ADB touts potential of cloud for expanding countryside banking coverage
CLOUD-BASED services can help expand the reach of banks and financial institutions in remote areas, the Asian Development Bank (ADB) said.
“This is already being done in several countries. South Africa’s Tymebank and the Philippines’ Cantilan Bank, both first in their respective countries to operate fully off a secure cloud-based infrastructure network, have passed on cost savings to consumers and enhanced the customer experience,” the ADB said in a blog post on Thursday.
“Without access to financial services, individuals and small businesses are unlikely to achieve prosperity and upward mobility. To reach those who remain unbanked and underserved, financial solutions must be delivered at low cost and be scalable, sustainable, and responsible,” it added.
The ADB said that cloud-based services can allow financial institutions to provide more affordable and accessible financial services.
“By adopting cloud computing solutions, they are now using shared computing and data storage resources, hosted and run on remote servers in the cloud instead of investing in their own on-premise servers. This provides flexibility to scale capacity up or down to accommodate peak periods,” it said.
Modern digital banking solutions make the processes of online banking, mobile apps, ATMs, and cash-accept machines more seamless.
“Features like these make cloud computing a scalable, elastic, and on-demand service providing access to servers, storage, networks, software, and analytics over the internet. This is particularly useful for new digital banks and fintech startups still testing their technology and business models and serving a large, diverse customer base, including underbanked and unbanked populations who may not have access to physical branches,” the bank added.
The ADB said that implementing cloud computing will require reliable internet access.
“This remains a challenge in some areas, particularly remote or rural locations, but improvements in digital connectivity have been rapid. Remote locations can benefit from off-grid energy and connectivity innovations, such as satellite connectivity and community networks,” it added.
It also said that digitalizing banking operations introduces other risks that can be costly unless well managed.
“With data growing exponentially and customer data being one of the most critical assets, banks risk losing revenue, reputation, and business continuity if data is compromised. The IT system design and security protocols must ensure that they are robust and that cloud computing providers have solid security certification,” the ADB said.
Cloud providers also have built-in disaster recovery and business continuity capabilities, which can help businesses avoid costly downtime during an outage.
“As data is stored in a secure, off-site location, it is not affected by disasters that may occur on-premises,” it added.
It cited Cantilan Bank, which was able to re-establish connections immediately after Typhoon Odette (international name: Rai) in Surigao del Sur and the rest of the Caraga region in 2021.
“Additionally, cloud data centers can help to decarbonize data processing if powered by renewable energy, can use energy more efficiently than dispersed on-premise servers, and may reduce e-waste by lowering the consumption of IT hardware,” it added. — Luisa Maria Jacinta C. Jocson