Redefining banking with the cloud
Digitization continues to advance, and companies are constantly reinventing the way they interact with their customers. In banking, too, amazing progress has been made in automation in recent years.
PwC estimates that the global volume of cashless payments will increase by more than 80 percent between 2020 and 2025, reaching nearly 1.9 trillion transactions. The rise in bank transactions in traditional e-commerce pales in comparison to the explosion in subscription e-commerce - a market that is expected to grow from $72.91 billion in 2021 to $904.2 billion in 2026, with a CAGR of 65.67 percent. There is ample evidence that modernization is high on the agenda. However, the explosive growth in transactions places a new emphasis on renewing systems to handle demand. Banks have little tolerance for technology transformation initiatives that take years to deliver even incremental improvements in scalability and resiliency, customer experience and operational efficiency. Far too often, initiatives do not address the root cause, which is fixing the technical debt.
Every bank needs to get its risk management and governance in order. This includes regularly carrying out stress tests in which various future market scenarios are modeled. The purpose is to determine whether the bank has an adequate financial cushion for the worst conditions. Such tests should be combined with the collection of liquidity and other metrics. All metrics should be transparent and ideally published as information.
According to the latest EY Banking Barometer 2023 it seems that, due to the current very uncertain environment, banks are once again looking to focus more on cost-cutting programs and efficiency enhancements. The latest Swiss Private Banking-Deloitte's study concludes that technology will replace the human element in the future. New opportunities will be created that will allow banks to bundle offerings, reach more customers, use social media and build networks. In addition, technology will allow them to work more efficiently, implement updates faster and more cost-effectively, and use multiple platforms to increase employee expertise. Marc Meignier, Leader Cloud Romandie tells us more about some of the technology trends in banking.
Where and how the data is stored by banks
Oracle supports many financial institutions, including public and private banks in Switzerland and around the world, with a variety of technology solutions that meet their specific needs. These include, among others BPC, German Bank, Volkswagen Financial Services, BBVA, Erste Group Bank, Crédit Agricole, HSBC and Lalux.
As cloud technology enters a more mature phase, we are finding that there are specific and unique cloud technology requirements for each financial institution. Common to all is the desire for a clear and transparent understanding of where data is stored, how it is processed, and by whom. But also how to take advantage of cloud technology, such as speed or scalability, and the ability to drive innovation faster. That's why we've developed a distributed cloud strategy that offers different cloud services depending on workload and customer requirements. Options offers. The commonality of this model is that the same secure base technology is used across our cloud infrastructure portfolio. Options include, for example, public cloud services, multicloud, hybrid cloud services or a dedicated cloud. We let our customers choose whether they want to work in the cloud, in a hybrid model (see below), or on-premise. Many private banks choose the latter, and some banks prefer to keep their data in the locations where they operate rather than running it in the public cloud. This allows them to meet their specific data governance and residency requirements.
For example, Deutsche Bank uses Oracle Exadata Cloud@Customer, to run thousands of financial workload databases in the bank's own data centers. It is already benefiting from significant cost savings and a reduction in energy consumption for running these databases at 50 %. The corporate and investment bank of Crédit Agricole in France and Lalux Insurance in Luxembourg are reaping the benefits of their on-premises cloud deployments in terms of performance, operational costs, flexibility and data sovereignty.
The Swiss-based company BPC (Banking, Payments, Commerce), which provides payment solutions for virtually all digital payments players, decided to move its payments suite to Oracle Cloud Infrastructure (OCI) to meet growing customer demand from multiple regions and save on hardware costs. Ultimately, the company gained a competitive advantage by reducing the time it takes to onboard new customers, enabling it to offer fast and innovative payment solutions.
What about security in banking?
When it comes to data security, no industry is as challenging as the financial services sector. Banks, credit unions and other financial institutions are consistently among the organizations most frequently targeted by cyberattacks. Attackers seek to gain access to information systems and capture sensitive financial data that they can then use for their own financial gain. Attackers use a variety of constantly evolving techniques, such as compromising application or privileged user credentials, exploiting misconfigured database systems, and attacking unencrypted data.
Financial institutions must not only protect their data from attempted attacks, but also comply with ever-changing and growing regulatory requirements, including regional data protection regulations. Despite these immense challenges, most financial institutions are able to protect their sensitive data, satisfy examiners and comply with regulations - all while maintaining successful financial margins. We support organizations in their zero-trust initiatives through our cloud, which is designed to provide customers with integrated security services. Once configured, these services help secure workloads in the cloud quickly and effectively.
Why banks are particularly demanding cloud customers
Each bank has its own requirements, tailored to its customers, existing systems, regulatory requirements, etc. Data sovereignty is one of the most important aspects of financial services, but not the only one. They actively seek IT modernization and increasingly rely on digital technologies to cut costs, innovate on a large scale, and offer new services to customers. In many ways, this is similar to other sectors, so Oracle's broad portfolio of cloud infrastructures, back-office and purpose-built financial services applications meets these needs.
Banks also have special requirements in areas such as financial crime and payment processing. Therefore, we also offer a range of Cloud-based services todeveloped for financial services companies. These include highly scalable demand deposit account processing for enterprises, real-time global ISO20022 payment processing, digital service capabilities, anti-money laundering solutions, and more. These offerings enable banks to modernize their business capabilities faster and with less risk.
From a data governance perspective, banks are indeed regulated, so the issue of data governance is of great importance to them. There are interesting parallels with the healthcare industry. The Geneva hospital HUG for example, is using Oracle Exadata Cloud@Customer to modernize its technology infrastructure and accelerate the migration of its systems to the cloud. The hospital will migrate the majority of its database systems to Oracle Exadata Cloud@Customer, a deployment option of Oracle's Exadata Cloud Service that is delivered as a managed service in the organization's own data centers. As a private cloud platform, Oracle Exadata Cloud@Customer will enable the hospital to consolidate critical systems into a single IT platform while keeping data on the hospital's premises and within its firewall.
Author:
Marc Meignier is Cloud Leader Oracle Suisse Romande. www.oracle.com
