The cloud is changing fintech by allowing fintech services to be provided in a way that is more convenient and secure. Continue reading below to learn more about the cloud’s role in advancing fintech.
The 2020s are the era of the cloud. Not only are more organizations moving their infrastructure to the cloud, but over 55% say they are using multiple public clouds, according to the 2020 IDG Cloud Computing Study. And a sizable slice of companies’ IT budget (32%) is dedicated to this purpose. With purported benefits such as accessibility, ease of use and fast deployment, it’s not hard to see why businesses are drawn to this relatively new technology. But what does this mean for fintech?
Five Ways The Cloud Will Drive Fintech Into The Future
Not one to miss out, the fintech industry is capitalizing on the benefits of the cloud, helping to drive the industry’s forecasted 23.84% compound annual growth rate. But what direction will the advancement take? These are the top five ways I see that cloud technology will drive fintech into the future faster.
- Self-service applications: When the pandemic hit full force in early 2020, there was a dire need for remote self-service technology. As the crisis continues, and even after the pandemic ends, this need will not evaporate. Conversely, it may increase, especially if you consider the continuing closures of brick-and-mortar bank branches. Both individuals and businesses need the ability to open and manage their finances from a distance, but it’s not only that. Internal staff needs to be able to manage processes from afar. Self-service applications based on cloud technology help companies to deliver this technology at a relatively rapid pace.
- New security features: Despite early concerns about security and data protection, the cloud has proved reasonably secure if the right measures are taken. Zero-trust verification and encrypted data have increased cloud security in recent years. When used alongside measures such as employee education and access control, among others, the cloud proves itself no riskier than traditional IT infrastructure setups. For fintech providers, no doubt, security is at the forefront of their minds when adopting new technology, and it’s vital they ensure their systems have adequate measures in place.
- Data management: For fintechs, acquiring and working with data is a top priority, from onboarding and identity verification processes to account management, balance, checking, analyzing spending habits, etc. Data is key. Companies can use cloud technology to gather and store large quantities of data securely and make it accessible at any time. That means there’s no need to wait for an IT specialist to clock in to access vital information, providing an employee has the correct credentials. This can be done from anywhere at any time and often automatically.
- Scalability and flexibility: Fintechs are often rapidly growing platforms. This means they need an infrastructure that can grow with them and not put up unnecessary barriers or create challenges where there needn’t be any. Cloud technology provides the agility to scale relatively easily while saving on on-premises technology infrastructure, which can be more costly to upgrade. Even for traditional banking structures, the cloud platform delivers the capacity to adapt to branch closures while still providing services to as many people as possible. Moving infrastructure to the cloud measures accessibility, flexibility, and scalability for both fintechs and financial giants.
- Potential for innovation: At its core, the cloud is an agile technology, and without this agility, some of the latest advancements we’re seeing in the financial industry overall would not be possible. The cloud helps financial companies get their products to market faster, adapt to meet new trends or market demands, and even adjust strategy to significant world events, such as the Covid-19 pandemic. Its agility is there to be harnessed, and this is perhaps one of the greatest benefits that fintech companies can take advantage of in the coming years.
Best Practices For Cloud Adoption In Finance
Working with more documentation and creating, storing and sharing a great amount of financial information make cloud adoption in banking and fintech specific. Here are the things to consider:
- Encryption and access control: Discuss encryption policies and procedures with your provider to select the technically feasible ones and properly protect the financial data you transmit.
- Compliance: Finance executives need to ask providers to demonstrate compliance certificates of the cloud service.
- Data segregation and data management: Cloud services thrive on shared resources, though financial institutions may require a combo of shared resource benefits with the increased security reached by data segregation.
- Disaster recovery plan: Reputable service providers always have it in place, and it’s important to obtain a detailed disaster recovery plan and ensure your digital infrastructure allows all that.
Financial Services And The Cloud
If you go back just 15 years, when Amazon released its first cloud-based platform, no one could have imagined the impact the technology would have. From being just another techy buzzword, it has now become a global force for business growth. Moving forward, and especially in the pandemic-driven remote-working world, the cloud will become more important than ever. For the financial industry, in particular, I expect an accelerating pace of adoption across many platforms as the industry builds a more accessible financial world.