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Tuesday, May 28, 2024

Cloud Dominates Bank Resilience: Forget Vaults, Go Virtual

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Khushbu Raval
Khushbu Raval
Khushbu is a Senior Correspondent and a content strategist with a special foray into DataTech and MarTech. She has been a keen researcher in the tech domain and is responsible for strategizing the social media scripts to optimize the collateral creation process.

The ability of cloud-based systems to deliver faster payments and treasury insights took on an added importance during the pandemic.

Traditionally, financial services organizations or banks hesitated to migrate to the cloud because of security and compliance concerns. However, shifting consumer expectations and the Covid-19 pandemic forced them to rethink their business models. 

Now, many financial institutions that were previously cloud-shy have become cloud champions as they realize the opportunities cloud computing can offer in terms of scalability, cost savings, security and compliance, and innovation through access to technologies like big data analytics and machine learning.    

Banks are increasingly focusing on operational resilience, reflecting the growing dependency banking systems have on complex systems, automation and technology, and third parties. 

Operational resilience is the ability to deliver operations, which includes critical operations and core business lines through disruption from any hazard. Operational resilience needs to be understood as the desired outcome instead of a singular activity and the approach to achieving the outcome. It addresses many operational risks, including cybersecurity, pandemics, environmental and infrastructure, geopolitical, third-party risk, and technology risks. 

Here are five ways the cloud can help banks drive operational resilience:

1. Follow Regional And Sector-specific Regulations

Providers like Google Cloud offer globally and regionally resilient infrastructure, data centers, and support. The global footprint of 24 regions and 73 zones allows them to serve customers in over 200 countries with a globally distributed support function. They can support customers even in adverse circumstances and allow business transformation across banking, capital markets, insurance, and payments to support data-driven innovation, customer expectations, and security and compliance needs.

Also, from encryption by default and Titan security chip to high-scale DOS defenses and Google Cloud data analytics, it helps banks secure their environment.

2. Reach Customers Via New Digital Distribution Channels

Retail banking is transitioning from face-to-face to online transactions, with 80% of all customer touchpoints occurring on digital channels. This resulted in customers sharing more data in return for a personalized banking experience and benefits such as reward points. 

So, while the industry is moving to real-time, retail banks should contend with additional challenges because of legacy data and infrastructure. There’s an urgent need for retail banks to digitize rapidly to remain relevant.

Google Cloud Platform helps banks reach customers via new digital distribution channels through Open Banking FinServ Solutions. It’s a system allowing access and control to consumer banking and financial accounts through third-party applications. It encourages interoperability between banks and consumers by making its core services available and accelerating digital transformation. 

Let’s understand it with an example of the eCommerce industry that offers last-minute Chromebook deals and develops a new app experience using Google Assistant. You choose and finalize a product from the Pixelbook Deal Store. After which, Google Assistant will ask your preference whether to pay now or pay later and let you choose the bank you use. It will take a confirmation before linking your bank account. Also, to be noted, linking the bank account with your Google is for consumer experience customization. Financial data or authentication data will not be collected via the conversation interface. It will let you review the terms and conditions. After completing the process, you will get a confirmation receipt via email. 

It provides an opportunity to build new customer channels with more control over the data and enhances interoperability between traditional banking data and an API ecosystem. 

3. Offer A Cost-effective Solution To Customer Support

Google Cloud’s intuitive Contact Centre AI offers retail banks a cost-effective way to improve caller experience and operational efficiency. Contact centers struggle to keep up with rising customer demands and look for solutions that help improve the customer experience. However, current contact center solutions are expensive and time-consuming to set up and run.

Solutions like interactive voice response (IVR) are helpful but sometimes meet customer needs or expectations. Customer satisfaction is important for retail banks, as 30% of critical customer interactions occur in contact centers. 

Using Google Cloud Platform, you can transform your contact center by providing a better customer experience at a lower cost with Contact Centre AI. 

  • Generate human-like text-to-speech and speech-to-text conversations
  • AI-powered virtual agents with ML for adaptive routing
  • Run auto-tuned, AI-driven speech models on tensor processing units (TPUs)
  • Receive surface relevant insights and bank account holder information in real-time to agents
  • Integrate with existing technology systems for a seamless omnichannel experience

Benefits across the banking ecosystem:

  • Agent Reskilling: 10-25% faster leads handling
  • Churn Reduction: 0.2-2.5% better call experience results in lower churn, and enhanced insights flag at-risk customers. 
  • ARPU Increase: 1-3% increase in average revenue per user

4. Run Risk Calculations To Test New Products

Banking services institutions require increasingly complex risk calculations to stay updated with market movements. Analyzing portfolios and forecasting potential P&L are the biggest priorities and responsibilities. Usually, FinServ organizations conduct formal risk modeling – value-at-risk (VaR) and other calculations to mitigate risk, ensure financial control, and make well-informed trading decisions. To do this, all the banks or FinServ institutes need to aggregate the risk assessments from positions held by different trading desks, portfolios, and departments within the institution. 

The challenge lies in VaR valuations, which use historical methods requiring significant computational resources. It can take a virtual server farm to handle the operation. Organizations don’t have an extensive amount of infrastructure on site. 

And that is where Google Cloud comes into the picture. Its high-performance computing grid offers all the resources you need to perform timely risk calculations and simulations efficiently, effectively, and cost-effectively. Google Cloud delivers a high-speed data processing platform required for complex VaR calculations.

5. Automate Data Capture To Fast Track Processes

Nearly all businesses or banking-related processes begin, include, or end with a document. Almost all organizations are sitting on a document goldmine. PDFs, emails, customer feedback, patents, contracts, technical documents, sensitive documents, and HR files. All these documents grow with the time. A lot of these documents need to be more structured. 

Document processing is quite a complex process. Google Cloud Document AI extracts structured data from unstructured content. Document AI enables businesses to unlock insights from unstructured documents with the help of machine learning. This can enable businesses to make better decisions, such as analyzing customer feedback, processing invoices, or reducing mortgage processing times. Document AI can extract and classify information from unstructured documents. 

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