By Ramesh Babu J, Head of Public Cloud for Southeast Asia
All throughout the world, traditional banking, financial services, and insurance (BFSI) institutions are under tremendous pressure to innovate and to do so rapidly. This also applies to Malaysia, a nation quickly becoming a preferred centre for shared services in functions such as IT, and HR, as well as leading technology industries. Staying relevant is non-negotiable for established financial institutions due to the sheer competition from new companies flooding the financial sector, evolving customer expectations, and newer, more alluring financial business models.
IDC predicts that public cloud services are projected to reach a staggering $219.3 billion by 2027, whereas Asia Pacific is experiencing an IT spending boom, with public cloud services and software investments skyrocketing with a compounded annual growth (CAGR) of 14.2% for the next five years.
Domestic fintech firms like Boost Bank, AEON Bank, and GX Bank are becoming more assertive in providing seamless digital customer experience, while the rise of new entrants promises even more competition. The cloud-based tech stack, which gives these challengers the ability to develop, grow, and deploy quickly, is their main weapon.
Shifting to the Cloud, Not Just a Creative Decision
As governments and organisations increasingly recognise the importance of cloud capabilities for economic and business growth, investors are putting more money into Malaysia’s cloud infrastructure. In cloud computing, Malaysia witnessed a significant breakthrough in the cloud-computing space as Amazon Web Services (AWS) announced a substantial investment of US$6 billion by 2037. For one, being in the cloud means having access to cutting-edge technologies that can drive smarter decision-making, automate repetitive tasks, and customise interactions with customers.
Nonetheless, BFSI needs to work to satisfy the rising need for speedy, contactless payments in the face of rising and changing customer expectations. Numerous financial institutions are creating cloud strategies or have already done so. Yet, a few conventional players are still on the fence about switching to the cloud.
Security Issues
Concerns about data privacy and sovereignty arise when handling sensitive financial data in a cloud environment. These difficulties are made worse by stricter laws and increased cybersecurity concerns. Even with cloud service providers’ enhanced security features—like encryption and multi-factor
authentication—the fear of security lapses and data breaches continues to be a major obstacle.
Limitations in Financial Resources
Making the switch to the cloud might come at a high cost. This includes not only the initial outlay for cloud infrastructure but also the ongoing expenses related to maintaining and managing cloud services. For many financial institutions, these costs can be daunting. The financial load is increased by the need for specialised skills and the possibility of unanticipated costs.
Adherence to Regulations
It can be difficult to ensure compliance both during and after the cloud migration due to strict regulatory norms. However, emerging policies and frameworks in place, such as those from the Bank Negara Malaysia are making the process less confusing and offering a foundation for cloud adoption that works. Organisations may strengthen security, save costs, improve customer experiences, and become more agile and scalable by utilising cloud technologies.
Improved Agility and Scalability
The flexibility required to react quickly to changes in the market and client needs is made possible by cloud technology. This agility is crucial for financial institutions aiming to stay competitive in a rapidly evolving landscape. With the cloud, BFSI can scale their operations up or down as needed, ensuring they are always prepared to meet current and future demands.
Savings on Cost
Making the switch to the cloud is not only financially savvy — it’s financially smart. With a pay-as-you-go model, financial institutions only pay for what they use, avoiding the wasted costs of underutilised on-prem infrastructure. Additionally, migrating to the cloud eliminates the significant costs associated with upgrading outdated systems, making it a more cost-effective option.
Improved Customer Experience
Rapid innovation is fuelled by the cloud, enabling financial institutions to launch cutting-edge products faster. In a market where customer expectations shift constantly, the cloud allows BFSI to stay ahead, delivering top-tier services to customers, and giving them a decisive edge that exceeds expectations.
Enhanced Security
Security-wise, cloud services frequently surpass traditional on-premises systems. Cloud providers, who have experience with cybersecurity, provide better protection than most in-house teams can provide. Data security is kept secure even when transaction volume rises thanks to features like multi-factor authentication and top-tier security certificates. This robust security is essential in today’s digital-first world.
Malaysia’s financial industry can lead the way in reshaping the financial landscape and staying up with innovation if it adopts the appropriate cloud strategy. Adopting the cloud is a strategic step that offers long-term success and a competitive edge in the digital era, rather than just a technological shift.
