Fintech’s future is being shaped by cloud technology
Despite the epidemic, which affected companies all over the world, digital technologies were adopted at an exponential rate, with cloud computing emerging as a critical enabler. Organizations have benefited from the use of cloud technologies in establishing a data- and technology-first work culture.
The fintech sector is booming and has more unicorns than any other. It has become necessary for fintech to use cloud technology due to the large amounts of data that need to be securely managed, stored, and analyzed. This is in keeping with the DNA of Fintech, which emphasizes responsibility for the custody of sensitive information and speed, scalability, and agility.
Tech vs. Fintech
Financial Services have higher expectations from technology in terms of its ability to truly comprehend the industry and have a well-considered 360-degree picture of what customers, firms, regulators, and market infrastructure institutions are expecting from it.
Technology in financial services is comparable to a driver who not only controls the steering wheel and presses the accelerator but is also acutely aware of the passengers’ expectations for the destination, speed, safety, and dependability, as well as the dynamics of other vehicles on the road and the requirements of non-negotiable rules and regulations.
The following translates explicitly to “Financial Services Technology” as follows:
- Since all new products and offers are designed as Tech first solutions, domain solutions and time to market are well linked with core functionality. The era of financial services evolving from manual to automated is long gone.
- The expectation of constant availability and almost little downtime (like a utility or first respondent service)
- Speed and reaction time in nanoseconds
- Agility is such that, in the retail sector’s jargon, every given day may be a “Boxing Day” stress test for the technological infrastructure.
- Expectations for security and compliance that rival those of, maybe, a defence network
Today’s demands for fintech may be satisfied by cloud technologies, which can act as a one-stop shop. Due to the development and maturity of cloud technologies, which have a fascinating history and validation for offering scalability, availability, dependability, agility, security, and favourable economics, fintech is now fully operating as a “Cloud First” industry.
Oligopoly Market for Cloud Technology Providers
It’s interesting to note that the market for Cloud Technology Providers is a prime candidate for oligopoly. As an infrastructure solution, cloud computing has developed into a somewhat commoditized industry with expectations that are based on the lowest common denominator for scalability, security, agility, etc. As a result, a decision-maker for a cloud technology offering has advanced to the expectation of having a Business Operations Partner job based on three main qualifications:
- Is the cloud provider willing to serve as an all-weather partner in the journey of fintech, regardless of the stage of the company, in terms of scale and depth? Will they be agile, stickier due to value rather than lock-ins, have a flexible and transparent cost structure and billing, and offer meaningful advice and recommendations?
- Can the cloud service provider deliver non-core, near-core functional solutions that are value-added for the Financial Services domain, such as assistance with FS domain-focused AI/ML solutions, data lakes, and open stack interoperable offerings?
- Alignment to Business Roadmap, including the capacity to support growth plans, jurisdictions, portability, meet regulatory requirements and provide pertinent cloud marketplace services.
Collaboration between the cloud and fintech industries
The future of the partnership between fintech and the cloud is quite positive and comforting. Cloud computing should function as a Direct to Business service for the ensuing ten years, coupled with its market solutions. Deeper domain-oriented solutions addressing Business, Product, and Regulatory needs should result from collaboration and cross-pollination of ideas, knowledge, and talent. Additionally, Next-Gen Fintech DevOps should mature into a low-tech/no-tech self-help Direct the Business operating model as computing power continues to grow exponentially.
Future attention would undoubtedly be directed toward more in-depth financial services (FS) domain-focused cloud marketplace solutions and offerings that are relevant to particular regulatory and market requirements, better commitment to the portability of business accounts, and even cloud marketplace solutions by the ecosystem partners across Cloud infra providers, taking a scale-agnostic approach when forming business partnerships with Fintechs, and making poly cloud technology stack reality for even not so large Fintechs.
Cloud technology in India has impacted the financial sector and is here to stay thanks to a fast developing business. Over the last ten years, it has developed into one of the most productive and creative enterprises, providing cutting-edge services to the fintech industry, which ultimately sparked the Industrial Revolution.
Cloud Computing Shaping The Future of Fintech
The corporate sector is being completely revolutionized by financial technologies. The need for digital money transfers, payment procedures, online lending, and online stock trading platforms has witnessed a significant shift in the previous ten years, as has the perception of traditional banking and lending. The financial sector, which benefited from the digital revolution, was transformed by creative minds into the next technological boom. Fintech entrepreneurs are reshaping culture with ground-breaking concepts that solve problems linked to money that we face on a daily basis.
Fintech firms employ technology in a way that has never been done before to build a functional financial system. One of them, cloud computing, is shaking up the financial industry. Cloud service providers for the fintech industry are maximizing its potential. Banks and Fintech companies can innovate thanks to cloud computing, which also helps them save money on operational and regulatory expenses. Customers gain because it increases the banking sector’s efficiency and competitiveness.
How the Fintech Industry is Revolutionized by Cloud Computing
Fintech businesses are embracing cloud computing as a rising technology since it offers solutions to many of the intricate issues related to financial needs. Any traditional organization that incorporates technology gains a competitive edge, and cloud technology offers the corporate sector several benefits.
In the financial sector, the cloud offers great security, quick service, creative procedures, and endless scalability. 23.84 per cent of the anticipated compound annual growth rate has been accounted for by the cloud.
What makes cloud technology the most alluring in the fintech sector, and why is it in such high demand?
In the age of competition, the majority of large financial institutions and smaller financial startups are rushing to integrate technology in order to provide their clients with greater speed, constant connectivity, data security, and flexibility.
- Effective Data Management –
In contrast to traditional data systems, a cloud-based data management system facilitates data change. It is crucial to choose the appropriate tools and procedures when new financial activities like cryptocurrency exchange platforms, crowdfunding, online banking, money-saving applications, etc., emerge as fintech firms become more cloud-centric. They carry out a variety of tasks, including managing accounts, confirming identities, showing live trading, showing account or wallet balances, and examining spending patterns.
Organizations can store, manage, and retrieve data at a high-level thanks to cloud computing, which also provides high security, space flexibility, and cost efficiency on demand, from any location, at any time.
- Automated Analysis –
A cloud system’s built-in capability to carry out autonomous duties that have been predetermined by the organization’s system includes automatic security parameter analysis, web application testing, automated data breach provisions, and more.
Financial players will be freed by disruptive technologies like blockchain, AI, deep learning, and others since the cloud can enhance platform integrity through automated security procedures and controls.
Using cloud technology, specialized processes like banking, credit scoring, and fraud detection may be completed more rapidly and efficiently.
- Business Continuity –
Business continuity can only be effective if you always have access to your vital information, both for routine work and in an emergency.
Fintech deals with extremely decisive operations like lending money, banking, payments, and trading, which require watertight recovery plans for data loss contingencies to ensure that your firm can run as usual while securely recovering from a disaster.
Fintech has benefited from cloud computing’s resiliency and protection of its essential skills. Additionally, to prevent hacking and other serious security concerns, the data stored in the cloud is encrypted.
- Progressive Innovation –
The agility that clouds computing technology brings to the table has helped the financial sector innovate. Financial institutions can create and promote products more quickly thanks to cloud computing in the fintech industry, and they can also react swiftly to changing consumer wants and new trends. The Covid-19 outbreak caused various challenges for the fintech sector, but cloud computing has rapidly and readily benefited financial services firms.
- Proven Security features –
One of the factors driving fintech’s use of cloud technology is its robust integrated security system. Since financial information is so important, security should always come first. Therefore, executives in the financial industry can relax knowing that their data is secured thanks to the extremely secure environment provided by cloud technology.
It is troubling that, according to the Information Age research, 42 per cent of financial institutions lack space for protected data. Implementing cloud technologies may offer the same degree of security as high resilience through its security infrastructure, but traditional IT infrastructure runs the risk of cyberattacks to malware threats and emails.
Additionally, Zero-Trust verification and encrypted data have raised the bar for cloud security. The use of new technologies and improvements will guarantee that fintech firms’ systems have the necessary safeguards in place.
- Reduced Operating Cost –
It is painfully obvious how expensive operational expenditures may become for the aforementioned reasons. Compared to building and maintaining all the required infrastructure, cloud services are very cheap. Data storage and resource management do not need any more time, effort, or resources. As a result, employing cloud computing in fintech may save businesses money on system development, so they can use that money to enhance and modernize their core services.
- Greater Scalability & Flexibility –
One of the fastest-growing segments in the internet industry, fintech businesses recognize the need for safe online financial transactions among consumers. Therefore, businesses require a supportive atmosphere and infrastructure to reach their long-term business objectives without erecting pointless obstacles that impede their ability to advance. Fintech and cloud technology work hand in hand to swiftly scale up the business while saving money on the costs of setting up on-premises equipment and its updating and maintenance.
By enabling the flexibility to respond to branch closures while continuing to serve as many clients as is practical, the cloud platform’s level of flexibility in comparison to traditional banking institutions is demonstrated.
- Build stronger relationships with customers by serving them faster –
With the advent of cloud computing, it is now more easy and simple to plan the creation and introduction of novel goods and services, which has been a barrier to the financial sector’s reluctance to adapt to changing customer requirements.
Because of the cloud’s combination of huge data and potentially endless processing capability, banks may now have a deeper understanding of their consumers than ever before. Finance companies who miss out on this once-in-a-lifetime chance to design highly customized solutions to meet the demands of their clients will pay the price by losing important demographics.
With the help of cloud computing, the service is always fully functional, and the client obtains far better service in general. This allows the business to focus on providing exceptional customer service at their end of the line.
- Providing Relevant Customer Insights to Banks –
Challenger banks and fintech companies that specialize in niche financial sectors are giving established financial institutions a run for their money in today’s banking industry, which is more competitive than ever. Customers’ expectations for the quality of financial service have already increased. As a result, traditional banks and the still-growing alternative finance sector, which includes fintech and challenger banks, provide banks with the unprecedented competition. Two key factors driving this rivalry are the exponential rise of data and cloud technologies to offer precise, in-depth, and rich consumer insights.
The standard was significantly higher after the epidemic. Customers, especially members of Generation Z and millennials, would go for another financial service provider if banks don’t meet their expectations. Banks must deploy more cloud-based, data-efficient services throughout their whole organization in order to fulfil this demand. In their operations and business models, proactive banks have already identified time-consuming and ineffective processes that may be swiftly improved using cloud technology.
- Improved corporate efficiency –
By simplifying processes and using capabilities for greater performance, introducing the cloud into current tech infrastructures will change their design. To maintain a high degree of efficiency, a large corporation that operates in several places and has a wide range of target demographics must optimize the business process.
The ability to evaluate and foresee pertinent consumer insights based on market data is the key role of cloud computing in fintech in increasing operational efficiency. Financial services companies that successfully use this approach get an edge over their rivals by deftly navigating recent industry innovations and breakthroughs.
Choosing Fintech Cloud Service Providers: Best Practices
Data documentation, data storage behind highly secure walls, and information exchange are the criteria that are unique to the banking and fintech industries. Before choosing a reputable service provider, it would be prudent to take a few technological factors into account.
- Encryption and access control – Ask your fintech cloud service provider specifically about their data encryption policies and procedures to better understand the technical infrastructure requirements and how they can safeguard the sensitive financial data you send.
- Data segregation and management – Organizations can go to the cloud thanks to access to centralized data and sharing capabilities; however, owing to security concerns, they are searching for benefits from data segregation and resource sharing.
- Make sure your service provider provides you with a system that is integrated with backup plans in case of a system shutdown or any loss of data. System failure recovery plan. A thorough strategy for disaster recovery must be in place, and your digital infrastructure must support it.
- Compliance – Your company system should be compliant with the rules and laws of cloud-delivered technologies. Asking providers to give thorough documentation of the necessary compliance certifications for cloud services would be a good idea.
Tech-savvy financial institutions have recognized the agility potential of cloud computing and how it may help them dominate their industry. Today, cloud computing extends its influence to the fintech sector by creating and offering cutting-edge goods and services, establishing smooth client interactions, and raising income through partnerships with linked businesses. Therefore, be aware of the cloud’s scope. The fintech sector is booming and has more unicorns than any other. It has become necessary for fintech to use cloud technology due to the large amounts of data that need to be securely managed, stored, and analyzed.
Renting cloud services versus purchasing physical gear to process all of your data has significant financial and operational advantages. Businesses that use cloud technology in their operations benefit from greater security, dependability, scalability, efficiency, access to a much broader infrastructure, and several other advantages.
The fintech sector profited from the cloud migration of old system processes by creating a more adaptable and customer-centric business model to generate revenue and support growth.