5 Ways the Cloud is Promoting Innovation in Digital Finance 

Providing a wide catalog of ready-made products and services

Cloud-based banking platforms host a wide range of pre-built and customizable products and services, such as customer onboarding, digital banking, transfer and payments, ATM & card-based transactions, fraud and AML, logistics and communications, KYC, etc. With these solutions in one place, banks do not have to reinvent the wheel – they only need to integrate the product APIs into their systems and customize them to meet their needs.  

A good example is Codebase Technologies Digibanc Fintegrator, a cloud-based integration platform consisting of 500+ industry-grade, out-of-the-box open APIs covering a wide range of banking products and services. The platform enables banks and other financial institutions to collaborate with FinTechs to shorten their proposition development time – from prototyping, software development, and deployment – without compromising vital aspects such as security, scalability, and efficiency.  

Designing sophisticated customer journeys that delight today’s customers 

As the world becomes more digital, opportunities for face-to-face interactions are significantly reducing, and the financial industry is not immune. Customers are increasingly sensitive to convenience, personalization, and general user experience, not just in banking but across the wide spectrum of digital products.  

It’s no wonder more than two-thirds of customers today prefer digital banking and engaging with their banks on digital channels as opposed to visiting bank branches. A parallel study by McKinsey found that companies that improved their customer experience boosted their customer satisfaction rates by 15 – 20% and conversion rates by 20%.  

Fortunately, different types of cloud computing, such as Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) are at the nexus of this transition, supporting financial institutions to innovate at scale and meet their customer expectations with minimal hassle.  

From our experience working with renowned banks from across the Middle East, APAC, Africa, and around the world, we have witnessed first-hand how integrating legacy systems with the cloud can quickly foster customer satisfaction and boost revenue generation. We leverage the robust Google APIGEE API management gateway to build APIs faster while helping institutions to easily integrate our APIs into their operating systems for more growth and innovation.  

Scalability to new market and customer segments 

Cloud providers have data centers all around the world to allow banking institutions to access their systems and data from across multiple locations via the internet. Remote access helps them scale to new markets running on the vendor’s infrastructure and serve more customers efficiently. The pay-as-you-go subscription model also helps minimize the entry barriers as institutions don’t need all resources or infrastructure upfront to launch propositions – they can start small and scale up as demand increases.  

On-premise cloud infrastructure also comes in handy for institutions that want to have more control over their data, security, and compliance, especially when scaling to new jurisdictions with different data regulations. As leaders in cloud banking, we provide end-to-end support to financial institutions with our rich cloud and on-prem banking platform with ongoing technical support so they can grow unrestrained, focusing on the customer.  

Enhancing data security

One of the prime reasons 61% of financial executives are optimistic about cloud computing services but are still stuck in the implementation stage is security concerns. According to IBM, the global average data breach cost recorded a 2.6% increase in 2022, reaching $4.35 million up from $4.24 million in 2021.  

Surprisingly, the cloud promises much higher safety to financial institutions than in-house data centers and infrastructure if utilized the right way. Some of the best practices to ensure optimal security in cloud banking include:

• Enforcing multi-factor authentication for all cloud users, from employees and management to customers, to add an extra layer of security besides the conventional username and password authentication method.  
• Using multi-tier banking architecture to ensure there is some level of segregation between different stacks to avoid compromising the entire system in the event of uncertainty. Gartner predicts that by 2025, 99% of cloud data breaches will result from preventable cloud misconfigurations from end-users. Using multiple tiers can help combat such misfortunes.
• Leveraging High-Speed Encryption (HSE) technology to secure the data in transit through the organization’s network – from local data centers to the cloud and back. 
• Using Identity and Access Management (IAM) controls to limit privileges for users and employees and curb potential insider threats that arise from unnecessary privileges.  
• Maximizing real-time data analytics to monitor user behavior and identify suspicious activities. E.g., logging in from unauthorized devices and IP locations.
• Having a well-defined shared responsibility framework outlining the boundaries between all players in the infrastructure – the financial institution, cloud provider, the government, and other vendors   

As is evident, the partner you choose for your cloud adoption goals plays an integral part in the safety of your banking infrastructure and how you manage data storage, disaster recovery, or customer banking information as you grow.  

Addressing regulatory compliance 

Cloud providers offer built-in regulatory compliance tools that help banks automate compliance-related tasks, such as logging and monitoring – to help stay up-to-date with the dynamism of regulatory watchdogs and minimize non-compliance. They also operate in line with industry-specific regulations as required in certifications such as SOC 2, PCI-DSS, and HIPAA. So by extension, banks running on their infrastructure are compliant. Given that most cloud platform providers have a global presence, they provide the flexibility to store data in a specific region or country, which can help banks comply with data sovereignty regulations. In addition, banks can integrate auditing and data reporting tools to effortlessly track user activity, detect suspicious activities, generate reports for compliance auditors, etc.  

Going Beyond Agility with Cloud Banking to Innovate at Scale  

From FinTech 1.0 to FinTech 4.0, banking has never been easy – there has always been an evolving need to simplify processes and take care of customer demands. Inasmuch as technology has not arrived there yet, there is so much potential on the horizon of cloud computing that will help banks minimize the technical hassle so they can focus more on their core business – serving customers.  

The benefits of cloud computing become more evident and the process even more seamless when working with cloud partners who have the expertise, experience, and technology to provide support from development, deployment, and maintenance.  

Banks and financial institutions can leverage the benefits of cloud technology by partnering with a technology provider like Codebase Technologies, as our Digibanc Fintegrator platform is compliant with Bank Negara Malaysia’s RMiT policies and frameworks, and is designed to meet the specific requirements of both private and public cloud services – not to mention that we have our local team to help in the transition process and ongoing support to ensure you go beyond agility and truly innovate at scale.