6 minutes

Maxim Berezin: "Banks are flooded with data to analyze, yet data torrents are coming down on IT systems."

Financial institutions are considered to be the most advanced IT users, and rightly so. According to Harvard Business Review survey, about 36% of banks around the world try to keep one step ahead of their competitors when it comes to adopting new technologies, and 68% have revised their development strategies, having the latest IT achievements in mind, while only 20% the respondents actively use cloud services – the fastest growing segment of the IT market. Maxim Berezin, Business Development Director at CROC Cloud Services, encourages wider use of cloud services in banking business, supporting his idea with the following five arguments.

Omnichannel communications and digital banking

Banks are trending toward online customer communications and thus have to go omnichannel, which means creation of an environment allowing users to quickly switch between different communication channels and retaining history of communications. New remote banking services are also in increasing demand. All the above boosts cross sales and customer loyalty to new banking services. Since omnichannel communications and digital services mostly run on cutting-edge digital platforms, banks need qualified developers among staff and computing infrastructure being both efficient and adaptable to changing workload.

To roll out new banking products and services for businesses and individuals, many banks, especially digital thinkers, opt for cloud and avoid infrastructure investments, thus reducing both time to market and financial risks. The best thing about such model is that digital banks benefit from cloud services by increasing return on equity and expanding portfolio with virtual products.

Information security and business continuity

Large banks are rather averse to change or innovation. Given that decision-making here heavily depends on security guys, key infrastructure components are still managed internally. Meanwhile, many customers are moving away from this costly and cumbersome IT model as being too slow to address market challenges.

Some banks use hybrid and multi-cloud infrastructures for extra data protection, while others save themselves the trouble of having own backup data centers and opt for data center outsourcing. Some businesses use cloud to perform IT development tasks or make contractors work in a trusted environment rather than local infrastructure, thus eliminating any security objections.

Finally yet importantly, digital banks are ready to move their entire business to the cloud by choosing cloud providers that ensure data security and reliability in compliance with all requirements of the Central Bank. Such providers offer a disaster-tolerant site based on several data centers, use certified security tools and duplicated communication channels, certify clouds for compliance with PCI DSS, practice all the necessary operating procedures, perform penetration tests several times a year, learn how to repel cyberattacks and simulate peak workloads to test the online platform for fault tolerance.

Storage of large amounts of data

The most promising information security technology used by banks is biometrics capable of analyzing fingerprints, palm vein pattern, retina, keyboard typing speed and manner, voice characteristics, facial expressions, or how an individual moves a mouse, etc. According to Spiceworks IT network research, 86% of companies in Europe and North America will use biometric authentication by 2020.

Russian banks are leaning toward biometric technologies too. In 2018, Rosbank, Tinkoff Bank, Alfa-Bank, and Pochta Bank collected biometric data of their customers with the help of Rostelecom Key system, a digital platform for remote identification of individuals.

At the same time, OCR technology is gaining momentum, recognizing Russian passports and other documents uploaded with mortgage applications.

Banks are flooded with data to analyze, yet data torrents are coming down on IT systems. To reduce pressure on IT infrastructure while delivering services to customers at the same speed, banks opt for private clouds (in their own or third-party data centers) and public platforms. For example, private clouds are best for secure operation of bank’s analytical systems that use personal data to make personal offers.

Process optimization

According to CROC Cloud Services, legacy systems account for about 15% of all infrastructure, and their migration without improvements is next to impossible. With static systems occupying about 60%, it would make more sense to opt for a private cloud or HaaS, while apps with hardly predictable workload, taking up 25 — 40% of the infrastructure, call for a cloud as panacea for a number of critical tasks.

In particular, cloud helps accelerate new development jobs, prevent performance degradation, manage workload, and ensure availability of business services. A tenfold increase in digital interaction between banks and their customers boosts IT load as well. Customers are impatient and wish to access banking services right here and right now. Therefore, constant availability of services has become a matter of prime concern, directly impacting customer loyalty, as good performance by cloud’s digital front-end may prevent customer churn.

IT infrastructure costs saving

Saving money through a cloud mostly refers to minimizing capital expenditure. Outsourced infrastructure makes banks more flexible and independent from heavy hardware demanding maintenance, upgrades, and depreciation. Advanced businesses going cloud are hard on the heels of banks with conventional infrastructures, thanks to faster business processes and analytics.

Cloud services can also save money on local tasks, such as scrum testing. Clouds eliminate the need of procuring and operating hardware and software and optimize maintenance costs thanks to payment for actually used resources only.

While banks are still cautious about clouds, treating them as testing sites for pilot projects and data backup, clouds services have much more to offer. Those who are already investing in clouds will definitely win the race, as it is cloud services that will help banks provide customers with the cutting-edge banking technology as fast as possible and drive the development of ecosystems beyond traditional banking.

Based on ComNews materials.

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