With the rise of financial technology and the wealth of digital services options available, banking, financial services, and insurance (BFSI) institutions face increasingly stiff competition. According to the e-Conomy SEA 2021 report from Bain & Co, Google, and Temasek, digital financial services are flourishing in Southeast Asia.

However, while competitive disruption drives innovation, BFSIs that lack effective business continuity frameworks to face these new challenges pose risks to the wider financial system.

While the Monetary Authority of Singapore is leading national efforts to prepare BFSIs to achieve the all-too crucial resilience amid the emergence of aggressive fintech entrants, banks and financial organisations must rapidly modernise to meet tech-savvy consumer expectations.

Easier said than done, however, especially against a backdrop of limited technical resources, an evolving regional regulatory landscape, and intensifying cyberthreats. But with the help of specialists, clear decision-making is within grasp and BFSIs can deliver compelling and differentiated user experiences, and leverage their brand strength and large customer base to consolidate their leadership positions.

Elevating digital banking

The pandemic has accelerated the need for BFSIs to deliver digital banking services with an increasing demand for quick contactless payments. Customers’ demand for speed and convenience has increased especially during the pandemic, whereby consumers no longer want to queue for banking services at office branches.

The cloud, for example, offers the agility and scalability for core banking services to pivot away. These use cases can provide the catalyst for digital banking transformation.

Security

A key concern in any digital transformation strategy is cyber resilience. Cloud adoption, for instance, requires BFSIs to think twice about security — predominantly around third-party data storage — as well as data sovereignty and breaches.

Following the recent spate of SMS-phishing scams targeting bank customers, The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) are introducing a set of additional measures to bolster the security of digital banking.

MAS expects all financial institutions to have in place robust measures to prevent and detect scams, as well as effective incident handling and customer service in the event of a scam. The growing threat of phishing scams calls for immediate steps to strengthen controls, while longer-term preventive measures are being evaluated for implementation in the coming months.

To manage the risk of adopting the public cloud, the Monetary Authority of Singapore issued an advisory to all financial institutions operating in the country, outlining the need for a comprehensive view to developing a public cloud risk-management strategy.

Recognising developing trends and the emergence of cloud platforms, the advisory highlighted the need for financial institutions to take full responsibility for securing their data, the privacy of customers’ identifiable information, and workloads especially in the public cloud.

Acknowledging the value of digital banking and financial services, MAS is recognising the increasing importance of not only public clouds, but also a multicloud strategy for the financial services industry in Singapore. In line with that, MAS has identified a set of guidelines to proactively protect customer, enterprise, and archival data, ensuring high standards of data privacy, handling and access control standards.

Regulatory compliance

As a well-established financial hub, Singapore’s regulatory landscape is among the most stringent globally, and institutions need the capability to ensure compliance on a regular and real-time basis to mitigate the associated risks.

Due to the growing convergence of leveraging digital assets to drive resilience, it is crucial that technologies like the cloud are harnessed amid the changes engulfing financial services.

Modernisation via cloud adoption

All successful organisations, including financial institutions and fintechs, have IT supporting mission-critical operations. IT is no longer a support function but has a crucial role to play in the achievement of business goals for BFSIs to reduce IT expenses, scale operations, and optimise the ongoing adoption of emerging technologies, so they could innovate and keep up with customer expectations.

Now is the perfect time for banks and financial institutions to accelerate their cloud adoption strategy.

With the power of the cloud, plug-and-play solutions that enable faster deployment of services through PaaS and SaaS cloud services can be leveraged. It also provides you the flexibility and scalability to accommodate the increasing user or transaction base while delivering exceptional performance.

Without cloud systems, an unexpected transaction surge can result in additional procurement and unattractive downtime until more capacity is built, which means performance issues and unpleasant end-user experiences. Cloud’s on-demand scalability means accommodating the fluctuating demands in real-time without any locked-in investments as you pay only for what you use.

Uncovering savings through enhanced customer experience

Migrating to the cloud can raise future operational cost savings, as organisations only pay for the capacity used, which means no unused storage, as is often the case with on-premises infrastructure. You can also avoid costs associated with upgrading on-premises capabilities that are costly and unfeasible.

Harnessing the cloud to drive IT modernisation enables financial institutions to accelerate innovation, and adapt to and anticipate changes to the business environment. As a result, you can establish robust financial operations and gain an edge over your competition by offering state-of-the-art innovative financial solutions that cater to changing customer demands.

Through the cloud, BFSIs can spur digital transformation through application modernisation or incorporate AI and machine learning into workflows and processes. As a result, BFSIs can retain their competitive edge by, among other things, continually improving customer experiences and keeping pace with more tech-advanced upstarts in the financial services sector.