101 to Banking on the Hybrid Cloud: All You Should Know | Intellectsoft

Updated: January 12, 2023

A financial crisis in 2008 resulted in the rise of neobanks, financial institutions that have no physical branches and operate only online. The initial business idea of neobank was simple and clear — to cut the operational expenses for banking services in a time of crisis. It was just the beginning.

The boom of smartphones and mobile technologies supported the growth of neobanks, driving further demand for online banking services. The COVID-19 pandemic also became a power force for neobanking, being the safest available option: contactless payments decreased the spread of disease.

Now the global neobanking market is valued at 66.82 billion and analytics predict steady growth till 2030. Fintechs use the power of modern technologies to compete with traditional banks, and cloud computing solutions are at the top of this list. It seems cloud-based banking is the industry’s future. Let’s take a look at the success of neobanks and the cloud that backs it.

Five Things to Learn from Neobanks

Fintechs changed the way people save, spend and invest. Naturally, neobanks grabbed market share from traditional banks: in different regions, they make up 30 percent of the total banking market. So, traditional banks have been forced to learn from neobanks and adopt the best practices to stay competitive. Let us consider the main advantages of cloud banking.

Online Access

Neobanks do not have physical branches, they are accessible via web and mobile applications. Surprisingly, for most routine banking operations, this is enough. In-person visits to the bank branch seem like a waste of time.

Biometric Identification

Customers use biometric data — fingerprints, retina scanning, face ID — to access neobanking services. Mass demand for this technology made it available and secure. It is safer than traditional identification methods like PIN-code, signature and identification by photo.

Transparent Costs

With traditional banks, the cost of services can be high and unclear. With cloud-based banking, every fee is clear and transparent. Moreover, a client knows the cost beforehand and can reject a deal if he or she is not satisfied with the price.

High-skilled Support

While a neobank client cannot visit a physical branch to deal with a problem, all issues can be solved online. This means cloud banks have excellent online support teams, with a high level of technical and soft skills. Traditional banks can rarely claim the same.

Automated Approvals

With traditional banks, the approval processes for services and transactions take time because they are manual. With neobanks, the approvals are mostly automated and take seconds.

Traditional banks could probably develop and offer these advantages with time, but the situation in the world and the banking services market evolved very quickly and they just could not react with the same speed. So, neobanks appeared as an alternative to traditional banks and introduced the above-mentioned features. But there is even more.

‍Five Benefits of Neobanks

Cloud-based banking has a lot to offer a new generation of customers. While older people mostly trust traditional banks more than innovative mobile solutions, youngsters appreciate the benefits of neobanking. People who stay online 24\7 require banking services at their fingertips. Simply speaking, online access to banking services comes with a host of other benefits.

No More Queues

Nobody likes queues at the bank especially when it’s for a small transaction like utility payments or card-to-card transfer. Neobanks proved that most routine operations can be conducted online, and there is no need to waste time in a line.

Quick Problem Resolution

It would be incorrect to say that the online support team solves all problems immediately. Sometimes it takes time for a problem to be resolved. Anyway, it cannot compare with offline service, including the time to visit a bank office.

Transparency

With neobanks, customers have immediate access to routine services, like account balance checks, transaction history, card-to-card payments, etc. It means better control and transparent money movement. For example, a client can immediately see an unauthorized transaction and call support.

User-centric Experience

While cloud banks are only available online, they pay much attention to their application to make it accessible, convenient and customizable. A client can get many custom functions, from interface color to automated regular payments.

Cloud Data Storage

Neobanks store their data in cloud storage, without relying on outdated legacy systems. It means faster operations, automated approvals and faster services in general.

Looking at the benefits of neobanks, it seems they are a perfect stage in the banking industry evolution and should push the traditional banks out of the market. However, nothing is perfect, and cloud banking has its challenges.

6 Challenges of Cloud-based Banking

The challenges of cloud-based banking solutions can kill the euphoria of their benefits. In particular, there are some major and minor risks both for banks and customers.

Human Factor

Modern technologies implement the best data protection solutions. However, people can still intrude on the processes. The impact of the human factor can appear at different levels, starting from a simple data entry mistake up to system failure. It is impossible to protect the cloud system from human incompetence 100 percent of the time. Traditional banks are less vulnerable to human mistakes because of slower processes.

GDPR Violation

All companies promise to keep clients’ data safe, but not all keep their word. For example, in 2020, Google faced a five billion dollar lawsuit for GDPR standards violation. We never know which company will break its own promises and start trading sensitive information. Of course, traditional banks can also do this, but neobanks seem more vulnerable to this because of all the data in the cloud.

Force Majeure

A bank does not control its infrastructure. Mostly, it is a benefit, but when the cloud service provider faces unforeseen circumstances, like a natural disaster, server downtime is possible. A bank cannot manage the situation and its customers can be without access to their banking until everything is fixed.

Contradictory Regulations

The banking industry is the most regulated in many countries. Failure to meet the regulations results in fines. At the same time, cloud solution providers also follow regulations, which sometimes contradict banking regulations. The simplest way to avoid fines is to hire a compliance expert to remove the conflicting rules and mitigate the risks.

Status Issues

As we mentioned above, neobanks are not banks but financial organizations. The main difference is the type of license. As a result, neobanks act like banks and provide a broad range of banking services, but they cannot operate without the support of traditional banks. This precarious situation causes many contradictions and requires changes in the global banking system.

Data Migration

When traditional banks start using cloud services, they always face the need to migrate the entire architecture into the cloud. According to Bloor Research, one in three migrations ends with failure. The problem lies in the absence of a high-skilled IT team that can handle the process. Finding a team of experts is a pain due to scarcity.

Need a team with expertise in financial solutions? Get in touch with us.

What Is a Hybrid Cloud?

There are three main types of cloud solutions, differentiated by level of privacy: public, private and hybrid cloud. Public clouds are familiar to most of us: Google Environment and Microsoft 365 count a billion users. A private cloud, also known as an on-premise server, is a popular enterprise solution. It can be assessed only by authorized staff.

However, modern businesses want to combine the secure on-premise server with the benefits of public clouds. This combination is called a hybrid cloud and for now, it is the most popular in the enterprise segment.

Hybrid Cloud Adoption in the Banking Sector

There is no question that banks and financial institutions should adopt hybrid cloud technologies. If they do not migrate to the cloud and modernize their infrastructure, they cannot follow their more innovative and responsive competitors.

According to Gartner, 70 percent of banking and investment respondents increased their cloud spending in 2022, and plan to do more until 2025. Most of them prefer a hybrid cloud solution that combines an on-premise server for sensitive information and public clouds like Amazon AWS for customer relationship management, marketing, data analysis, fraud detection and other functions.

Migrating to the cloud for banking means better efficiency in operational processes and greater flexibility in new business models, better customer services and products and the ability to focus on the core business without needing a series of machines to run it.

How to Start Implementing a Hybrid Cloud in the Banking Sector

The process of modernization and data migration to the cloud can take months. To avoid failure and banking service disruption, a bank should have a well-trained internal IT team or hire a professional service vendor.

A strategy stage is crucial for successful hybrid cloud implementation to ensure continuity of service without interruption or downtime. An IT team and bank representatives should discuss, develop and approve a comprehensive implementation strategy and consistent architecture. A migration strategy should include not only the specific needs of the banking business but also all related institutions. Only after strategy approval can the process of implementation start.

Hybrid Cloud Implementation: Main Challenges

Adapting traditional IT to new hybrid infrastructure is a key issue for banks due to the large volume of legacy technology and compliance requirements.

Many banks have existed for decades and even centuries, so they have long track records. It means that they have significant legacy technology that needs to be adapted for use in a new hybrid ecosystem.
Banks need to make sure that any data stored in the cloud is secure and compliant with applicable laws and regulations. To do this, they must ensure that their hybrid cloud environment has strong security measures.
Banks also need to keep an eye on third-party vendors and make sure that they are not using any outdated or insecure technologies or services.
Additionally, they need to choose a technology partner that has experience with banking solutions and understands their specific needs so implementation projects can go smoothly.

When it comes to selecting the right platform for their hybrid cloud solution, banks must consider a variety of factors such as storage capacity, scalability requirements, cost-effectiveness, customer experience delivery timescales, etc., before making a decision.

Where to Get Hybrid Cloud Services

Major banks can afford to keep the internal IT department to develop and implement both private and public clouds for the bank, integrate it, set up all the necessary applications, check compliance, and perform other steps.

However, the internal team has its own weaknesses. Having broad expertise in local infrastructure, networking, hardware and software, they usually lack experience in the cloud for the banking industry. The alternative is to find an independent banking software development company.

Intellectsoft offers to advance your efficiency, customer experience and business performance using the power of Intellectsoft software development for banking and financial services.

If you want to learn more about how your bank can use cloud technology as the catalyst for enterprise transformation, don’t hesitate to contact us. Our managers will reach out to you in order to provide you with the most detailed information and help you make your first step to a more digitized business.

FAQ

What is Cloud-based Banking?

Cloud-based banking is a combination of hardware, software and services that allow banks to focus on their core activities while delegating the care for IT infrastructure, technology, networking, hardware and software to a cloud service provider.

Can Cloud Banking Completely Replace Traditional Banking?

For now, cloud banks do not have full banking licenses. They need supporting traditional banks to work with some banking products. It would be more reasonable to predict that traditional banks will migrate their core banking to the cloud.

Why Use a Hybrid Cloud for Banking?

Hybrid cloud technology for banking allows for combining a private cloud for sensitive and vulnerable data with a public cloud for some business aspects, including marketing, analytics, and service personalization.

Cloud Banking vs. Traditional Banking: What is Better?

Cloud banks are more user-friendly and flexible. Moreover, they can offer higher rates. However, they cannot offer some products and require the backing of a traditional bank. Also, traditional banks usually have better coverage and more users.

The hospitality industry depends a lot on keeping customers happy, but it’s getting harder to attract and keep them. The pandemic hit this industry hard, and now market competition is tougher than ever, with competitive offerings swaying customers. Hospitality businesses are willing to spend big to win customers back. The main questions for many are: how can we stay ahead of the competition, keep our customers, and increase revenue? Keep reading—we’ve got some answers.

Customers today have so many options that getting their attention is a real challenge. It’s not easy to make them choose your business over others. What worked 10 years ago doesn’t work the same way now. Back then, people often chose businesses based on reputation. But with new types of businesses (boutique hotels, craft cafes) popping up or big enterprises getting a new strategy, expectations have changed. The good news is these businesses have shown what works: great customer service. They focus on personalizing the experience, making things easy for customers, offering loyalty programs, and using smart technology.

In this article, we’ll explore these tech strategies and show you how they can help your business grow, and double the revenue. Keep reading to learn more!

The Importance of Customer Satisfaction in the Hospitality Industry

Customer satisfaction, which equals exceptional customer experience, is the backbone of the hospitality industry. It plays a central role in driving revenue and loyalty, as satisfied customers are more likely to return and recommend a hotel, restaurant, or other hospitality business to others. In fact, a study by the Harvard Business Review found that a 1% increase in customer satisfaction can lead to a 0.5% increase in revenue. Moreover, loyal customers are more likely to forgive mistakes and continue doing business with a company, even if they experience a negative encounter.

Let's quickly review the challenges the hospitality industry is facing right now so we can move on to the solutions and our case studies.

Challenges in Hospitality

As businesses navigate the changes in the hospitality industry, there are some key areas where a little improvement can go a long way. From improving customer service to embracing digital transformation and tackling labor shortages, we’ll take a closer look at today’s biggest challenges—and, more importantly, how technology can step in to help. Let’s get started!

Poor Customer Service

Even with strong and high-quality business offerings, poor customer service can drive potential customers and existing customers away. Common issues include:

Long wait times in customer service queues (it is worth remembering that our attention spans 8 seconds, and we live in a very busy world, so quick and efficient responses are more important than ever.)
Poorly trained customer service representatives
Lack of follow-up
Services not being done properly or quickly
Recall issues that require multiple service calls

These problems can frustrate customers. But, at Intellectsoft, we believe that the right approach, combined with technology, can address them effectively.

Digital Transformation Gaps

Approximately 50% of hotels are adopting new technologies, with 43% automating repetitive tasks and 39% upgrading existing systems.
Source: workstaff.app

Source: workstaff.app

While many businesses are adopting digital solutions, some still struggle with outdated systems and fragmented data. Legacy companies often face chaos when trying to manage their data and create new systems or add features.

Some of the recent examples include clients coming to us to create AI solutions for their services while their data simply was not ready for the advanced tasks. We advise stepping back, communicating with a company objective, and working on keeping the data clean (centralized, structured, and segmented).

When we’re asked to create advanced systems using AI, we always emphasize the importance of organized data. To train AI and build such complicated systems that truly work, you need to start from the very beginning—collecting, storing, centralizing, and organizing it. We encourage our clients to align all departments to work internally on the data so we can create a unified digital system that delivers personalized experiences.

If you’re unsure where to start with your data, we can help. Collecting feedback at various touchpoints along the customer journey is crucial for gaining insights into customer satisfaction and loyalty. Book an IT consultation with us, and our experts will guide you in mapping out a path to get more from your data and build a system that works for your business and team.

Reskilling Staff

The pandemic hit hard in early 2020, especially for the hospitality and travel industries. Even five years later, many businesses are still feeling the impact. Recruiting and retaining skilled staff has become a major challenge post-pandemic.

Reskilling to address technology’s impact is of utmost importance, as about 40% of hotel General Managers place it among their top three workforce challenges.

Source: Deloitte

We strongly believe that adopting the right technology can help. For example, creating an app to train your staff not only saves time but also ensures consistency in learning. AI assistants can also work alongside your team, helping with tasks like recruitment (providing industry insights, crafting emails) and staff training. Imagine having an app dedicated to making your team’s work easier and more efficient!

How Technology Tackles These Challenges and Supports a Customer-Centric Hospitality Culture

Automation, AI, and similar technologies may threaten many. However, the debate about replacing humans isn’t about that—it’s about cooperation and working hand in hand with technology to achieve the highest standards and establish brand-new “golden standards.” Technology is here to assist staff in listening to and collecting customer insights from data.

Let’s review some of our cases to see examples of how technology helps improve customer experience and supports customer service.

Examples of Intellectsoft projects

Property management systems (PMS)

We created a web platform and mobile app that makes managing daily tasks easier and offers extra services to improve residents’ experience. It gives a clear overview of daily activities and helps with managing units and users. Residents can easily book amenities, submit service requests, and report incidents. The platform also includes features for equipment management, key instructions, workflows, and custom permissions. This makes it easier for staff to stay on top of equipment and ensure residents have all the information they need. Plus, tools like announcements, quick votes, a forum, and a community calendar help build a connected and engaged community.

Guest Experience Management App

Our next app helped our client improve their guest experience by replacing printed marketing materials and the need for phone calls with a smart solution. Now, guests can easily order in-room dining, make reservations, and interact with staff— through a simple tablet in their room. The solution includes three parts: a custom in-room tablet with a variety of services, an admin panel for hotel staff and service providers, and a backend system that connects everything together. This approach makes things easier for guests and staff, improving both convenience and efficiency.

Existing Customers First: Building Loyalty with Personalized Touchpoints

Keeping existing customers is not just a strategy; it’s well-known that retaining existing customers is more cost-effective than acquiring new ones. In fact, research shows that it costs five times more to acquire a new customer than to retain an existing one. KPMG named customer retention as the number one revenue driver for the company.

Moreover, a 5% increase in customer retention can lead to a 25% to 95% increase in profits, showing the significant impact loyal customers can have on a business’s bottom line. Retention strategies, like personalized experiences and loyalty programs, can foster long-term relationships and generate recurring revenue, ultimately making them an invaluable part of any business model.

Personalization: How Technology Can Help?

Everyone loves to feel special—it’s part of being human. In hospitality, personalization has evolved from being a luxury to an essential standard. With the right technology to manage your data effectively, you can deliver those “wow” moments that guests won’t forget.

More than half of hotel chains are already using personalization features on their websites, booking platforms, and apps, and another 39% are planning to follow suit soon. They’re tailoring experiences to fit guest preferences perfectly.

Source: Deloitte

How does technology make it happen?

CRM Systems: They help you keep track of guest preferences, booking history, and special requests so you can offer services tailored just for them.
Loyalty Programs: Personalized rewards and offers show your guests that you value them, keeping them coming back for more.
AI Personalization: AI analyzes guest data to predict what they’ll love (from room upgrades to local recommendations) before they even ask.
IoT Gadgets: Smart room features like voice-activated assistants, or temperature controls adjust to your guests’ preferences, making their stay more comfortable.

With tech-powered personalization, you’re building loyalty and maximizing the lifetime value of every customer.

Our Case Study: Smart Hotel Management & Loyalty Program

For one of our clients, we created a smart room solution, complete with a custom IoT system. Guests can use a mobile app to control services, explore amenities, and find resort information-- with a special touch to their suite type. For the client’s entertainment business, we improved their legacy software by running a full IT and code check, fixing issues, and making the system better for customers.

Along with that, we developed a mobile app for the loyalty program, allowing businesses to effortlessly reward their customers and keep them engaged with exclusive benefits.

Our solutions not only helped the client with special experiences for guests; it also improved operations, cutting costs by eliminating inefficiencies. Here's what our experts shared:

"We transitioned away from ESB (Enterprise Service Bus) systems, which previously cost millions, and replaced them with more efficient, self-managed solutions. Similarly, we’ve implemented Device Farms that improved operations and saved resources."

Leveraging Software to Increase Upsell Opportunities

Here are some examples of tech tactics that will help your team sell more and introduce new offerings to existing customers, improve overall efficiency leaving your team grateful:

Dynamic Pricing Algorithms

For finance and marketing teams, manually calculating pricing by segment to introduce your clients can be incredibly challenging. AI-powered tools can strongly optimize these strategies by analyzing your database in detail.

Upselling via Apps

Boosting revenue in the hospitality business often comes down to personalized experiences. Imagine this: a guest books a room, and then your app suggests a spa package or a room upgrade at just the right moment. Later, it nudges them to book a dinner reservation or a guided tour designed to their preferences. With apps offering these personalized recommendations during and after bookings, you’re not just increasing your revenue per guest but also skyrocketing their experience. And you do it in a sustainable way, not by speculating, but by offering what your customers desire based on their previous experiences. It’s a win-win: seamless, helpful, and far from pushy.

Inventory and Resource Management Software

Making every resource count in your hospitality business is key. Inventory and resource management software allows you to effortlessly track everything from linens to room availability, ensuring nothing goes to waste. Having real-time insights to reduce overstock, avoid shortages, and optimize operations assists sustainably keep everything under control and know what you need to focus more. It helps maximize room occupancy by aligning bookings with available resources, ensuring every room and item is used effectively. This approach leads to smarter management, better guest experiences, and a noticeable boost to your bottom line.

Adopting these strategies not only optimizes your operations but also drives business growth. Ready to discover how technology can elevate your goals? We’re here to create a tailored solution for you.

Steps For Implementing a Customer Service Technology Solution

Improving customer service in hospitality doesn’t have to be a daunting task. With the right technology, you can smooth the path of your operations, speed up response times, and elevate the overall guest experience. Here’s where you can make it happen:

1. Understand Your Needs

Start by identifying the challenges your business is facing. Are you struggling to manage high volumes of inquiries, track customer feedback, or personalize the guest experience? Pinpointing your needs will guide you to the best solutions.

2. Pick the Right Tools

Choose technology that aligns with your goals. Look for solutions that are scalable, easy to use, and integrate effortlessly with your current systems. Options like CRM software, live chat tools, or a guest experience app can make a difference.

3. Equip Your Team

Technology is only as effective as the people using it. Train your staff to make the most of the new tools, so they can deliver exceptional service and resolve issues quickly. Confident, well-equipped staff creates happy, loyal customers.

4. Keep Improving

Once implemented, monitor how well the solution works. Are response times improving? Are customers more satisfied? Regular evaluations will help you fine-tune your approach and keep things running harmoniously.

Some Tech Ideas for Hospitality Businesses

CRM Software: Manage customer interactions and preferences.
Guest Experience Apps: Delight guests with personalized experiences right at their fingertips.
Amenity Management Systems: Simplify operations for everything from room service to facility bookings.
Helpdesk Software: Resolve customer issues optimally.
Live Chat Tools: Offer instant support and answers.
Social Media Management Tools: Keep customer interactions engaging and organized.

Integrating these strategies will not only improve your customer service but also deliver unforgettable customer satisfaction, loyalty, and, ultimately, your bottom line. Ready to take the next step? Book a consultation with our experts.

Conclusion

To wrap up everything we've discussed, customer satisfaction and experience are at the heart of hospitality. Retaining customers is more than just keeping them around—building strong, long-lasting relationships and consistently meeting their evolving needs. By understanding their pain points and offering personalized solutions, you can inspire loyalty and drive progress. With the right technology and continuous improvement, your business can stay ahead, let go of what no longer serves you, and keep growing.

At Intellectsoft, with over 17 years of experience in software development, our expert team is ready to help. We create everything from mobile apps to full-fledged portals and systems, leveraging the latest technologies like AI, Cloud, and Machine Learning. With deep experience in the hospitality industry, we’re here to craft personalized solutions that bring your business unforgettable customer experience and retain your valuable clients.

Ready to double your revenue and level up your customer retention strategy with personalized technology? Contact our experts, and we look forward to working hand in hand with you to build or revitalize the perfect app or system for you.

Tetiana Borysova

Content Writer