More than 700 million Africans lack access to a bank or mobile money account and only 41% of Africans are financially included. This is due tothe high cost of providing financial services in
These are some of the many insights from the report Cloud Banking in
Part of the cost problem is that financial institutions in
Cloud computing creates an opportunity for providers of financial services to rethink their technology spend and significantly reduce costs. Cloud computing involves using internet technologies to provide virtual infrastructure that is scalable and delivered as a service. Fixed costs can be converted into a subscription-based approach and upfront capital investments are converted into operational costs. Cloud computing allows banks to pay less for ICT infrastructure and services and achieve higher utilisation on ICT spend. Particularly for small banks in small markets where specialised ICT skills are in short supply, cloud computing can ease a critical operational constraint.
The most compelling reason to move to the cloud is undoubtedly cost savings, but there are other business reasons too. The flexibility of cloud-based operational models allows financial institutions to experience shorter development cycles for new products, which supports a faster and more efficient response to the needs of customers. Cloud computing provides the computer power necessary to deliver analytical insights in real time, which enables financial institutions to move towards a customer-centric model where the financial needs of customers are fully understood. Financial institutions can also gain a higher level of data security, resilience, fault tolerance and disaster recovery from cloud computing.
A few international and African banks have already realised the value of cloud banking. WeBank is China’s first digital bank that is based in a private cloud and uses innovative technologies, such as Artificial Intelligence and blockchain, to effect an extraordinarily high volume of transactions at a very low cost. WeBank has been able to run at 95% lower cost than that of traditional banks’ IT operations and has passed this cost saving onto their customers in the form of low account fees. TymeBank is a new digital entrant to the South African banking sector and has made a 56% cost saving compared to other startups by using cloud services from AWS.
Before financial service providers can adopt cloud banking, regulators need to support and approve the use of cloud technology within the financial sector. Some international regulators are already allowing the use of cloud banking in the financial sector. The
Africa’s financial sector regulators’ approaches are very much work in progress. The report urges African regulators to develop clear policy positions and regulations on data privacy, risk and security; data sovereignty; cybercrime; protection of intellectual property; vendor risk; and migration complexity and operational risk to enable financial institutions to reap the benefit of cloud banking.
Genesis Analytics is a global African firm that has worked in more than 74 countries across the world, 41 of which are on the continent, and
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Genesis Analytics (www.Genesis-Analytics.com) is a global African firm that has worked in more than 74 countries across the world, 41 of which are on the continent. Working across various domains, the company combines deep sector knowledge with technical expertise to provide solutions for decision-makers and unlock value in
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