How Cloud Computing in Fintech Drives Innovation?

Money matters. If anything, global commerce keeps the world moving. Whether barter trade or financial banking, commerce has been around for a long time. But with time, technology has reshaped the way we trade. For instance, hardbound ledgers were replaced by spreadsheets, and the same spreadsheets are now shared and edited by countless authorized people worldwide. Now, cloud computing fintech solutions have taken the world by storm.

The integration with financial service IT solutions sped even more with the advent of smartphones. Financial technologies are thoroughly revolutionizing the corporate sector. The future of the cloud is reshaping financial services solutions with ground-breaking concepts that solve problems linked to money that we face daily. In this blog, we shall understand why cloud computing fintech is picking up pace and what are the benefits of cloud adoption that fintech can experience once they initiate the cloud integration.

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Understanding Cloud Computing Fintech

Fintech firms are harnessing the power of cloud computing to reshape the financial industry, and as a result, cloud service providers for the fintech industry are maximizing their potential. Thanks to cloud computing fintech solutions, financial companies can innovate and save money on operational and regulatory expenses. In addition, customers gain better experiences because cloud computing fintech solutions increase the banking sector’s efficiency and competitiveness.

FinTech, in its simplest form, is a phrase used to refer to a wide range of integrated technologies, including software, mobile applications, and other tools, that enhance and automate conventional forms of finance for both businesses and their customers. The financial infrastructure-as-a-service (IaaS) aims to help FinTech firms execute highly secure transactions swiftly within an internal network while enhancing user experience. The intricate (but practical) approach streamlines financial transactions while removing different stages from the transaction process. Ultimately lowering the cost and increasing the accessibility of financial transactions.

Useful link: What is Cloud Computing?

What Cloud is to Fintech

Digital technologies were embraced exponentially despite the global business pandemic, with cloud computing emerging as a key facilitator. Organizations have profited from adopting cloud technologies to create a work environment prioritizing data and technology.

The burgeoning fintech sector has more unicorns than any other industry. Due to the vast volumes of data that need to be securely handled, saved, and analyzed, fintech now has to leverage cloud technology. This is in line with fintech’s DNA, which strongly emphasizes speed, scalability, agility, and accountability for the custody of sensitive information. Cloud-native applications are created, crafted, and maintained in the cloud.

These cloud-native infrastructure apps make deploying new features and solutions easier since their architecture is inextricably linked to the cloud. However, on-premises programs migrated to the cloud are not suited for the environment and do not exist in a typical cloud-based environment.

The complexity of cloud-native applications is essential for financial services solutions since transactions are continually in motion and happen quickly. For instance, having a cloud-native infrastructure will allow you to scale with more regular surges in transaction volume to our systems and lay the groundwork for extending our current platform to include a robust API ecosystem. In addition, cloud-native apps’ scalability and dependability reduce the impact of outages, especially during high usage times. This may also simplify transitioning to an API-driven platform and supply vital building blocks so that clients and partners may incorporate compliance into their cloud banking platforms.

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Advantages of Cloud for Fintech

Cloud computing fintech organizations are increasingly relying on the cloud to offer practical solutions to businesses and customers. According to a LogicMonitor analysis, 87% of cloud computing fintech intend to hasten their cloud migration by 2025. It is a given that the attractive benefits of cloud adoption are attracting Fintech firms. Let’s look at the advantages of cloud-native applications for cloud banking platforms.

• Flexibility: Businesses need to respond swiftly to market developments to stay ahead of the competition if they want to compete. Cloud computing in financial services meets this demand by allowing businesses to quicken the scaling process. Cloud banking platforms can swiftly adjust their capacity up or down to satisfy client demand.
• Affordability: Most fintech firms lack the cloud-native infrastructure necessary to develop cloud computing fintech solutions that can be utilized by multiple financial institutions and potentially millions of their clients. One of the cloud’s main draws is that the vendor offers all necessary cloud-native infrastructure for a reasonable monthly price rather than a significant capital expenditure. The cloud vendor will manage the cloud-native infrastructure, keep it secure using advanced firewalls and other technologies, and provide 24/7 technical support in addition to offering the hardware and networking, all included in the price.
• Swift Production: Cloud banking platforms may discover that their businesses develop quickly and unexpectedly. Although this may seem positive, some businesses are not yet ready for it. Their financial services solutions cannot keep up with the demand, resulting in their carefully built reputations suffering. It may be challenging to restore faith among investors and consumers.

The benefit of cloud adoption is that it provides financial companies with unmatched, on-demand scalability, guaranteeing that their infrastructure can expand as rapidly as their business. Pay-as-you-go pricing also prevents businesses from spending unnecessary money.

• Security: Security and compliance are top issues for fintech organizations since they handle sensitive data. Like financial services solutions, cloud suppliers are also required to adhere to stringent rules and implement reliable safeguards in their cloud strategy to protect against hacking, viruses, and internal data theft on their clients’ data and systems. These precautions include next-generation firewalls, intrusion detection and prevention systems, in-flow virus protection, and encryption. Zero-trust verification and VPN usage can strengthen each of these safeguards even further. Additionally, single-tenancy private cloud deployment may guarantee compliance for businesses that handle the most delicate personal data.
• Modernized: Many emerging cloud computing fintech solutions provide remote, self-service technologies to clients. Demand for these technologies rises as customers become more digital and banks close their main street branches. Customers, of course, can access them online for remote use. As more companies offer remote work, employees must access these technologies outside the workplace. The cloud banking platform is the single workable option for providing these technologies.
• Data Production Improved: The cloud is the ideal solution for businesses that rely on data. Teams can quickly deploy analytics, AI, and machine learning tools to deliver crucial insights. They can access data, along with the most recent versions of synced files and documents, whenever necessary and wherever they are located. It allows silos to be broken down and data to be centralized, merged, and enhanced.
• Future-Proof: Cloud computing fintech solutions are fantastic because it is ready for the future. Most modern apps are cloud-based and open-source, allowing fintech companies to use them for free, install them immediately, and customize them to meet their specific needs. The rivalry among cloud service providers also assures an ongoing investment in their technologies. The performance of hardware is continually improved, for instance, while services such as security, disaster recovery, business continuity, and customized technical assistance are also continually enhanced. Naturally, when it comes to resources, the sizable data centers of cloud suppliers ensure that fintech companies always have the storage and time they require to deliver their services, as well as the confidence that they will be continuously available.
• Better UX: People of the latest generation don’t favor going to the bank. Thanks to technology, most of them have never had to visit a banking office. This cloud-powered technology has enabled countless transactions that previously required users to jump through various hoops. Whether using Zelle or net banking, users now enjoy a better customer experience through mobile apps. This is one advantage that every fintech firm can leverage, as customer satisfaction is a crucial component.

Useful link: What is Cloud Computing Security?

Drawbacks of Cloud Computing Fintech Solutions

FinTech organizations continue to have the opportunity to accelerate corporate growth through the adoption of cloud computing. Unfortunately, while a handful of FinTech businesses have successfully used these infrastructures, some have failed. Any business that invests in cloud computing fintech solutions might have adverse effects.

Businesses must start recognizing these possible difficulties and actively work to prevent them.

• Too Much of a Change: It’s challenging to handle change. However, businesses must continue to adopt the cloud as it develops. FinTech organizations risk an inflow of user inconsistencies if they fail to construct platforms utilizing modern technologies. On the other hand, if they want to scale up, they risk compromising the company’s overall agility. By removing outdated data, cryptic patches, and significant inefficiencies, businesses can proactively address their issues and maintain infrastructure continuity by leveraging current and open-source technologies.
• Lack of Comprehension of Capacity: To ensure the creation of a successful cloud computing fintech solution, extensive capacity planning is needed when using FinTech engineering. Companies face the risk of building infrastructures that cannot handle the volume of metrics used without proper preparation. As a result, dashboard performance may be compromised, and problems may become difficult to resolve. Regardless of the provider’s choice, planning is necessary at every level.
• Overestimating Cloud Abilities: FinTech engineers continually implement new technologies to maintain their competitive edge in a fast-paced, cutthroat sector. While businesses must develop new ideas and ways to improve their offerings, operations shouldn’t veer too far from their initial mission. Businesses should strive to eliminate unnecessary elements from their projects that could waste time and money. Don’t complicate essential financial services solutions.
• Lack of Plan: For a business to succeed, it needs independence, adaptability, and a cost structure. Companies must take the time to develop and assess each solution to determine which best meets their objectives to obtain these scores. Changing providers can seem simple, but doing so may lead to a more involved and pricey solution. Setting long-term goals before choosing a provider may make your team’s eventual transition more manageable.

Useful link: How to Enhance Security in the Multi-Cloud Era

Best Practices of Cloud Technology in Fintech

The best practices evolve when you take cognizance of your unique needs. Of course, catering to them all won’t be possible, but you must include the most crucial ones. If the ignored needs are significant, mold the cloud solution to support your needs instead of dropping it altogether. These will shape your unique best practices, and the standard best practices listed below must be followed.

• Encryption: Data espionage and hacking incidents occur worldwide. Be it insider threats or outsider-initiated breaches, encryption is your first line of defense. Ask your MSP essential questions regarding data encryption policies and procedures to better understand what technical infrastructure you need and how they can safeguard the sensitive financial data you send.
• Compartmentalization: Organizations can leverage the cloud by accessing centralized data and sharing capabilities, but due to security concerns, they are seeking advantages from data separation and sharing resources.
• Backup plan: Ensure your service provider offers a system with built-in backup plans in case of system failure or data loss. A disaster recovery strategy must be in place, and your digital infrastructure must be able to support it.
• Compliance: Your company system should comply with the law of the land. An MSP usually addresses these concerns.

Case Study: Driving FinTech Agility with Cloud and Infrastructure Automation

Veritis partnered with a prominent finance and insurance company to implement a full-scale infrastructure automation and cloud support solution. The organization was grappling with rising operational costs, performance bottlenecks, and stringent compliance demands, all typical challenges in the FinTech landscape. By deploying a hybrid cloud model with automated provisioning, Veritis enabled faster deployments, greater scalability, and enhanced regulatory alignment. The solution not only empowered the client to innovate securely and efficiently but also showcased the transformative potential of cloud computing in FinTech operations.

This success story is a compelling example of how FinTech firms can leverage cloud solutions to enhance performance, agility, and compliance. It underscores the significant benefits that can be reaped from such solutions, making it a must read for all FinTech decision makers.

Read the complete case study: Full Fledged Infrastructure Automation & Cloud Support to Finance and Insurance Company.

Conclusion

Speed, along with security, is the need of the hour. If you don’t innovate and upgrade your fintech business, ensure your enterprise is future-proof. Whether emerging or Fortune 500 companies, almost every other company has integrated their enterprise with cloud migration services, and they realize their goals better than before. The cloud juggernaut is only picking up in pace and shall continue to do so as the world increasingly gravitates towards this technology. So, reach out to the Stevie Award Winner Veritis and integrate your fintech business with the cloud before it is too late.

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Additional Resources:

• Global Cloud Market to Reach Nearly USD 800 Billion by 2028: Survey
• Cloud Computing in Healthcare: Looking for Security Advantage?
• The Biggest Clouds Myths that Every Organization Must Do Away With
• Cloud Security Automation: Best Practices, Strategy, and Benefits
• Cloud Infrastructure Automation: The Imperative for Cloud Success!