5 Ways Fintech is Revolutionizing Traditional Banking

Despite how hotly contested software-as-a-service (SaaS) or cloud computing is in the banking industry, there’s no stopping the migration to digital. And, at the end of the day, cloud computing is a reliable model that has the ability to change the landscape of financial services because it offers consumers access to banking systems without previous costs and obstacles.

At this point in time, according to recent Gartner data, market trends suggest that retail banking firms only use SaaS in non-core areas. However, there are plenty of reasons to expand adoption to ever-more areas in banking and experience all of the benefits that the cloud has to offer. Here are some of the main benefits that banks can realize with cloud computing.

1. Reduced Cost through Superior Economics with Fintech

A major factor that is often under-appreciated is the superior economics that SaaS provides. SaaS reduces bank costs significantly by lowering the total cost of ownership of software infrastructure. The adoption of SaaS eliminates not only the cost of setting up the software and the subsequent updates but also that of the hardware required to run it. The SaaS provider is responsible for the system’s support and maintenance costs as well as the storing and protecting your data. SaaS is able to reduce your costs while also increasing the productivity, efficiency and accessibility of retail banking services operations. This can give you a distinct edge over your competitors.

2. Reduced Cost through Digital Transactions

As transactions move online, you’re able to provide automated 24/7 customer service without human representatives. While completing online transactions can be confusing for some customers, especially those who aren’t particularly tech-savvy, there are programs that can ease the transition process. Online guidance platforms use onscreen contextual guidance can guide users step-by-step through processes using walkthroughs, until they’ve completed specific tasks. For example, if a user has to transfer funds between accounts, you can create a walkthrough to explain to him/her step-by-step exactly how to do it. Online guidance platforms real beauty is that they can be easily overlaid onto any bank website.

3. Increased Agility to Implement Upgrades, New Releases 

Traditionally, the process of upgrading software was long and painful since the user was forced to buy a software upgrade and hire professionals to install it. However, SaaS corrects this by providing businesses with great agility since their applications are constantly evolving. Now that we’re in the age of constant software upgrades, the consumer has access to the latest versions of software and quick access to new releases, at very low costs. “SaaS applications evolve constantly. The software constantly improves and the customer is always on the latest version of the software with minimal to zero investment (Gartner, 2015).”

 4. Unlimited Scalability to Upsize or Downsize, as Needed

SaaS infrastructure has access to a large number of servers and is powered by an architecture in which all the users and applications share one common infrastructure. This makes it easy to alter computing capacity when required because computing capacity can be increased or decreased easily to match the demand. “A cloud-based infrastructure taps into large number of servers and instances on the back end that can be increased or decreased as necessary to match demand, without requiring additional re-architecting of the application (Gartner, 2015).” This means that retail banking services will not have to put an extra investment in their server capacity and software licensing.

5. Adequate Security and Privacy Protections

Financial data must unquestionably be protected with the strongest measures and, according to a global survey, security and privacy protection is the main reason why central banks have lagged behind in SaaS adoption. Central banks aren’t yet convinced that data protections are possible in a cloud delivery model. However, many regulatory firms agree that regulatory requirements and data protection laws for cloud banking systems align well with the existing SaaS models. SaaS has sufficient controls in place to safeguard security and protect privacy; it is only a matter of time before these worries are finally put to ease.

 

The advent of Fintech is taking the banking industry by storm. Many believe that the benefits that SaaS brings to banking — economies of scale, increased agility, unlimited scalability and security/privacy protections — make SaaS adoption an inevitability.

 

Bo Amidor
Head of Corporate and Marketing Communications at WalkMe and Contributing Author to SaaS Addict blog.