How Is Cloud Technology Changing Fintech?

Quick Summary: The utilization of cloud technology is catching on in the fintech industry and the growth is happening at a steady pace. More than 20% of all applications run on the cloud, with substantial room to grow. Using cloud computing technology, the banking sector is clubbed with fintech much more easily, and newly started businesses are developing as cloud-native from the start. Here, we’re going to discuss how cloud technology is enhancing the fintech industry in 2021.

Table of Content

1. Introduction to Cloud technology 2. Fintech on cloud 3. How is Cloud technology useful for financial services? ❏ Potential for Innovation ❏ Security and Privacy ❏ Business continuity ❏ Data management ❏ Flexibility and Scalability ❏ Reduce operational cost ❏ Self-service applications ❏ Enhance client satisfaction and business efficiency ❏ Automated analysis ❏ Seamless cloud migration 4. What are the best practices for cloud adoption? ❏ Data segregation and data management ❏ Encryption and access control ❏ Disaster recovery plan ❏ Compliance 5. Wrapping Up: Are you planning to adopt cloud technology for the Fintech sector and enhance your business?

Introduction to cloud technology

Cloud technology is the delivery of computing services such as databases, networking, servers, storage, software, and intelligence over the Internet to provide faster innovation and economies of scale. It refers to configuring, accessing, and manipulating the software and hardware resources remotely. It is an independent platform, as the software is not required to be installed locally on the PC. Essentially, cloud computing means having the ability to access data and programs over the Internet instead of on a hard drive.

 There are three main cloud computing models namely Infrastructure as a Services(IaaS), Software as a Service(SaaS), and Platform as a Service(PaaS). These models use software and middleware to ensure seamless connectivity between devices that are linked via cloud computing. The cloud providers mainly maintain multiple copies of the data to mitigate instances of security threats, data breaches, etc.

In this article, we’re going to discuss how cloud computing technology is changing the fintech sector and what are its security cloud adoption trends to follow in 2021. So, without any further ado, let’s get started!

Fintech on Cloud

Currently, banking sectors and financial industries are using cloud computing services for mainly non-core processes, but as the service offerings improve, the adoption of the right technology becomes essential to process that core activity, with deployment in areas. Small banks have quickly made the change by switching all their core services to the cloud. Many large banks are planning to adopt new Fintech, their service offerings will excel in the competitive landscape and drive the digital transformation race. Supporting the digital transformation brought forth by the cloud is helping fintech institutions operate more effectively by providing enhanced accessibility and customized products. 

There are numerous reasons for the Fintech revolutions such as technology innovations and evolving customer preferences. Moreover, banking sectors are being available everywhere, they are unable to accomplish the demands of the current generation who don’t want to wait in a queue.

How is Cloud technology useful for financial services?

Embracing cloud technology and its advantages are key to rapid adoption in the fintech sector. Companies of all sizes have much to gain from cloud services, starting from agility to innovation to cloud saving and much more as mentioned below.

1. Potential for innovation

Van Nuys says, Agility is the key reason we’re having this movement to the cloud. Companies can harness resources as they require them and that’s the way to build, test, and roll out new applications faster, and more in a more secure environment. The cloud is an agile technology, and without its agility, some of the latest innovations in the fintech industry are seen. The banking sectors are moving at a more rapid pace and sharing data like startups in the industry. This shift is broadening the competitive landscape. WIth local computing capacity in place almost everywhere, public cloud providers give companies the ability to vastly explore their reach in minutes.

When attendees are asked what percentage of their application suits would be running in the cloud currently, more than 50% answered 80% or more. So, we can predict that the technology is going, the panelists agreed on the migration and adoption of the cloud.         

2. Security and privacy

Security and privacy are the main concerns that the cloud has proved reasonably secure if the right measures are taken. Zero-trust encrypted data have increased cloud security in the past years. If it is used alongside such as employee education, among others, the cloud proves itself no riskier than traditional IT infrastructure setups. For every fintech service provider, security is their main concern when adopting new technology, and they must ensure their systems have adequate measures in place.

Storing information, migrating data, and using additional services such as machine learning and artificial intelligence on the cloud become more ubiquitous, there’s a clear need for organizational oversight. The in-built features are an important differentiator for cloud technology and can exist in tandem with a company’s effort to preserve sensitive information.

3. Business continuity

Nowadays, businesses are highly reliant on cloud technology because it offers sophisticated systems for data storage that provide a much better level of resilience to the business. Gathering information and storing everything on the internet ensures higher data security in cases of disasters. Also, the data gathered in the cloud storage is encrypted well to avoid hacks and major sorts of insecurity threats.

4. Data management

For the fintech sector, working with the data and information is a top priority, from starting and identifying verification processes to account management, checking, analyzing spendings habits, balance, and much more. Data is key. Giant companies can use cloud technology to collect and store large amounts of data securely and make it accessible at any time. That means there is no need to wait for an IT professional to clock in to access important information, offering an employee the correct credentials because this can be done from anywhere and often automatically.

5. Flexibility and Scalability

As we all know that Fintechs are one of the most rapidly growing platforms. This means they need an infrastructure that can grow with them and eliminate unnecessary barriers or create challenges. Cloud’s broad applications and advantages are the keys to how rapid adoption has become and gaining from this technology, from cost savings to agility to innovation. Cloud technology offers the agility to scale relatively easily while saving on an on-premises technology environment, which is more costly to upgrade.  For the traditional banking sector, the cloud platform delivers the capacity to adapt to branch closures while still providing services to as many people as possible.

Migrating infrastructure to the cloud measures flexibility and scalability for both fintech and the financial sector. Cloud technology has its real implications for newly started businesses as well, especially considering so many are establishing themselves as cloud-native from inception. Adopting cloud technology allows an enterprise to innovate faster and focus on highly valuable IT resources on building the apps that differentiate their business and improve customer experience.

6. Reduce operational cost

Presume data storage can be highly expensive compared to cloud storage solutions. Adopting cloud computing services helps you to reduce overall investment and cost for maintaining servers and burning resources to maintain uptime. Additionally, no extra investment and efforts are required in the management of resources in banking for gathering data.

7. Self-service applications

The pandemic hit full force in 2020, there was a dire requirement for remote self-service technology. Even after the pandemic ends, this need will not evaporate rather it may increase, especially if you consider the continuing closures of brick-and-mortar bank branches. Individuals and businesses both need the ability to manage their finances from a distance, but it’s not only that. The internal staff should also be able to manage processes from afar based on cloud technology and help organizations to deliver this technology at a relatively rapid pace.

8. Enhanced client satisfaction and business efficiency

Huge computing power that are the working models offered by cloud empower fintech organizations to create modular customer-centric services improving client satisfaction. Further while addressing Big data and machine learning, finance frauds have been significantly decreased to provide a trusted platform for users to undergo all banking activities. Cloud computing technology incorporates centralized data management and supports faster data processing in this ever-changing landscape which allows businesses to stay focused on banking operations maintaining maximum productivity.

9. Automated analysis

Implementing modern technologies and leveraging the abilities of like data science, artificial intelligence, and machine learning to perform specialized tasks credit scoring and baking processes can now be achieved smoothly through cloud computing. The technology brings capabilities to the financial sector, expanding and automating the process of data analysis.

10. Seamless cloud migration

Many giant and small companies are planning to embrace the hybrid security infrastructure so that the cloud works along with the current environment. Many of these are operating hybrid models to deploy cloud-based sandboxes to quickly validate user’s acceptance of new service offerings without interrupting their existing business. Implementing cloud computing services helps you to reduce risk related to traditional infrastructure technology where resilience is the main business concern. It provides flexibility to the banking sectors and allows them to scan around hundreds of transactions per second to combat financial crime, like fraud or money laundering.

What are the best practices for cloud adoption?

1. Data segregation and data management

Cloud services prosper on shared tools and resources, financial institutions need a combo of shared resource advantages with improved security reached by data segregation.

2. Encryption and access control

Make sure to discuss all the essential encryption procedures and policies with your service provider to select the technically feasible ones and protect the financial data that you transmit.

3. Disaster recovery plan

A reputable and good service provider always has a recovery plan in place and it is crucial to collect a detailed disaster plan that makes sure your digital infrastructure allows all that.

4. Compliance

Banking executives need to ask providers to reveal compliance certificates of the cloud service.

Wrapping Up: Are you planning to adopt cloud technology for the Fintech sector and enhance your business?

Implementing cloud technology has made it possible for fintech companies to advance their business models and deliver better services at a lower cost. Cloud technology always encourages businesses to accelerate their workflow to make them secure and more user-centric. Giant businesses that adopt cloud technology gain increased security with reduced infrastructure. These cloud solutions for fintech companies cannot be matched by other presume server systems. It also helps to empower the underpinning of financial transactions and provides additional fraud detection and security to protect your information. The financial sector is accelerating a greater pace of adoption across various platforms as the industry develops a more accessible financial world.

As we all know that cloud technology is rapidly growing and becoming a key influencer in global digital disruption in the banking industry. It is a crucial platform for catalyzing innovations and trends in the Fintech sector. Make sure that you are adopting the best cloud technology in your business to ensure that your information is secure and to adhere to the regulatory compliances. The financial sector is gaining significant momentum while implementing cloud technology with the evolution from experimentation to implementation.