Covid-19: accelerating transition from legacy banking to the cloud.
On the whole, banks and financial institutions have been reluctant to adopt cloud technologies. The underlying cause of this is due to an over reliance on outdated IT infrastructure.
This all changed when Covid-19 shook the world of banking. Many banks were slow to react to the crisis, but as the news of the pandemic circled and became more real for each country it engulfed, financial institutions had to respond appropriately to protect the lives of their employees and the future of their businesses.
As the full scale global lockdown measures were implemented, a necessity was created for access to data that can be processed quickly, securely and remotely. Financial teams needed to ensure that customer data was protected, and at the same time keep their business operational with the necessary procedures and protocols in place, modifying their processes based on changes to the new working environment.
The pandemic has also altered customer behaviours and expectations. Social distancing and isolation measures throughout the world have prompted customers to use their bank’s services either online or via an app – creating a greater demand for online services while overloaded legacy systems have struggled to keep up.
Legacy issues were already visible prior to the outbreak, signified by the high-profile banking outages at some of the leading and most prestigious retail banks. During the Covid-19 outbreak, the reliance on traditional legacy systems is becoming unsustainable to provision for a seamless customer experience for both personal and business clients.
Covid-19 has become the catalyst of change, creating a necessity for digital services, personalised product offerings and remote accessibility which is becoming increasingly the norm in response to the new way customers are interacting with banking and financial services.
At a time when customers aren’t able to visit their local branches and spend hours waiting for their call to be taken by the customer service team, online customers require quick access to their bank accounts and financial products remotely. New services or products are demanded in matter of hours and days. This is expediting the need for the banking sector to implement digital technologies to cope with the surge in demand.
An opportunity to serve customers better
The switch towards a more digitised world where access to data is important to keeping business moving isn’t anything new. In fact, prior to Covid-19 we could already see this transition. Our survey of 2,000 UK banking customers shows that 4 in 10 Brits (43 per cent) expect to be able to set up their bank account instantly. Additionally, 1 in 5 (20 per cent) customers also stated they would switch banks if the financial institution had a better customer service. To keep up with these developments it is essential for banks to update their traditional legacy systems and modernise, in order to be able to offer the services expected from customers during this time.
Covid-19 has accelerated the necessity for the provision of cloud services, creating an opportunity for banks to provide a personalised service aligned with customer expectations. Championing satisfaction across all channels will enable banks to remain resilient through a time of uncertainty.
Cloud native technology: saving traditional banks from becoming irrelevant
Covid-19 has led to an increase in lending support; the difference between a business declaring insolvency or staying afloat. Customers across the world are requesting for additional credit facilities and alterations to the terms of their loans as a way of supporting them through these challenging times. Cloud native core banking is the key determining factor in being able to provision for these demands before it’s too late. Furthermore, the lack of cloud native technology is stunting global economies and will hamper business growth.
As a way of responding to a changing environment, cloud native technology is equipping banks and financial institutions with the technology to scale their business based on client demands, and to launch new products and services while keeping operational and investment risks low.
The provision for emergency lending products and services and leasing agreements, like hire purchases and equipment financing, are being made possible by a cloud native core banking system. Cloud native banking also makes it easier for banks to make changes to existing loans and repayments. Being able to apply changes to loan agreements can be the difference between a business surviving the crisis or going into administration. Banks need to act quickly and respond to the demand in real-time, rather than taking weeks or months to onboard an application or approve a loan.
Adapting to the new ‘normal’
It’s not only during a crisis that banks will need to stay flexible and agile. With cloud banking technology, providing customers with a suite of products and solution across a single platform will become the future reality.
The full spread of lending and leasing products can be consolidated and integrated, creating an opportunity to offer quotes in a timely manner to ensure high levels of customer satisfaction. At the same time, banks have the ability to offer customers flexible finance products such as savings and deposit accounts – including multi-currency options, and support those customers looking to secure a mortgage with a full range of end-to-end services.
To ensure traditional banks adapt and survive the new ‘normal,’ they should place their emphasis on updating archaic legacy systems that aren’t fit for purpose in modern times. At the same time, they must harness the benefits of using a cloud native core banking system, to respond to the rapidly changing demands of their customers.
Cloud native banking is a unique opportunity for banks to remain competitive. The market is now saturated with the latest challenger banks. Banks must abandon nostalgic ways of working and respond to change in order to survive.
The game has changed. A game that has become survival of the fastest and most flexible. For banks to continue to attract and retain their customer base, they need to harness the benefits of the banking in the cloud to mitigate risk and stay relevant for the future.