Cloud in Finance Industry – Benefits and Use Case

As per the O’Reilly survey, cloud technology adoption is increasing among industrial sectors, with over 90% of corporations employing cloud technology in their business process. Whereas, in the last survey, it was found that 88% of organizations were using the cloud globally.

If we talk about the banking and financial sectors, over 44% of these firms currently store their sensitive data on the cloud. This number is expected to cross the halfway mark, reaching 52% in upcoming years.

Now, industries have started relying on cloud services to store and secure data and enhance operational needs. Just one sector is taking time to adopt a cloud approach, and that is the financial sector. This industry is spending time checking all crucial aspects of the cloud, starting from the security approach to handling sensitive data.

However, cloud-based solutions emerged as one of the most helpful and robust technological approaches for the financial sector, offering strong security measures, facilitating modernization, and enabling outstanding scalability.

Let’s explore further to gain deeper insights into the benefits of cloud solutions for the finance industry and learn how this technology can revolutionize the sector.

How is Cloud Technology Used in the Financial Sector?

Financial, banking, and insurance institutions are increasingly using cloud technologies to lower costs, expand, and drive innovation in their businesses. Research conducted by Capgemini in 2023 found that 89% of financial services executives identified the cloud as crucial for transforming the banking and finance industry. Consequently, the cloud banking market will exceed $230 billion by 2032.

Data Source: Precedence Research

As per the Gartner analysts, more than 85% of organizations will embrace a cloud-first principle by 2025 and will not be able to fully execute their digital strategies without using cloud-native architectures and technologies. Cloud technology is used in finance and accounting for various purposes; here, view the few use cases of cloud technology in the finance sector.

• Customer Relationship Management (CRM): Financial institutions use cloud-based CRM to handle customer interactions and data. It allows tracking all customer interactions, regardless of location or time of day.
• Fraud Detection: Banks use cloud technology to detect and prevent fraud by examining vast amounts of data from various sources. This helps institutions detect suspicious activity before it causes damage.
• Data Analysis: Banks increasingly use the cloud for advanced analytics to acquire insights into customer behavior patterns and trends.
• Loan Origination and Processing: Cloud technology streamlines the loan origination process by automating workflows, reducing paperwork, and speeding up approvals. Lenders can easily access and process applications from any location, improving efficiency and customer satisfaction.
• Enterprise Resource Planning (ERP): Cloud-based ERP systems such as Sage 100 integrate financial data across departments, providing real-time insights and facilitating better decision-making. They offer scalability and flexibility, allowing financial institutions to adapt quickly to changing market conditions.
• Operational Synchronization: Cloud technology enables seamless coordination between various operational units within a financial institution. It ensures that all teams have access to up-to-date information, improving collaboration and enhancing overall efficiency.

Benefits Of Embracing Cloud in the Finance Industry

The finance sector is taking a cautious and steady move towards cloud infrastructure, so it is crucial to highlight the benefits of cloud in the finance and banking sectors.

Less Administration

Employing cloud software in your financial business process will save employees crucial time usually used to spend on software installation, data backups, and other organizational tasks, enabling you to focus on key business needs and goals.

In addition, you also don’t need to worry about managing servers and IT infrastructure to run the accounting software. Spending less time on managing administration will free your staff time to spend more time on other productive activities, helping you grow your business.

Automation

Adoption of cloud technology in finance can help you automate accounting and banking tasks, ultimately reducing manual workload and human errors. Cloud-based finance software can automatically produce recurring invoices, pay subscriptions, schedule reports, and post transactions.

Additionally, it can also calculate tax and discounts and flag exceptions in case invoices do not match purchase orders.

Ease of Compliance

Most cloud platforms help finance companies with compliance by providing them with quarterly tax estimates, accurate financial statements, and yearly tax returns. It helps finance business owners avoid under-reporting tax liability, which could help you perform audits in less time and eliminate unnecessary deductions.

Migrating finance software to the cloud could help accountants automate domestic and international tax calculations, ensuring compliance with applicable tax regimes. Opting for a cloud solution from a reliable cloud hosting service provider, such as Ace Cloud Hosting, can provide additional benefits. They can help you save your IT expenses and provide a shared workspace for your team to collaborate while ensuring the highest security standards.

Data Security

Finance and accounting sectors have very sensitive data – this industry has major concerns about data security. Here, cloud technology can really help the finance sector as it usually involves multiple levels of security, including access control and advanced encryption, ensuring only authorized users can access the data.

Moreover, opting for the cloud can help you with automatic data backup and recovery, allowing you to access data in case file corruption, hardware failure, or any other disaster occurs.

Accuracy with Scalability

Managing finances with Excel or spreadsheets is quite unmanageable as it can cause difficulty if the team size increases. Desktop-based accounting systems usually have limited functionality, which can hamper business productivity.

Cloud-based accounting software, such as hosted QuickBooks Enterprise, can enhance accuracy by eliminating manual errors caused by spreadsheets. It can also provide scalability, allowing you to manage all your business functions—accounting, inventory, sales, payroll, payments, and more—remotely.

Accessibility

Cloud technology in the finance industry allows users to use finance software by sitting at home or any other place, irrespective of location. All you will need is an internet connection. Cloud-based software allows you to access information on budgets, cash flow, assets, or other financial data at any time, giving you a 360-degree view of your business finances.

Moreover, sharing files in real-time and collaborating with team members all get sorted and can be managed with just a few clicks.

Conclusion

Cloud technology has become indispensable in finance, offering unparalleled benefits like enhanced security, scalability, and real-time access to critical data. By streamlining processes such as loan origination, ERP, and operational synchronization, cloud solutions empower financial institutions to operate more efficiently, make informed decisions, and adapt quickly to market changes.

Embracing cloud technology is no longer just an option but a necessity for staying competitive and meeting the evolving demands of the modern financial landscape.