Software-as-a-Service (SaaS) provides numerous benefits to financial institutions and can be a huge help to businesses that want to expand. However, the sector faces many challenges such as security issues, regulatory compliance, and growing customer expectations, all of which need to be taken into account when using SaaS to aid scalability.
This is what makes SaaS management so crucial to the process. SaaS purchasing experts Vertice define this as ‘the process of identifying, managing, and governing the software applications that exist within an organization’s technology portfolio’.
Here are some of the key things to consider when using SaaS solutions for scalability and operational efficiency.
Integration and Compatibility
There must be seamless integration between different SaaS applications otherwise data would need to be entered manually between platforms, potentially leading to errors and also costing time. New SaaS tools also need to be compatible with existing infrastructure and systems.
This can be challenging for financial companies looking to scale. For example, the integrations in their home country may not be right for international markets, which could lead to a lot of time, money, and effort being spent on targeting the platforms target customers use locally. Building and then maintaining new integrations is also time-consuming, expensive and complicated, which could put businesses at a disadvantage to local competitors.
To evaluate and select SaaS solutions that align with the platform’s requirements, finance businesses should thoroughly research, vet and understand the integration solution they are considering implementing and ensure they have skilled staff on hand to develop and maintain integrations. Companies could also consider hiring an integration partner to make the process smoother and free up resources elsewhere.
Scalability and Performance
As noted by Fidelity National Information Services, ‘banks need to grow to become more efficient, to offer more products at competitive price points, and to ultimately increase value for their shareholders.’ The organization states that in order to scale, investments in hardware and supporting software should be shared across one platform, there should be a focus on risk, compliance, innovation and training, and APIs should be utilized to deliver open banking and offer options for new product solutions.
One of the key benefits of SaaS is that applications are highly scalable so businesses can access more features and services as they grow. Therefore, financial companies must choose SaaS solutions that can scale in line with their requirements, while also taking performance considerations, such as response time and data handling capabilities, into account.
Security and Compliance
Cybercriminals are keen to get their hands on financial data which is why it’s so important for companies in the sector to have strong data security measures and comply with mandatory cybersecurity regulation. For example, all merchants and service providers that process, transmit or store cardholder data must comply with the Payment Card Industry Data Security Standard (PCI DSS).
Before choosing new SaaS platforms, financial companies should ensure they have complete visibility over their tech stack and have an overview of all existing products. This can help them identify instances of shadow IT (the use of hardware or software without the knowledge of the IT or security group within the organization) that may increase security and compliance risks.
When selecting new vendors, it’s crucial to vet the security measures in place. Oracle has a useful SaaS security checklist that could help but finance companies may wish to raise additional questions related to regulatory compliance and specific business concerns.
Cost and ROI
Managing multiple SaaS applications can be incredibly costly if the portfolio isn’t properly managed. Finance companies may, for example, be paying for platforms that are mostly unused, have unsuitable licenses, or have duplicate solutions that are solving the same problems. Therefore, good SaaS management is required to keep costs down and ensure resources aren’t being wasted on apps that aren’t serving the business.
It’s also important to evaluate the total cost of ownership (TCO) and return on investment (ROI) for SaaS solutions:
TCO: Annual contract cost plus time and operational costs for effective tool implementation and maintenance (e.g. training expenses, integration and support costs, data storage costs etc.).
ROI: The subscription cost to the potential benefits and savings it provides (increased revenue to total investment). If the product doesn’t impact revenue, look at other indicators such as impact on efficiency, customer satisfaction, brand engagement, and cost savings.
Companies can compare these two metrics to determine the app’s value but must bear in mind that ROI may increase over time as the TCO should decrease after the first year of implementation and training. That said, some tools may cost more the more you use them which is why it’s so essential to monitor ROI.