Cloud banking describes the deployment and delivery model used to enable financial institutions to manage core banking platforms and applications on the cloud while leveraging on-demand access to the resources required to deliver core banking services online. Instead of confining critical infrastructure and complex technological software to a physical bank, cloud banking moves much of the manual tasks of bank software management out of the hands of the local bank's IT team. The result is streamlined processes for financial professionals and the ability for customers to conduct bank business with the click of a button.
It's estimated that 89% of banks and 96% of credit unions will have launched a digital transformation strategy by the end of 2022. The banks that fail to implement such solutions will lack critical services their customers will likely seek. While adapting to digital transformations can be challenging, the benefits outweigh the potential learning curve for cloud banking. Moving critical services to the cloud offers consumers a variety of services that save time and increase convenience. It offers critical sources of value for bank and credit union leaders and employees.
Bank customers want to know that their money is safe, secure, and easily accessible. They also want the same convenience and speed they enjoy when taking care of shopping and business in other industries. From opening an account to account maintenance, transactions, and loan origination, customers want bank services provided by remote capabilities that any device can access.
Cloud banking solutions allow customers to track financial transactions and spending in real-time, conduct business remotely, and even move money from one account to another (like from checking to savings). Additionally, when cloud storage and machine learning are applied to back-office processes within banks and credit unions, customers can see their problems solved quickly and more efficiently.
Cloud banking not only eliminates the stress of conducting business during banking hours, it allows consumers to take advantage of self-service options. While excellent customer service is always appreciated, sometimes it's quicker to simply take care of something yourself. With no waiting in line or making phone calls during work hours, customers can check their balance, fill out prequalification loan information, and perform business tasks.
These self-service options don't only benefit customers. When bank staff members don't have to perform every transaction manually, they can offer improved service to the customers who need their assistance.
Your customer acquisition model depends heavily on the consumer journey. To effectively onboard new customers, you need to be able to meet your potential customer's needs and offer a convenient and simple journey from discovery of the service to conversion. For most modern consumers, much of this journey will take place online. Over 80% of bank customers check their balance online. Not offering this service could be an immediate deal-breaker. Digital banking can reduce the time it takes to open an account from 24 hours to 5 minutes. When the onboarding process can be completed online, you reduce the risk of losing a potential customer to a competitor.
Cloud banking synchronizes data across all platforms for greater insight into your customers' actions. With the results of real-time data analysis, a bank or credit union can utilize data analytics to understand individual customer behavior and respond with targeted actions that improve the personalization of services.
Financial transactions are complex and require strict attention to detail. These aren't the qualities that speed up processes and make them more efficient. Cloud technology decentralizes your business, and your customers' finances can remain accessible even if your physical location is damaged or out of reach. These systems also share data across platforms, eliminating silos that slow down banking processes and make it difficult to track information. By leveraging this easily accessible data, banks can eliminate manual tasks and quickly respond to the needs of their customers.
Banks and credit unions have historically resisted cloud storage and processes, fearing security outside of a physical location would be compromised. In reality, legacy systems are more likely to be vulnerable to attack. Decentralizing data makes your information available in more than one location. Additionally, cloud providers offer the most modern solutions and work under strict security standards. When these applications are implemented correctly, they provide higher security levels than traditional networks.
Financial institutions, both large and small, are working to meet customer demands for convenience and modern technology by moving to the cloud as rapidly as possible. However, banks and credit unions have to balance this rapid change with potential security risks. Moving to the public cloud versus a private sector cloud offers lower costs, streamlined processes, and a variety of other benefits, but it requires these organizations to give up a measure of control, potentially creating security vulnerabilities and risking failure to maintain financial regulatory compliance.
Financial institutions face a high level of regulatory pressure to collect, retain, and report data. While upstart fintech companies are leveraging the public cloud to create hyper-efficient products, services, and business models, these companies may struggle to compete in the future. Consumers trust established banks because they want less risk and less potential disruption. Banks and credit unions that balance security concerns with technological advances are turning toward a hybrid cloud approach.
Financial institutions don't need to compromise moving forward for the sake of compliance and security. Some digital banks find ways to meet regulatory requirements while developing new business models by building a secure, scalable, and innovative platform in the cloud with Amazon Web Services (AWS). The managed service provides infrastructure, services, and tools for a consistent, multi-cloud experience.
For banks and credit unions, cloud banking is an inevitable part of the future. Moving to the cloud will help these institutions cut costs and devote resources to improve services. Organizations that carefully research and choose a deployment model that meets their current and future needs are most likely to maintain the critical regulations required of financial institutions while meeting consumer demand for products that keep up with the pace of today's technology and busy consumer lifestyles.
The economy, technology, and accelerated changes to business processes due to COVID-19, fuel the need for changes within the banking industry. Banks that rush toward the public cloud could face future problems when it comes to compliance, while those that wait until they're forced to compete could lose valuable customers. With the right preparation and a clear outline of your goals, you can partner with a company that understands the complexity of regulatory requirements in the financial industry.
Co.tribute is a modular digital customer acquisition platform that powers credit unions and banks to digitally onboard customers and offers a streamlined digital experiences they expect. Instead of ripping and replacing legacy core systems, Co.tribute layers on top of the existing systems and provides community banks and credit unions a branded customer experience that rivals the neobanks and direct-to-customer fintechs. With solutions for banks and credit unions to compete in today's digital world, Co.tribute is poised to help all types of financial industries create a roadmap that aligns with the future of digital transformation. Want to learn more? Schedule a demo to see how easy it is for your financial institution to deliver the financial products your customers expect.