In many industries, cloud use has increased exponentially. Cloud adoption in the financial business, on the other hand, has been sluggish. To boost the fintech industry’s digital skills and keep up with the fast digitization, the industry is currently transitioning from exploration to application. According to a Logic Monitor survey, 87% of global IT decision-makers agree that the pandemic will drive organizations to accelerate their transition to the cloud, with on-premises workloads expected to fall by 2025. In the second quarter, companies spent $34.6 billion on cloud services globally, up nearly 11% from the previous quarter.
“We’ve witnessed two years’ worth of digital transformation in two months,” says Microsoft CEO Satya Nadella.
The fintech industry is no exception to the fast speed of digital development. They’ve realized that, in order to keep up with the changing dynamics and meet expanding expectations, the industry must reassess how technology enables virtual work, remote work, and the usage of Cloud as a major distinction in keeping pace with the growing digital kinetic energy.
COVID-19 struck while the debate about adopting agile technology in fintech was raging, leaving decision-makers with no alternative but to accelerate the process and develop for survival. According to the IDG Cloud Computing 2020 Study, “not only are more organizations migrating their infrastructure to the cloud, but over 55% claim they are using numerous public clouds.” Fintech companies are quickly using cloud technologies for their core services, as well as support and operational functions.
At the moment, banks and other financial institutions do not use the cloud exclusively for their core functions. Nimble technologies are widely utilized for non-core operations, but with rising demand and service offerings, it is becoming increasingly important to employ the correct technology to provide core services in areas like regular banking, customer payments, billing, credit, and so on. Smaller fintech organizations that are quick to respond to developments see the most changes.
However, now that the benefits of Cloud computing have been realized, the industry’s bigwigs are following suit and seeking creative and simple solutions that would benefit customers interacting with them. Financial institutions have recognized the importance of agility and how it may help them prepare for the future. The ambit of cloud computing has expanded beyond cloud-based platforms, apps, and business processes to include how to create new doors for the finance industry in terms of:
- Developing and providing outstanding products and services
- Interaction with clients
- Increase revenue while allowing collaboration with partners.
The fintech industry may benefit from migrating to the cloud by developing a more adaptable and customer-centric revenue model that is known to produce profit and growth.
Benefits of Cloud Computing for Fintech
Switching to any new technology is difficult, and the incapacity to do so at spatial levels can add to the obstacles and hazards. Moving to the Cloud, on the other hand, may prove to be more beneficial in the long term than not doing so. If you’re shifting your fintech company to the cloud, here are a few advantages:
- On-demand processing capabilities are easily accessible.
- Faster response to the ever-increasing demand for creative solutions
- Cloud-based technology allows for more frequent releases.
- AI, machine learning, and process automation have all improved the user experience.
- Scalability and the ability to add new apps and databases
- Ability to swiftly and securely optimize products and services
- Connected data sets provide access to data and insights, allowing for better decision-making.
- Flexibility in the face of physical failures and service interruptions
Cloud Transforming the Fintech Industry
In fintech, cloud migration is revolutionizing the sector and preparing it for the future in the following ways:
Data Management
The amount of financial data that is used and transmitted around the world is enormous. Fintech organizations can use cloud technology to store and maintain data in a secure and trusted manner, as well as use artificial intelligence in the lending, payment, and fraud detection areas.
Seamless Cloud Migration
While some businesses choose a hybrid framework that enables current infrastructure and agile technologies to work together smoothly, few companies choose a hybrid model to implement cloud-based sandbox gameplay to increase customer acceptance of new services and offerings without disrupting the existing framework.
Security
Around 42% of financial services organizations, according to the information age report, lack the capability to guarantee data protection, making it a big worry. When effectively applied, cloud technologies give the same level of security as traditional institutions.
Competitive Advantage
Fintech companies may focus more on innovation and productivity by using agile technology and apps.
Reduced Maintenance Cost
While in-house hardware and data storage devices take up space and resources, they also increase the overall cost of maintenance. Third-party service providers’ cloud solutions, on the other hand, lower total operational and implementation expenses connected with server or data administration, as well as security.
However, the cloud’s level of ease is not without its drawbacks. Before racing to enjoy the fruits of cloud infrastructure, organizations must first guarantee that the necessary foundation is in place. To achieve the ultimate goals, red flags should not be overlooked, and adequate attention should be paid to data governance, resiliency, security, and compliance, among other things. As a result of the pandemic crisis, the RBI’s recent Financial Stability Report notably emphasized cybersecurity threats in the context of remote working. A well-thought-out cloud strategy can help sleepy businesses that have lost market share to more agile competitors to wake up and shine.