The banking and finance landscape
“The recent IT outages witnessed at leading high street banks typify the difficulties traditional banks and financial institutions are facing with supplying a consistent, seamless digital service due to existing IT legacy systems.
“These legacy systems have become overloaded with extra layers of functionality, making them complicated and harder to manage. Not only is it highly inconvenient for customers who wanted to check their online accounts, make payments and transfers, but potential outages are resulting in the loss of business opportunities and reputational damage for business customers who depend on these services for the smooth running of business operations.
“The creation of siloed data management by existing legacy systems is preventing banks from having a single customer view of data, making it more difficult for banks to onboard customers and to guarantee the protection of customer data to align with GDPR and PSD2 regulations.
“With the rise of ‘big tech’, consumers are used to fast, personal, safe and always-available portable solutions. Unless banks future-proof their banking, IT architecture they will become left behind.
“So, how do banks future-proof their IT architecture?
Overcoming banking outages, though future-proofing IT architecture
“For traditional banks to be fit for the future they need to deploy a three-layer IT architecture. The architecture enables a seamless customer experience and separates product and client data. The layers are connected by APIs, equipping banks to easily respond to future changes and enable a fully-digital customer experience.
“Once this has been completed, banks need to migrate core banking systems to the cloud will help to alleviate the problems caused by existing legacy systems.
“The cloud presents banks with many benefits including an opportunity to reduce costs while increasing agility, flexibility and scalability to ensure seamless user experience.
“Banking in the cloud enables banks to focus on their business instead of IT, and rely on the expertise of their vendors when it comes to running their own system.
“When using a cloud-based model, banks can make many cost savings. Rather than the ongoing costs of on-premise solutions including hardware, power consumption, and space, banks only pay a subscription fee to a SaaS provider. Banks can then allocate budgets to focus on innovation, customer satisfaction and growing the business.
Cloud banking provisions for the immediate access of resources at any given time. There are no capital expenses and data can be backed up regularly, connecting banks with customers, partners, and businesses with minimal effort.
Why banks are under-utilizing the cloud?
“Despite these benefits, banks and financial institutions are hesitant in adopting cloud-based offerings, citing potential security concerns.
“As a bank, security concerns remain the number one barrier to implementing new technologies. However, within a cloud environment, high levels of security are ensured as cloud providers isolate data per client, and have huge teams that are solely dedicated to managing security – something that banks will struggle to manage inhouse.
“Cloud-based banking provides a level of security that surpasses on-premise platforms, enabling a high level of automation to achieve a zero-touch environment, multi-factor authentication for administrative tasks, identify management, and end-to-end encryption.
“In addition to security, another benefit of cloud-based banking is ease of aligning with regulation. Standardization, configuration, and automation enable banks to speed up innovation, digital, accelerate the genetic ecosystem – making it much easier for banks to respond to new and existing regulations to stay compliant.”
Source: International Agency (Financial IT)