Financial Institutions! Choose SaaS for Innovation

October 11, 2022

Financial Institutions! Choose SaaS for Innovation

Financial institutions have gone through a transformation over the past few years driven by technology innovation. This transformation has been driven by new entrant fintech players that have challenged large established institutions by changing the way consumers and entities interact with financial services such as payments, lending, insurance, personal finance, money transfers, and consumer banking.

SaaS is at the forefront and drives new innovations and transformation in the financial services IT landscapes. Banks have also learned from the success of FinTech companies and are changing their perspective on this cloud technology. Given the regulatory requirements that govern this sector, banks should choose SaaS providers who take security as seriously as they do.

It is often difficult for banks to innovate immediately. SaaS allows banks to use the latest software applications without having to buy expensive systems or pay for their maintenance. SaaS is an excellent alternative for parties that need to respond quickly to technological developments.

Many banks and non-bank financial companies (NBFCs) are waking up to the potential that cloud offers for their business. Cloud solutions, when widely used, can lead to a transformation that puts every financial company in the position of a serious competitor in the digital environment.

The service provider manages SaaS applications and issues licenses on an ongoing model according to business requirements. They help financial companies digitize their businesses, strengthen security and compliance, reduce physical infrastructure requirements, and implement automation to increase efficiency and reduce costs.

Financial Technology Start-ups (FinTech) initially disrupted the banking and financial sector by adopting a SaaS delivery model that enables online transactions. A popular example of this business model helps FinTech lenders accept business loan applications online, process them in minutes, and disburse the required amount with eligible borrowers in less than 5 minutes.

Compared to traditional licensed software solutions, one of the most underestimated and underappreciated benefits of SaaS is the potential for SaaS vendors to bring a rapid transformation to their clients. SaaS design can save money compared to the old on-premises model in several ways. First, it has a cheaper start-up cost for the program due to the subscription model instead of on-site licenses that have higher start-up costs.

As a business tool, SaaS helps these companies to improve their agility, secure existing revenue streams and take advantage of new market opportunities. This allows them to easily adapt to a changing business environment and scale according to customer demand.

The top opportunities that SaaS brings for the financial industry include:

  • Agility to support rapidly changing business cycles and demand patterns
  • Reorganize the IT cost structure from CapEx to OpEx
  • Reduce costs and better cost forecasting
  • Easy data analysis for business growth
  • Better operational control with web-based interfaces
  • Business continuity assurance with data backups
  • Data-driven business growth
  • Seamlessly integrate technology stack with modern APIs
  • Speed up the time-to-market of new product and service offerings
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