Banks utilize cloud computing to better handle financial and non-financial risks. It would include credit, market, and liquidity risks. Risk management has been rendered increasingly vital for the banking and finance sector on account of a variety of factors such as cybersecurity, financial crime, fraud, and financial risks including liquidity, credit, and market. Suffice it to say that risk management needs to handle a humongous amount of data and rather quickly at that.
This is exactly where cloud computing comes in, empowering risk management teams with the ability to realize significant benefits. Cloud computing offers a significant advantage when risk management executives are expected to analyze larger quantities of data in a shorter duration. This is often done while working under tight budgets and personnel limitations. It would assist risk teams to respond quickly to changes in the external environment as well as delving deeper into the analytics life cycle.
It is often observed that the legacy technology systems on which banks rely often incur maintenance costs where the depreciation charges associated with the said systems are low. Because of this, the expenditures required for cloud migration must result in add-on operational expenses to be properly planned and sequenced over time to minimize the financial impact.
Listed below are some of the important benefits:
One of the more important benefits here is scalability since customer demands and expectations tend to be volatile in banking and finance. Cloud computing service providers offer quick elasticity as well as automatic triggers to ensure companies have an appropriate supply of requisite resources albeit without a hefty bill.
For companies in the banking and finance sector to operate efficiently and effectively, their systems’ round-the-clock availability and reliability are mission critical. Cloud computing helps in this regard as well, offering BFSI companies increased availability and secure reliability, thus affording companies the ability to quickly mitigate risks, adapt to changing market conditions, etc.
It goes without saying that for any banking and finance company, it is imperative to ensure that their systems are continually improving and that, of course, involves updates for the systems. With cloud computing, sending out these updates is not a hassle at all since the latest software updates can be sent out through only a handful of clicks instead of having to update every single system every time there is an update to be introduced. As you can imagine, this greatly simplifies the process and cuts down the time it takes to introduce said updates.
Now, let us also quickly share some handy tips to help CROs and risk managers to help adopt cloud computing for their organizations:
The most basic best practice in this regard is to make sure that the journey of migrating to the cloud is organized across different stages. These stages would ideally include the development of foundational capabilities to ensure scale and security, adoption in every business domain, etc.
While the sheer number of use cases can be overwhelming, companies must ensure that they choose the right use cases and that the selection of use cases factors in potential benefits, feasibility, and cost-benefit analysis.
There you have it ladies and gentlemen, some of the many, many reasons why cloud computing for risk management, especially in the context of banking and finance, is vital. With the right cloud-based solutions, companies in the BFSI sector can not only realize the aforementioned benefits but also easily and quickly integrate various data sources and systems to glean better and more valuable insights to drive their business growth. So now that you see the value of cloud computing in the finance sector, what are you waiting for? Go ahead and start looking for a trusted cloud computing services company and start working on transitioning to the cloud ASAP.