Innovation is the key to survival in today’s tough business environment. More so for banking and finance service companies (FSI). It is very difficult for banks and financial institutions to achieve competitive differentiation. Enterprises that do achieve it get a big boost to their business.

The cloud has disrupted most industries, and the banking and finance service industry is no exception. On the positive side, such disruption improves efficiency and customer focus. The cloud delivers innovative products in the financial service industry. Cloud-centric innovations enable financial inclusion and open up new possibilities for underserved populations.

Here is how cloud-based innovations enable financial inclusion and better customer-centricity.

Better accessibility of financial products and services

The cloud makes computing infrastructure available on demand through the Internet. When enterprise applications and data shift to cloud-based servers, anyone with access credentials can access it anywhere, anytime.

These resources also become device-agnostic. Users can access resources through smartphones, browsers, desktops, laptops, or any Internet-enabled device.

The cloud’s ability to deliver anywhere, anytime access is a game changer. It makes financial service institutions resilient. The resilience makes services accessible to underserved populations, especially in remote areas.

Limited accessibility is a big pain point in financial services. Banks and other financial institutions have limited branch offices. They also work only during specific working hours. These limitations make banking services inaccessible to a vast segment of the population. For the FSI, huge overheads in operating branches make it unviable to open branches in remote locations.

Today, financial service institutions can develop apps and enable access anywhere, anytime. Customers can access financial services through customer-facing apps. They no longer have to rely on a physical branch. The cloud also makes these institutions more inclusive for employees. By enabling remote login to the cloud servers, the institution can hire anyone, even from remote corners of the world.

Improved access through scalability and resiliency

The cloud allows financial service institutions to scale their infrastructure up or down based on demand. Such resilience improves service availability and allows customers to access services friction-free.

Easy scalability also offers a level playing field. Smaller institutions can leverage cloud elasticity to compete with larger players. They can access the same infrastructure industry leaders use without investing in upfront costs.

The cloud also helps financial service companies become more efficient. Reduced operational costs, a single source of truth, improved collaboration, disaster recovery capabilities, and automation improve operational efficiency. Improved efficiency translates to better margins. When FSIs pass on such gains to customers, their services become more affordable.

Improved customisation and personalisation through data-driven analytics

Businesses today rely on data big-time. More so, financial service businesses.

The cloud helps FSI businesses create 360-degree views of their customers. Such improved views help them deliver customised services and personalised engagement. FSI businesses can, for instance, run analytics on extensive data sets to refine products. They can make their services more accessible or affordable to the unbanked and underbanked segments of the population.

Financial service businesses can also leverage data to improve their internal processes. They can, for instance, use cloud-based AI to assess an application’s creditworthiness. Static credit scores are problematic. These scores reflect past events and often result in the rejection of credit for eligible individuals. FSIs using AI can develop plans that consider the application’s financial position and the right size of the plans or products. Customers get affordable products without the risk of misselling.

Facilitating Innovation for differentiation

Innovation is the catalyst for competitive advantage in today’s tech-centric world. But innovation depends on resource availability and the ability to experiment.

Cloud platforms offer unlimited storage for data and advanced analytics capabilities. FSIs leverage these resources to experiment and evolve new products tailored to customers.

One red-hot trend in FSI is open banking. Open banking provides customers with access to their financial data through APIs. Customers get greater control over who has access to their data. Innovations in this space will help banks connect with customers in a better and more engaging way.

Better safety through improved security and compliance

In the early days of the cloud, cloud adoption by FSI companies remained lukewarm. The main reason was data privacy concerns. Also, regulatory requirements mandated control over data sovereignty requirements.

Today, many of these challenges have become non-issues. Hybrid clouds help FSIs leverage cloud advantages while complying with data sovereignty mandates.

Cloud service providers now offer a higher grade of security compared to most on-premises stacks. Cloud platforms enable the automation of routine tasks, streamline compliance processes, and ensure basic security, such as patch deployment. Improved threat detection capabilities and streamlined risk management minimise reputational and financial risk.

The emergence of industry-specific clouds further promotes innovation in the financial service industry. These products cater to the unique needs of financial institutions. For instance, these products come pre-built with regulatory compliance features. 

Companies can focus on their business models without worrying about administrative drags.

The impact of GenAI

As the hype around Generative AI (GenAI) settles, enterprises pour their proprietary data into large language models (LLMs). They use this data to create bespoke applications and drive their businesses in new directions. In a recent EY survey, 78% of the respondents have either implemented or are in the early stages of exploring GenAI use cases.

GenAI enables companies to take their data-driven analytics to a new level. GenAI-centric innovations personalise financial planning and investment management. For instance, AI helps insurers make risk assessments and tailor personalised products. More accurate risk assessments reduce insurance costs. GenAI also improves other customer-facing areas, such as contract documentation. The process becomes fair, objective, fast, and friction-free.

The cloud is the main vehicle for delivering GenAI innovations.

GenAI makes cloud-based chatbots more powerful and takes self-service to newer areas. LLMs allow virtual agents to evolve from their legacy question-and-answer mode. These advanced chatbots analyse customer details in depth and respond in human-like language. They give personalised, contextual responses on EMIs, loan eligibility, charges, offers, and more. Customers who access these services through the cloud get instant results at their fingertips. Consider a customer in the middle of a meeting. The AI-powered application crunches numbers and delivers the implications of a financial commitment in seconds. Such AI and cloud-powered apps take customer experience to the stratosphere.

The cloud has become a powerful driver for financial inclusion. FSIs that focus on cloud-centric innovation achieve competitive differentiation and customer loyalty.