All industries, including financial services, have looked to the cloud to boost resilience and continuity during the past 18 months. It’s not surprising since the cloud can seamlessly integrate parallel systems, create a simplified IT structure, and reduce maintenance costs. For the financial sector, the cloud can also help banks move from heavy capital investments to an operation-based model that drives efficiency. The need for remote services has also driven a spike in demand for digital banking, with banks managing a record rise in digital business transactions and feeling the need for scalability and customization. Today, “going mainstream” with cloud banking has become critical.
The Business Benefits for Cloud Adoption in Commercial and Small Business Banking
Fortunately, cloud adoption can be far more than a reactive response for Commercial and Small Business banking. It can hold strategic business importance as well. Five key benefits of cloud for the Commercial and Small Business banking sector are:
- Improved customer service
- Access to enhanced tools and applications
- Greater capacity to add new and improved product and service offerings based on deeper customer insights
- More efficient and advanced platforms and ecosystems to support daily tasks
- Alternative Core modernization strategies
Improved Customer Service: Although cloud delivers operational cost reductions, a recent survey from Gartner shows that the biggest driver for cloud implementations is now improving the customer experience. This represents a significant change in a short period of time, and it highlights a key business benefit in the new remote-services world. One of Wipro’s banking clients, for instance, used the cloud to improve the availability of real-time data for instant and personalized customer offers. This enabled the client to move from making offers based on historical/static data analyzed after monthly cycles to an environment in which it could provide real-time offers through embedded AI tools in customer-facing applications.
This level of personalization is critical in servicing consumers’ demands, but it’s also important for commercial and B2B engagements as well. Banking is witnessing a huge movement to personalization as financial institutions attempt to decrease their time-to-market via the cloud and offer more-relevant products for customers that truly match their needs.
Cloud can help overcome legacy customer-engagement tactics that reduce banks’ competitiveness, including:
- Product and service offerings that are not based on real-time customer data or 360-degree customer views
- One-size-fits-all offerings that try to apply to any industry
- Generic Credit and Cash Management customer offers that are less attractive than current products and services, even those coming from the same provider
Access to enhanced tools and applications: Salesforce blazed the trail for cloud-based CRM tools, with fintechs like nCino integrating with the Salesforce Cloud-based solution to enable the Commercial and Small Business Banking industry to automate and digitalize lending workflows and processes that were historically difficult in the Commercial Lending space. The cloud-based providers have continued to evolve their products through solutions customized to the needs of a particular industry segment. Salesforce Industries provides a suite of 12 industry clouds tailored to specific best practices that help companies deal with their unique challenges. The Financial Services Cloud (FSC) enables banks and financial institutions to automate omnichannel customer journeys and drive straight through processing, which has been a significant area of struggle for many banks.
Many banks have attempted to solve customer onboarding through automation only, resulting in an acceleration of inefficient processes to the next bottleneck. Addressing the challenge requires a comprehensive cloud-based strategy and roadmap that also incorporates the use of fintech solutions and rules engines to ensure compliance, particularly for institutions with global footprints.
Example of business differentiators that can be leveraged by banks include:
- Event streaming
- Machine learning and augmented AI
- Voice recognition
- Identity validation
- Managed blockchain
- Forecasting and estimation
Enhanced capacity to add new and improved offerings based on customer insights: Gone are the days when it takes years to implement new products or changes to existing offerings. Cloud-native environments offer open APIs by third-party providers, giving banks and financial institutions access to new capabilities without the traditional constraints of legacy systems built 40 years ago. This allows banks to accelerate innovation using common development platforms and centralized applications.
Citi has led the market by offering cash and treasury management services for commercial and corporate customers with Oracle ERP. This has enabled the bank to make product and service recommendations and enhancements based on the customer’s real-time data. Amazon, meanwhile, has built a $2+ billion trade finance business based on the buying patterns and seasonality trends of the merchants using its platform. This enables point-of-need credit offers for customers that are convenient and easy to utilize based on transaction-level data, and it allows diversification into new sectors and platforms like digital marketplaces based on deeper customer insights.
Efficient platforms and ecosystems to support daily tasks: As financial institutions embrace the cloud, risk, security and regulatory compliance become key considerations in their journey. The use of Governance Risk and Compliance (GRC) platforms like OpenPages, Archer and ServiceNow can greatly benefit from the cloud, and risk modeling and scenario planning are nature activities and functions to leverage the cloud. Fintech offerings like Hexanika have grown due to cloud enablement, while the cloud has also enabled the growth of GRC platforms that enable banks to eliminate “shadow IT” environments in which End User Applications (EUC) have been developed and enabled outside the IT compliance and control function. By moving EUC applications into an IT-compliant ecosystem, banks and financial institutions can simplify the maintenance and support of EUC applications, greatly reducing their operational risks.
Moving these applications involves more than just a “lift and shift” approach and can be time consuming and costly for banks and financial institutions. It doesn’t have to be. Wipro’s EUC Remediation solution helped one of the world’s largest financial-services companies reduce the time and costs associated with remediation by following an eight-step framework that follows a logical flow from rule setting, cataloguing, assessing, remediation, and migration to steady state.
Alternative Strategies for Core Modernization: For many years, banks and financial institutions have actively evaluated how to evolve from core banking platforms built 40 years ago that are rigid, difficult to expand and maintain, and challenging to expose to the digital banking ecosystem. These obstacles are compounded by the number of legacy-platform experts who have either retired or are planning to retire soon. As the business of banking increasingly evolves into real-time, hyper-customized, data-driven BaaS solutions that are available anytime/anywhere and are AI/ML driven, a new core banking generation is needed. The scale of these modernization projects quickly results in significant costs, timelines, and risks to the bank’s fundamental businesses. But cloud-based applications offer the potential for core applications and systems to remain in place while the supporting applications are maintained on the cloud using API tools and integrations. This can significantly reduce the costs and risks of modernizing core applications.
Realign Overall IT Infrastructure with the Help of Cloud
Banks have started their cloud-adoption journey and have had limited success in specific functions. Yet cloud today has a whole new appeal for Commercial and Small Business banking, with demand increasing for remote services and security advances making cloud even more compelling. Banks need to adopt a more mature cloud strategy that aligns with their business goals. Wipro has helped financial and non-financial clients on their cloud journeys through consulting, advisory and IT Services. Contact us today to learn how Wipro can support your organization’s cloud objectives.