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.
Written by Torsten Boettjer
As Chief Cloud and Infrastructure Officer, Torsten Boettjer is a member of Avaloq’s Group Executive Board. He joined in September 2022 from Oracle Germany where he was Head of Cloud Engineering. Before Oracle, he was CTO for Cisco’s Software Business Group in Zurich. Prior to that, he held various senior positions at Swisscom and T-Systems, among others. Torsten Boettjer holds an MBA from the Bundeswehr University in Munich.
Want to find out more?
Get in touch and let our experts provide you with the insights you need
In recent years, Japan's wealth management industry has navigated significant changes, facing both unique challenges and unprecedented opportunities. In 2022, Japan's Prime Minister, Kishida Fumio, noted that over half of Japanese individuals' JPY 2,000 trillion (USD 14.4 trillion) financial assets are held in bank deposits and cash, resulting in slower asset growth compared to the US and UK. This situation presents both a missed opportunity and future potential.
Generative artificial intelligence (AI) has gained significant attention lately. The increasing number of creative AI solutions, including well-known ones like ChatGPT, demonstrates the growing awareness among the public regarding AI's potential to enhance productivity.
Gery Zollinger, Head of Data Science and Analytics at Avaloq, an NEC Company, recently shared his views on where artificial intelligence (AI) adoption currently stands in the wealth management sector, how the technology is already being harnessed in the front office and where we can expect to see new use cases emerge.
We have noticed, that your browser language is Japanese and you have tried to access our global website avaloq.com. Please note, that we provide a Japanese version of our website with a localized offering.
By clicking the "accept" button, you agree to be redirected to the localized Japanese version of this website avaloq.com/ja-jp. If you would like to stay on the global website, please click "cancel" or the close button "X".