Cloud vs. On-Premises Credit Decision Engines, Part 2
Introduction
In this second article of a two-part series, see part one here, we continue to explore the key benefits of transitioning to a cloud-based SaaS credit decision engine and examine how it stands to disrupt the status quo in the lending industry.
Benefits of Cloud-Based SaaS Credit Decision Engines Continued
Speed and Performance
Deployment Speed
The initial setup is significantly faster than traditional on-premises systems. This rapid deployment enables financial institutions to quickly start leveraging the system’s capabilities. Moreover, ongoing change management is streamlined with SaaS solutions, as updates, upgrades, and customisations can be implemented swiftly without the need for extensive downtime or complex reconfiguration.
Processing Power
Cloud platforms offer access to vast computational resources, ensuring that SaaS credit decision engines operate with high processing power. This capability is critical for performing complex data analyses and running sophisticated algorithms without delays.
Real-Time Decision Making
The ability to process and analyse data in real-time is a standout feature of cloud-based SaaS credit decision engines. Real-time decision-making capabilities enhance the accuracy and speed of credit assessments, providing quicker responses to applicants and improving the overall customer experience.
Security and Compliance
Data Protection
Cloud providers invest heavily in robust security measures to protect sensitive financial data. This includes encryption, access controls, and continuous monitoring. Financial institutions benefit from these advanced security protocols, ensuring that their data remains protected against unauthorised access and cyber threats.
Compliance with Regulations
Cloud-based decision engines are designed to comply with industry standards and regulatory requirements. Providers ensure that their platforms are regularly updated to meet evolving compliance mandates, reducing the burden on financial institutions to manage these requirements internally and ensuring adherence to legal standards.
Disaster Recovery
Cloud solutions offer built-in disaster recovery capabilities, including data backup and redundancy across multiple geographic locations. This ensures business continuity and quick recovery in the event of a data breach, system failure, or natural disaster, minimising potential downtime and data loss.
Innovation and Updates
Access to Latest Technologies
By leveraging cloud-based SaaS credit decision engines, financial institutions gain access to the latest technological advancements. Cloud providers continuously innovate and integrate cutting-edge technologies, such as AI, ML, and big data analytics, ensuring that institutions stay at the forefront of industry trends and capabilities.
Automatic Updates
Cloud systems receive automatic updates and patches from the provider, ensuring that the engines are always running the most current and secure versions. This eliminates the need for manual updates and reduces the risk of vulnerabilities due to outdated software.
Continuous Improvement
Cloud-based solutions foster continuous improvement by enabling institutions to experiment with new features, gather feedback, and quickly implement enhancements. This iterative approach leads to ongoing optimisation and refinement of the credit decision process, ultimately driving better outcomes and customer satisfaction.
Challenges and Considerations
Data Privacy and Control
Data Sovereignty
Data sovereignty refers to the legal implications of where data is stored and processed. Regulatory frameworks in different countries may require financial institutions to keep data within their borders to ensure compliance with local laws.
This can pose challenges for cloud-based SaaS credit decision engines, as data is often stored and processed across various geographic locations. Institutions need to carefully select their cloud service providers and ensure they comply with relevant data sovereignty laws to avoid legal complications and potential penalties.
Compliance Challenges
Compliance with regulatory requirements is a critical aspect of managing cloud-based SaaS credit decision engines. Financial institutions must ensure that their cloud providers meet industry standards and regulatory expectations. This includes data protection regulations such as GDPR, CCPA, and other sector-specific requirements. Continuous monitoring and regular audits are necessary to maintain compliance.
Institutions should work closely with their providers to understand their compliance frameworks and establish robust governance practices.
Dependency on Internet Connectivity
Reliability of Internet Services
Cloud-based SaaS credit decision engines rely heavily on stable and reliable internet connectivity. Any disruption in internet service can impact the accessibility and functionality of the decision engine, leading to potential downtime and delays in credit decision processes.
Financial institutions must evaluate the reliability of their internet service providers and ensure they have robust redundancy and failover mechanisms in place. This includes having backup internet connections and planning for potential network outages.
Mitigation Strategies
To mitigate the risks associated with internet dependency, institutions can implement several strategies:
- Redundant Internet Connections: Establishing multiple internet connections from different service providers can help ensure continuity in case one connection fails.
- Edge Computing: Incorporating edge computing can reduce reliance on central cloud data centres by processing data closer to the source, improving speed and reliability.
- Offline Capabilities: Developing offline capabilities for critical components of the SaaS credit decision engine can ensure that essential functions continue even during connectivity failures.
- Service Level Agreements (SLA): Negotiating strong SLAs with cloud and internet service providers can provide guarantees for uptime and performance.
Mitigation strategies are essential to maintaining the reliability and performance of cloud-based SaaS credit decision engines, ensuring that institutions can continue to operate smoothly even in the face of connectivity challenges.
How the ADEPT Decisions Platform meets these requirements and overcomes typical SaaS challenges
The ADEPT Decisions Platform (ADP) is a cutting-edge SaaS cloud-based credit decision engine designed to automate and enhance the credit decisioning process. Leveraging robust, real-time data analytics capabilities, it provides financial institutions with a flexible and scalable solution, eliminating the need for on-premises hardware management.
Hosted in public cloud infrastructure and accessible over the internet, the ADEPT Decisions Platform ensures high availability and business continuity, seamlessly integrating with various data sources and external services.
It also incorporates advanced security measures and compliance features, safeguarding sensitive financial data while streamlining credit decisioning workflows for optimal efficiency.
An Innovative and Flexible Deployment Model
The ADEPT Decisions Platform incorporates a hybrid deployment model that offers unparalleled flexibility and compliance with regulatory requirements. This deployment model allows the design time to be managed in the cloud, taking advantage of the scalability, accessibility, and real-time data analytics capabilities of cloud infrastructure.
Meanwhile, the runtime environments and data storage can be deployed in-country or even on-premises, catering to specific geographical or organisational needs. This approach ensures that sensitive financial data remains within desired jurisdictions, adhering to local data protection regulations, while still benefiting from the powerful decisioning capabilities and seamless integration options provided by the cloud-based design environment.
Read our two-part article on how we challenged the Data Sovereignty status quo in Rwanda with our hybrid deployment model by clicking here.
About the Author
Jason Kretzmann is our Chief Technology Officer and has been with ADEPT Decisions since inception in 2015, playing a key role in designing, developing and managing the ADEPT Decisions Platform.
About ADEPT Decisions
We disrupt the status quo in the lending industry by providing clients with customer decisioning, credit risk consulting and advanced analytics to level the playing field, promote financial inclusion and support a new generation of financial products.
