While cloud adoption has experienced significant growth across various industries, its uptake in FinTech has been comparatively slower. To bolster the digital capabilities of the FinTech sector and align with the rapid migration towards digital technologies, the industry is now shifting from a phase of experimentation to a comprehensive implementation approach.
As per a Logic Monitor Survey, 87% of global IT decision-makers agree the pandemic will cause organizations to accelerate their migration to the Cloud, anticipating a decline in on-premises workloads by 2025. Companies worldwide spent US$34.6 billion on cloud services in the second quarter, up roughly 11% from the previous quarter.2 As Satya Nadella, CEO of Microsoft, states, “We’ve seen two years’ worth of digital transformation in two months.
The FinTech industry is no different when such is the digital transformation pace. They have realized that as an industry to cope with changing times & adapting to growing demands, it is imperative to rethink how technology enables virtual work and remote working and using Cloud as a significant differentiator in matching the fast-paced digital acceleration.
In this article:
- Why Cloud is the future of FinTech
- FinTech’s tryst with Cloud
- Cloud Adoption in Financial Services
- Benefits of Cloud Computing for FinTech
- How Cloud is Transforming FinTech Industry
Why Cloud is the future of FinTech
While the argument for adopting agile technologies in FinTech was on, COVID struck and left decision-makers to fast-forward the process and innovate for survival. “Not only are more organizations moving their infrastructure to the cloud, but over 55% say they are using multiple public clouds,” says IDG Cloud Computing 2020 Study. FinTech is rapidly adopting cloud technologies for its core services, support, and operational activities. Agility has helped these institutions improve interaction with customers, staff, and shareholders, reduce costs, improve collaboration, and increase innovation.
FinTech’s tryst with Cloud
Financial institutions and banks are not using the Cloud for their core services. Agile technologies are extensively used for non-core processes. With increased demand and service offerings, it has become imperative to use the right technology to offer core activity in areas such as regular banking, customer payments, billing, credit, etc. Most changes are seen by smaller FinTech firms which are quicker in adapting to these changes; however, having realized the advantages of the Cloud, the biggies in the industry are following too and looking for innovative and easy solutions that can be fruitful for customers interacting with them.
Cloud Adoption in Financial Services
Financial institutions have understood the need to be agile and how it can help them become future-ready. Cloud computing scope is no longer just limited to cloud-based platforms, applications, and business processes; it is now also focused on how to open new avenues for the FinTech industry in terms of:
- Creating and delivering great products, services
- Interacting with customers
- Generate revenue & allow partner collaboration.
By moving to Cloud, FinTech Industry can build a more flexible and customer-centric business model known to drive profit & grow.
Benefits of Cloud Computing for FinTech
Adapting to new technology is complex, and the inability to execute such migration at different scales can increase challenges and risks. However, the benefit of moving to the Cloud can be more fruitful in the long run than not moving. Here are a few benefits of moving your FinTech business to Cloud:
- Easy access to on-demand processing capabilities
- Faster catering to the ever-growing need for innovative solutions
- Faster ongoing releases through cloud-based technology
- Improved customer experience via AI, ML & process automation
- Flexibility to scale up & include additional apps & databases
- Agility to optimize products and services quickly & securely
- Access to data & insights with connected data sets enabling better decisions
- Increased flexibility to physical outages & service interruptions.
How Cloud is Transforming FinTech Industry
Cloud migration in FinTech is transforming the industry and making it future-ready through the following ways:
- Data management: The volume of financial data used and shared globally is enormous. Cloud technologies allow FinTech firms to store and manage data securely and reliably, enabling them to benefit from artificial intelligence in lending, payment, and fraud detection segments.
- Seamless cloud migration: While some companies opt for a hybrid model that allows existing infrastructure and agile technologies to collaborate seamlessly, few opt for the hybrid model to deploy cloud-based sandboxes to increase customer acceptance of new services and offerings without interrupting the existing structure. Agile technologies also help financial institutions with flexibility and enhance capabilities to combat financial crime.
- Security: According to the information age report, around 42% of financial services firms cannot provide data security, making it a significant concern. Cloud technologies provide the same level of security as traditional structures when adequately implemented.
- Competitive advantage: Agile technology and apps allow FinTech firms to focus more on innovation to improve productivity. Onboarding services become fast, and the ability to instantly launch new services or products increases. Additionally, scaling up or down becomes easy, enabling businesses with resource reallocation, innovation, and rapid service delivery to end consumers.
- Reduced Maintenance cost: While in-house hardware and data storage units consume space and resources, it also adds to the overall maintenance cost. On the other hand, cloud technologies owned by third-party service providers reduce overall operational and implementation costs associated with server or data management plus security.
From being just a buzzword and ambitious project, Cloud technology has become a driving force for businesses globally. Agile technologies will become more vital, especially in a pandemic-hit remote work culture. With everything going digital, the FinTech industry must adapt and innovate quickly with Cloud regardless of the business size.