By Pullen Daniel, Managing Director – Europe, nCino, Pullen Daniel is nCino’s co-founder and managing director of Europe

A remarkable shift toward modernisation and digitisation is occurring within the financial services industry, with institutions of all sizes shedding their caution about the cloud and embracing its many capabilities. Many of the largest banks in North America, including Toronto-based TD Bank, have already embraced the cloud as a key part of their business and technology strategy. Now financial institutions across Europe are following suit – from young challenger banks like London’s OakNorth to some of the largest and most established institutions.

Because financial institutions face strict and comprehensive regulatory requirements, and the demands of connected, empowered, and socially-engaged consumers are not only high but also evolving, moving to the cloud can have far-reaching positive impacts on banks’ business models and operating environments. Importantly, the cloud provides significant opportunities for financial institutions to increase their competitive advantage, particularly against the crops of alternative lenders that continue to emerge.

Despite its many proven advantages, cloud computing in the European financial sector is still lagging behind other industries. According to a survey conducted by the European Union Agency for Network and Information Security (ENISA), this is partly due to inconsistent regulatory guidelines on cloud deployment, and concerns about security and data privacy jurisdictions across European Union (EU) Member States. While some industry professionals still voice concerns surrounding the cloud’s security, these hesitations are often due to misinformation rather than actual vulnerabilities.

In fact, the industry’s leading cloud providers, such as Salesforce, encrypt data, monitor system activity in real time, employ a host of software and hardware tools to defend their networks and back up user data. The enhanced risk management and security capabilities offered by these expert providers are far superior to in-house applications. As a result, financial institutions can better meet customers’ demands for flexibility and the latest capabilities, while ensuring risks are appropriately identified and managed through end-to-end security.

Improved security isn’t the only advantage provided by the cloud. Increased efficiencies can be attributed to cloud banking as well. With these technologies, banks can streamline and automate processes more quickly and easily than ever before. By automating manual processes, bank employees can focus on more strategic and customer-facing activities, which adds an extra layer of value and productivity to their role. Such automation also reduces the likelihood of costly human errors, enabling banks to manage higher volumes of transactions while reducing unnecessary spending. This also means banks are able to offer customers a larger suite of services, which are easy to upgrade, available on a range of platforms, and potentially at lower prices.

Considering the complexity and scope of regulations in the financial services industry, it’s understandable that some financial services organizations have been hesitant to fully embrace the cloud. However, regulators are actively looking to existing guidance and providing recommendations on how they can be adapted for the cloud due to the many benefits the cloud offers. This evolving regulatory landscape is encouraging because the largely manual, spreadsheet-based processes banks have been relying on for decades simply aren’t flexible or efficient enough to help financial institutions navigate through the current compliance landscape. The flexibility offered by the cloud also provides another great advantage, as its agility and modern architecture allow institutions to easily adapt to constantly evolving regulatory and compliance mandates. Banks must be able to quickly and simply modify documentation and processes in both the front and back office as new guidance is introduced or interpretations evolve.

In today’s world, the benefits or moving to the cloud are clear. It allows for more standardisation and higher availability of back-office products, so that customer-facing front-end solutions can more easily interact with each other. It also provides unmatched agility, security and scalability. Savvy banks understand that it’s not a question of if their institution should move to the cloud, but rather a matter of when. Cloud technology is a paradigm shift that is transforming the financial services landscape, and those who do not embrace it, may risk being left behind.

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