We believe that any new bank starting now or any bank that is looking for core systems renewal should go for cloud. In this blog, we’ll explain why cloud-based core banking is the way to go to support the business with an architecture that is flexible, future-proof, and legacy-free.
The rise of cloud-based core banking
Cloud computing is nothing new and has been on the radar of many banks. It’s been a technology that has gained massive traction in recent years and that is not without reason. The common concerns of banks, like 24/7 uptime, interoperability, secure storage, legacy issues, etc. are all addressed by cloud. Despite its growing popularity, only a small percentage of banks have transitioned their core banking systems to cloud-based banking systems.
Banks and other financial institutions show hesitation in adopting cloud-based offerings, citing potential security concerns. However, state-of-the-art SaaS solutions offer a level of security that meets or surpasses on-premise platforms.
Cloud computing benefits
Opting for a SaaS platform enables you to spend more time and money on the parts where you can make a difference for your clients and grow the business instead of focusing on IT and security issues. But there is more.
- Cost effective
Building your bank in the cloud means you don’t have to invest heavily in dedicated hardware and software nor the manpower to maintain the systems. It becomes much easier to update your IT infrastructure and you only need to pay a fixed fee to the SaaS provider. It offers you the ability to reduce system maintenance costs, which lowers legacy technology worries. This allows you to spend budgets on innovation, customer satisfaction and growing the business.
- Flexibility and scalability
Cloud-based banking gives you the ability to respond quickly to the ever-changing market and customer needs, which provides a real competitive advantage. Better said, in today’s market where you should be customer-centric, the ability to act swiftly is critical. Working in the cloud is the most effective way to achieve this scalability and flexibility at pace.
- Improved efficiency
Using a core banking system in the cloud requires standardized applications and processes, which makes it easier to align technology and business operations. Too much legacy and built-in customization is the reason why many banks can’t meet changing customer demands. Switching to a digital core banking platform that is based on standard building blocks and configuration editors ensures the viability and efficiency you need.
- Serve customers faster
It is easier to develop and launch new products in the cloud, especially when you use configuration editors. Configurability lets you set up your own products and processes without being dependant on IT professionals. Also, you don’t need to worry about whether the technology is up to date because this is at the core of your SaaS provider’s business.
Unlike on-premise core banking systems, cloud-based platforms are often compatible with open APIs. This means you can provide innovative third-party services to your customers. A platform in the cloud is adaptable with these digital gateways. It enables you to offer a range of in-house and third-party products and services, allowing a ‘plug and play’ approach. This means you can leverage fintech innovations and expand into new markets.
- Compliance and security
As a bank, you must have a certain level of security and privacy and you are subject to regulations. It is imperative that you remain compliant and know where the data is at all times. Security concerns remain the number one barrier to a cloud-based solution. However, high levels of security are ensured in a cloud environment. SaaS providers have huge teams that dedicatedly work on security and that is something that a bank can never match themselves. Also, they are up to date and compliant with all of the different regulatory mandates, which saves you a lot of work.
We believe the benefits of cloud-based core banking are too important to ignore. It is crucial to cope with an unpredictable and constantly changing landscape. We think that effective adoption of the cloud is a pivotal factor in deciding who emerges on top and who falls behind their competitors in this new age of digital banking.
However, what is essential in building and implementing a future-proof and legacy-free core banking system so you can provide a flexible architecture that supports the business? To help you with this, we have written an Architect’s Guide about digital core banking in the cloud. We share the key features of a future-proof digital core banking system, how cloud-based core banking can help you, and why using standard building blocks and configuration editors ensure not only viability but also a smooth implementation. Learn all about building and implementing your digital core banking platform in the cloud, configurable and with automated deployment: