Post COVID, Cloud Data Platform To Play a Major Role To Bring Back the Finance Sector On Track
While the full extent of COVID-19's economic impact is yet to unfold, organizations are now recognizing the need to accelerate digital transformation strategies to prepare for the next disruption
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Financial services institutions are launching digital transformation initiatives and migrating to the cloud. With growing customer demands and stringent compliance and regulatory standards, financial services institutions stand to benefit from leveraging the capabilities offered by cloud data platforms. Organizations which adopted cloud strategies have seen significant improvement in efficiency, reduction of costs and decreased downtimes. With the recent disruption and large-scale lockdown measures due to COVID-19, the mobility, security and scalability of cloud data platforms further highlighted its value to businesses. While the full extent of COVID-19's economic impact is yet to unfold, organizations are now recognizing the need to accelerate digital transformation strategies to prepare for the next disruption.
According to the National Association of Software and Service Companies' (NASSCOM) latest report, the cloud market is set to cross $7 billion by 2022. As one of the early adopters of the technology, organizations within the financial sector have been reaping the benefits of migrating to the cloud. The report further mentions how financial sector could offer real-time, high-volume and high-performance transactions across multiple channels by adopting cloud.
This trend can be validated by the latest FinTech & Digital Banking 2025 (Asia Pacific) report by Backbase and IDC that states that in India, 70 per cent of the tier-I and tier-II banks will regularly access third-party data and insights, as they strengthen their efforts around offering personalized customer strategies. Now this is a significant percentage of the projected $7 billion cloud market as reported by NASSCOM. The additional benefit that the financial sector could benefit from by migrating to the cloud is that of customer security.
As per the latest disclosure from the Reserve Bank of India, the total number of frauds reported by scheduled commercial banks and select financial institutions during financial year 2019-20 is 84,545 and the amount involved therein is INR 1,85,772.42 crore. The immediate solution of the hour is for financial institutions to migrate to a secure cloud data platform to ensure smoother and efficient scanning of crucial data inputs and help with accurate analysis of the same. This is a major loop that an efficient cloud service provider can fill.
From online bank transactions to insurance claims, financial services institutions generate large volumes of data. The insights that can be derived from these data have the potential to improve efficiency and security, enhance customer experience and create innovative products and services.
Here are three ways financial services companies can benefit from a cloud data platform.
Better customer experience
Today's consumers are looking for unique and personalized customer experience. For some customers, personalization can be a deciding factor whether the business relationship will continue or not. With access to a massive volume of consumer data, banks and financial institutions have the opportunity to deliver a personalised experience to customers.
For a personalization strategy to be successful, full visibility into customer interactions in real-time is fundamental. With the help of cloud platforms, businesses can house all types of data such as clickstream, transactional and third-party data in one secure place. Also, cloud data platforms can ingest structured and unstructured data coming from various sources including customer relationship management systems, customer transactions and the Internet-of-Things. With data converging on one platform, organizations can gain a 360-degree view of customer behaviour and preferences from multiple inputs.
With this capability, organizations can pinpoint high-value customers and ensure they have a good experience at every touchpoint.
New sources of revenue
Cloud data platforms offer direct and secure sharing of data without the complexity, cost and risk associated with legacy data warehouses. With simpler, enhanced data sharing, financial institutions leverage public data sets by adding new business lines of data products and services.
For instance, offering a stand-alone data product to data consumers can open new revenue streams. Financial services companies that collect tick-by-tick stock market data is an example of this. Using cloud data platforms, these financial data vendors can create data projects that they can sell to hedge funds.
Simultaneously, with insights derived from customer transactions, spending and payment patterns and product inquiries, banks can create new consumer products and services that address specific customer needs. By breaking through barriers between disparate data systems, cloud platforms empower companies to find new sources of revenue and expand business opportunities.
Mitigate fraud and risk
Financial services organizations are under constant attack from cyber threats and fraudsters. With high costs involved, financial institutions cannot afford the risk of being unprepared. As cloud data platforms can ingest and analyse various data types, it can serve as the first line of defence against cyberattacks. With automatic and infinite scalability, per-second compute pricing, and low storage costs, financial institutions can affordably store petabytes of historical data and index all of their cybersecurity, anti-fraud, and machine- and customer-generated data. With the use of advanced data analytics, banks and financial services institutions can use detection rules and enhanced visualizations to pick up aberrations in transactions.
Combined with high-volume data storage, in-depth finance data analytics can help detect risks quickly, often in real-time. The result is higher data security, cost-effective investigations, and earlier detection.
A cloud data platform provides the foundation on which companies can build a technology stack that will deliver business agility and growth. For financial services companies aiming to deliver a unique, personalized customer experience, gain higher profitability and establish stronger security measures, having the right data infrastructure and tools is a step in the right direction.