When we think about putting something on the internet for users for free or against a fee, the first thing that comes to mind is hosting and security. There are multiple types of hosting services available, but one term that we hear often these days is ‘Cloud Computing.’
Conceptually, cloud computing is not something we would call revolutionary. It’s simply putting your files and documents on a remote server hosted on the internet, instead of on the local server or personal computers.
What has made cloud computing the buzzword of the tech world is that it’s highly secure and cost effective, which is why businesses are switching to cloud computing at a rapid pace. According to Statista, ”In 2015, cloud computing market grew by approximately 13.7 percent.” The growth of cloud computing is rapid, and industry analysts are expecting higher growth numbers in the months and years to come.
Regardless of the niche, many businesses became the early adopters of cloud servers, and others followed the same path. One reason why they were comfortable shifting to cloud was that it allowed them to manage their customers in a convenient manner. Security and super customer-friendly features also made it very appealing.
Cloud Computing and the Financial Industry
In terms of financial services and businesses that revolve within the niche, the financial industry is a bit behind when it comes to adopting cloud computing. That makes a lot of sense to me, as financial institutions are more concerned than any other sector about data security, and they want to ensure that their data will be just as secure (if not more) in another organization’s data center as it is in their in-house data centers.
In March 2016, Tony Connor said on Cloud Tech:
All it takes is some careful planning to create a secure and reliable cloud solution that provides financial enterprises, and their customers and clients, peace of mind.
The growth number gives us a hint that there is a major shift in the financial sector toward cloud computing. This is mainly because cloud is incredibly secure, and companies offering cloud computing have some of the most talented people in the world.
Reasons Why Cloud Computing Makes Sense for the Financial Sector
There can be a big debate on whether or not the financial sector should shift toward cloud computing. In the rest of this post, I have compiled some of the most important reasons why I think the financial industry should consider making the shift.
Shift in business model: Cloud computing allows you to change your business model and serve customers better. Many new businesses are based on cloud technology that includes social media platforms like Twitter, bookkeeping services like Freshbooks or entertainment providers such as Netflix.
Cloud computing will not only be more secure, but it will give the financial sector an opportunity to serve its customers using a more transparent approach.
Employee satisfaction: If you are a startup (or an old business), you probably hire young and energetic people to keep your business at the top of the game.
In order to satisfy employees, you probably need cloud computing. These days, young employees expect a sleek and customer-friendly culture at work, which is easily possible with cloud computing.
Zero upgrades: If you are using the ERP application in-house, you probably know how costly and time consuming its software updates can be. With this, the updates will be run on the cloud server, your complete system will be updated within seconds and you can seamlessly provide high-end services to your clients without a glitch.
Data center and on-site server cost: When you have on-site servers and data centers, you have the highest level of security to ensure everything remains under control.
This sounds ideal, especially if you are in the financial sector, but when it comes to cost, all of this can be very expensive. With cloud computing, you receive a similar level of security without having to pay more for equipment, space and IT staff.
Set standards: If you have more than one ERP running in your organization, cloud will allow you to consolidate within one environment that is built to meet strict compliance guidelines.
Safety and security: We all know that financial institutions are always concerned about their data security and safety. This is one of the reasons why the financial sector is hesitant to move toward cloud computing. But, in my opinion, cloud is the safest bet financial institutions have. Service providers are very conscious about server security, as their reputation and credibility depends on it.
Obviously, like anything else in the world, there are some downsides to cloud computing. For example, with cloud computing, you will have less control over your server, which is unlimited when you have servers in-house.
But, I believe financial institutions need to look at the bigger picture and multiple benefits instead of just control over the equipment. The growing adoption of cloud in the financial sector proves that it is the next big thing.
Take it Slow
Cloud is very flexible. It does not work on the ‘all or none’ mantra. The financial sector is hesitating in making the shift because of security issues and the hassle this change will bring within the system.
In order to minimize the hassle of making this major change, financial institutions can always shift slowly so that there will be little to no chaos during the transition period.
It is safe to say that cloud is here to stay, and businesses that are not going to adopt it will face survival challenges in the future.