As the world welcomes a post-pandemic era, banks and financial institutions across the globe need to gear up for transitioning to cloud based technologies. Amongst the few positive impacts of the pandemic, one which stood out the most was the critical need for upgrading legacy systems banks around the world still depend on to serve their customers.
Right from offline and manual processes to succumbing to the negative effects of human error, legacy systems not only constraint the potential growth of these institutions but also pose a challenge in acquiring new customers.
However, as you might already know, migrating to a cloud based architecture and transitioning your entire offline system to online is not a single step process but rather a journey.
Thus, in today’s blog, we will share with you, first, the need to transition to the cloud and a few significant milestones you need to meet along the way.
Without further ado, let’s get started.
Table of Contents
- Challenges of Legacy Technology
- Adopting a Cloud-Ready Architecture
- Agile Business
- Digital Innovation
- Growth Without Cuts
- Streaming and Security
- The Reference Shelf
Challenges of Legacy Technology
Before we begin discussing the need of migrating your architecture to the cloud, the first and most important step is to understand the challenges a legacy system possesses.
To start with, legacy systems constraint the potential growth of banks.
Since these systems are primarily offline, there is a physical limit to how much they can be scaled. Along with this, since a majority of the processes in a legacy system are manual, almost all of them at some point in time bear the negative consequences of human error.
Lastly, at a time when digital banking customers are on the rise, legacy systems become costlier to maintain and operate, thus paralyzing the bank from acquiring and subsequently servicing the modern customer and their needs.
Adopting a Cloud-Ready Architecture
As I pointed out right at the beginning of the article, among the few good things that came out of the pandemic, one which stood out the most was the limitations of legacy systems banks around the world still rely on, and this goes on to benchmark the need to upgrade to a cloud-ready architecture.
However, before you begin your journey of transitioning to the cloud, it is important to realize the several advantages a cloud ready banking architecture arrives with.
As a visionary leader, I am sure you have come across the term “agile” more than once.
In simple terms, it can be understood as the ability to scale supply at large when demand and opportunities present themselves.
A cloud ready banking architecture helps you efficiently achieve an agile business model by equipping you with the tools and technology to meet the demands of digital consumers. As there is no physical constraint on your growth, you have the complete freedom of determining the scale of your business and the various processes it entails to serve your customers.
Additionally, most cloud based banking systems arrive at a per customer subscription model, meaning you only pay for the number of active users, thus equipping you to scale at budget.
In a recent article, I discussed how digital banking consumers are emerging around the globe.
One key highlight of this article centred around the need of equipping yourself with the right technology to first recognize the digital consumer and second serve them as per their needs. However, at the heart of all this lies innovation and migrating to a cloud based architecture empowers you to embark on the same.
Right from the ability to design custom financial products per the exact needs of the customer to facilitate a faster market launch, a cloud based architecture enables you to manifest your dreams of becoming a future-ready bank into a reality.
Growth Without Cuts
One common hamstring which binds most industries is the limitation budget cuts impose, especially when adopting modern technology.
However, contrary to popular belief transitioning and subsequently maintaining a cloud architecture is significantly cheaper as compared to a legacy system.
As per a McKinsey Digital report in 2018, by migrating to the cloud, organizations can save upto 40% of IT overhead costs by leveraging economies of scale. By adopting technologies such as AWS, you can not only shift your entire offline operations online but achieve so without burning a hole in your budget.
Streaming and Security
Gone are the days when individual financial institutions could store bits and pieces of customer information and not share them with network institutions.
Today, with the advent of open banking architectures, banks are not only liable to share and exchange information with one another but also authorized third parties to facilitate the creation of an accurate customer profile.
For example, take the case of OCEN (Open Credit Enablement Network), a joint initiative by the RBI (Reserve Bank of India) and IndiaStack to enable seamless flow of information between banks, insurers, credit rating agencies, payment organizations and lending institutions.
However, in order to seamlessly integrate your database with these upcoming technologies, you need to equip yourself with cloud architectures such that you can not only stream but also receive information seamlessly within the network, craft accurate customer profiles and serve their needs better.
Additionally, as data streaming continues to gain widespread popularity, it is important to ensure consistent security and rigid safeguarding of sensitive customer information.
However, legacy systems are not only behind in this domain but also expose you to severe dangers such as intentional leaks and manipulation of data.
On the other hand, with modern cloud architecture, you can leverage AES-256 and higher industry-standard encryption and task based access to efficiently secure your entire workflow.
Along with this, since all your data is encrypted and securely stored on the cloud, you do not need to worry about leaks, manipulations and theft.
A recent study by cloud experts at Accenture revealed that banking and finance are among the two industries adopting the fastest to cloud-ready architecture, and several other researchers went on to second this.
As the world transitions to a cloud first environment, it is crucial that you move beyond legacy and embark on your journey to the cloud.
Thank you for reading, and I will see you on the other side.