Cloud computing in Fintech has become an emerging trend that has shown impactful results in the demands of the financial industry and given it a huge opportunity for growth. The global Fintech sector market size is expected to reach USD 124.3 billion by the end of 2025 at an expected compound annual growth rate of 23.84%.
Even though an increasing number of personal and business transactions are taking place in digital format, it has become important for established brands as well as Fintech startups to provide their customers with better services that include speed, reliability and security, this which is possible thanks to cloud computing. as it makes storage of large and important data well secured and scanned.
Cloud computing has provided businesses with access to a cost-effective solution for data storage and sharing options, with added benefits of secure storage, interoperability, scalability, and 24/7 availability. . For the fintech industry, this comes with the added benefit of being able to operate across multiple platforms/applications, and also to create personalized experiences for customers around the world.
Read also | Financial organizations must implement multi-cloud strategies to excel today: Dhananjay Ganjoo, MD India & SAARC, F5
Some of the key cloud computing developments shaping the fintech industry are mentioned below:
1) Geo-redundant cloud data centers
Unexpected disruptions such as storms, power outages, or hardware failures can halt regular business operations, resulting in downtime and data loss. By allowing businesses to effortlessly migrate vital applications and data to one of the geographically distributed secondary sites, geographic redundancy will help businesses preserve business continuity in the event of a disaster. In order to be able to easily transition to a secondary site in the event of failure or inaccessibility of your primary site, it is important to ensure that computer systems and applications requiring high availability have geo-redundant configurations.
2) Regulatory compliance
Banking industry regulations, such as PCI DSS and PCI 3DS, are in effect for all cloud service providers. Meeting the minimum security requirements defined by the PCI DSS standard allows financial institutions and consumers to ensure that the risk of loss due to fraud and cyberattacks is kept within acceptable limits.
3) Self-service apps
Without cloud services, it could have been difficult to manage the financial data given its exponential growth. FinTech companies are now able to store and manage data securely and reliably using cloud technologies. It also enables businesses to use smart techniques for loans, payments and fraud prevention. It offers a highly secure platform, advanced engineering, and configurable services that enable businesses to deliver exceptional customer service.
4) Ease of deployment of managed machine learning
A key part of forecasting financial trends is the use of machine learning algorithms in businesses. The use of ML algorithms by FinTech companies can help them predict market risks, spot potential business opportunities, reduce fraud, and more. Large volumes of data, including financial transactions, loan repayments, company actions, customer interactions, etc. companies to train their machine learning models.
5) Cloud native
Instead of creating entirely new environments for application development, cloud native enables the commercial creation of microservices, which helps reduce vendor lock-in and increase portability. Fintech organizations are able to innovate, rapidly deploy new services, and consistently deliver great experiences regardless of the volume of traffic reaching their systems with the flexibility of cloud-native applications.
6) Quantum computing
Quantum computing in the fintech sector is increasingly recognized for solving critical issues such as cybersecurity, where it plays an important role in protecting customer financial data using next-generation cryptography ; financial data encoded with quantum cryptography is highly secure compared to current levels of digital security.
The risks associated with cloud computing in fintech are mentioned below:
1) Data security
A major concern for the Fintech sector is identity theft and data breaches. To protect the payment system, fintech companies use one-time passwords and other authentication techniques. Hackers still manage to break into these systems, stealing financial and personal data. Because cyberattacks are becoming more sophisticated every day and it is difficult to ensure complete security in the digital world, financial institutions have always run the risk of data leaks.
Read also | The cloud, if managed effectively, will enable a smooth transition for BFSI Infra: Raj Srinivasaraghavan, CTO, SecureKloud Technologies
To protect the security of shared sensitive information, financial services firms must comply with a number of standards and laws. Compliance is an important issue for fintech companies as it requires the deployment of strict security procedures to ensure that there are no loopholes that hackers could exploit. Other than that, compliance should not come at the expense of software and application performance. While some restrictions apply uniformly to all financial institutions, others are specific to the company’s industry – for example, lending and borrowing, insurance, financial advice – and therefore only apply to certain types of financial institutions. Financial institutions risk hefty fines if they fail to comply.
Fintech companies have realized how the agility potential of cloud computing could help them dominate the industry. Partnering with an expert in the field can further help corporations and fintech companies not only optimize their solutions, but also gain an edge over the competition through personalized innovation. Additionally, by expanding its influence by developing and delivering cutting-edge products and services, Fintech companies can leverage cloud IT to establish fluid contact with customers and increase company revenue.
Opinions expressed by: Sachin Nigam, CTO and Co-Founder, Goavega Software Pvt. ltd