With the sudden arrival of global lockdowns three years ago, organizations quickly discovered the risk of location dependence and had to act swiftly to simplify client engagement over the internet. This paved the way for an impressive acceleration in digital transformation. Cloud computing technology has been particularly influential in facilitating this trend, with the switch to the cloud allowing companies to offer location-independent services.
The impact of cloud technologies on the financial industry in recent years is undeniable. They enable wealth managers to roll out new services more quickly, increase cost efficiency through flexible pricing models, and rapidly expand into new markets – without the substantial capital expenditure of on-premises infrastructure and development teams.
Benefits of cloud computing in finance
As we enter 2023, we will see an increase in cloud adoption among wealth managers. Cloud services are designed for user-friendliness, fast iterations and efficient data handling, which help organizations to react swiftly to ever-changing client needs and industry trends – beyond the capacity of traditional service models.
Compared to on-premises infrastructure, the on-demand model of infrastructure-as-a-service increases cost efficiency by replacing capital expenditure with operational expenditure, i.e. a shift from an asset ownership model to service consumption. As a result, the flexible pricing structure means that organizations only pay for what they use. Greater flexibility is a further benefit of cloud services when it comes to scalability, with cloud platforms offering wealth managers the ability to rapidly ramp up operations as their business grows. These aspects are essential for incumbent wealth managers to remain competitive as digital-only challengers continue to vie for market share.
A shared responsibility model between the cloud provider and the cloud user offers benefits for financial institutions through increased data security, with multiple layers of protection in place to mitigate data breaches. In fact, cloud infrastructure provides more security for internet-facing services than on-premises systems since the provider can roll out critical security updates much faster without service interruption and use the latest technologies such as artificial intelligence.
The outlook for cloud adoption in wealth management
Despite the clear advantages of cloud platforms, many financial institutions and wealth managers are still reluctant to fully embrace the cloud due to cost-related migration concerns, uncertainty around regulation and misplaced fears about cybersecurity.
As we look to 2023 and beyond, we will see more and more financial institutions embrace cloud services as they realize the advantages such technologies provide in enabling business growth and understand the potential for even greater security standards. Having brought several banks and wealth managers live on the cloud this year, and with more in the pipeline, we believe that adoption of cloud infrastructure in finance will accelerate in the coming year, paving the way for more innovation and digital transformation across the industry.