While many companies have been busy migrating their business to the cloud, financial institutions have been a little reluctant. Initially, many financial institutions limited their use of the cloud for functions like storage, communications and cloud-native infrastructure. This was due primarily to concerns over regulatory challenges. Now, they’re considering cloud-native infrastructure for core systems. A recent study found that globally, financial institutions will spend almost 11% percent more per year on public cloud initiatives through 2024
While financial institutions are widening their public cloud adoption, in the last two years, a new strategy has emerged. Financial companies are adding industry leading business solutions – turnkey software as a service (SaaS) business products – when adopting the cloud. This allows them to get more from their transformation, and faster – particularly when the offerings include AI, data management and analytics and/or customer experience management. Today, there is a wide range of architecture and provider solutions available depending on the need. And financial institutions are relying heavily on SaaS for these pre-built solutions to quickly unlock the transformative potential of the cloud.
How SaaS Solutions Address Financial Lending Challenges and Unlock Cloud Potential
A good example of this new strategy to adopt cloud-based SaaS products with a cloud transformation is a technology solution for financial lending, like NetOxygen. This award-winning SaaS solution brings the power of an enterprise-class loan origination solution to the cloud. Its on-demand nature allows lenders to focus on doing what they do best: originating and closing loans. Migrating to the cloud and implementing a SaaS solution like NetOxygen for loan origination provides a turnkey workflow that addresses the main challenges of financial lending: compliance, enhanced user experiences, accelerating innovation, scalability and improved operating margins.
Lenders recognize the transformative potential of the public cloud, like better customer experiences and stronger ecosystem collaboration – the ability to work horizontally across the organization. But financial institutions are concerned about the loss of control, security, privacy, compliance issues and the ability to extend controls across multiple systems and platforms.
Public cloud providers like Google are and have been protecting data for thousands of companies. These providers offer a multi-cloud approach that means data is protected from the ground up, regardless of where it is deployed. Public cloud providers are industry leaders in data and include industry-standard UW, AI, fraud and identity protection, etc. Adding a SaaS solution like NetOxygen for loan origination gives financial institutions the ability to automate compliance and quality management and is easy to configure, allowing financial institutions to update compliance regulations as needed.
2.Enhanced user experience
The pandemic pushed many companies including financial companies into the cloud as customers had to rely primarily on online businesses for most of 2020. To be fair, the focus on better online customer experiences was already underway. But the huge shift to the internet intensified the need to address the customer experience. Add to that, financial institutions need to address a shift in the market to tech-savvy customers. This cohort is looking for financial services firms that offer innovative, enhanced customer experiences that align with their expectations. These customers want “always available” banking services that can be accessed anywhere, any time.
Financial institutions will need to migrate to the public cloud to offer speed and agility that make customer-centric solutions and competitive advantage possible. Using a pre-built SaaS solution can combine data assets making it possible to deliver customized user experiences. And if the solution includes automation, many routine queries can be handled by AI, freeing up support agents to handle the more complicated issues. These are the features that bring financial institutions closer to their clients and deepen those relationships.
The cloud helps companies answer the demands of the changing market and position themselves for new demands in the future. Adding an intelligent SaaS solution means companies have new opportunities and the operational muscles to unlock innovation through insights. The cloud is all about data – pursued, shared and continuously available to leverage insights. SaaS solutions that use technologies like AI and analytics can help determine where the market is headed, what products are adding the most value, and give companies the ability to make better decisions and better investments.
Artificial intelligence is the leading technology, used by 78% of cloud leaders, according to a Wipro FullStride Cloud Services study, with half of them saying AI is the most effective advanced technology they pair with the cloud. Companies need to stay ahead of the competition, not just meet the competition in the market. Better insights mean that financial institutions can adjust to economic changes and fast-paced market demands.
More non-financial institution firms are entering the financial-services space, posing another threat to legacy firms. These players have doubled since 2015 and are growing fast through aggressive pricing, agile services, and highly personalized customer experiences. This further accelerates the need for legacy institutions to move more services to the cloud.
But moving to the cloud and building in-house applications to respond to the market may not come fast enough to handle this threat. In the past two years, a new strategy has emerged. When moving to the cloud, more financial institutions are adding cloud-based SaaS solutions in their adoption. This allows institutions to get more from their transformation faster. The flexible architecture and easy configuration allow companies to pursue emerging markets and respond to new market trends. In the example of the loan-origination solution, having the ability to support multiple channels (retail, wholesale, consumer direct, etc.) and integrate with other third-party applications extends the possibilities for new loan products and services.
5.Improve operating margins
Innovation and cost efficiency are the top-of-mind issues for global businesses. The cloud delivers on both. This is critical as more competition (FinTechs) enter the market, driving pricing pressures and lowering yields. Financial institutions can embrace cloud and automation solutions to lower costs, but they must also view cloud as a vehicle to transform their business and fuel their future.
The cloud is all about data. Companies will be able to use data insights to tell a story about internal workflows and processes that could not otherwise be told. These insights will identify new ways to work and new opportunities for modernization that will drive further efficiencies – essentially, data insights will define the bank of the future.
Adding Targeted Solutions to Cloud Migrations Drives Faster Returns
Financial institutions have been moving to the cloud gradually for years, but the pace of change is pushing them to fast track their transformation to gain a competitive advantage. Wipro’s cloud survey found that banks plan to migrate 53% of their applications to the public cloud in the next 24 months.This is progress for legacy financial institutions, but it’s still way behind the emerging FinTechs. For financial institutions to compete with these nimble players, cloud transformation is not just a nice upgrade – it’s necessary. By implementing SaaS turnkey solutions like the NetOxygen loan-origination solution, financial institutions can improve their customer experience, enable quicker deployments, and gain the scalability necessary to make their business grow.