Mounting data volumes, the ever-evolving regulatory landscape, crippling legacy infrastructure, and intense competition is putting a lot of pressure on financial organizations.
Most industries have taken the cloud route – 83% of enterprise workloads are expected to be in the cloud by 2020. But FinTech has rather been slow in cloud adoption. Concerns over cloud security, along with strict regulations, has made it tough for FinTech companies to embrace the cloud.
But that doesn’t mean the industry cannot benefit from the cloud. The use cases of cloud in FinTech are immense: from increased speed of payment processing to reduced network latency, a dependable backend infrastructure, and more. Using an infrastructure that is global, scalable, and delivers the lowest possible latency has a significant impact on the quality of the service being provided.
However, for the industry to witness widespread adoption, a lot needs to be done. Here’s what has to happen for cloud adoption to increase in FinTech:
One size doesn’t fit all
With the day-to-day challenges faced by financial institutions sky-rocketing, moving to the cloud is probably the best business strategy. In other industries, irrespective of the size, type, or scale of the organization, a one size fits all approach usually works. The same approach just doesn’t work for in FinTech. For the cloud to really witness massive adoption in FinTech, it is important for cloud providers to standardize services to exceptionally high standards, so it can cater to the unique needs of the industry. Providers who offer specialized service offerings and customize offerings to suit to individual use cases and specific mission-critical workloads will clearly have an edge.
Not all things cloud can be done alone
For FinTech to maximize value from their tech investments, moving to the cloud is a plausible option. However, given the scalability and latency benefits that the cloud provides, it is important to ensure that financial institutions are making a move to the cloud correctly. Organizations need to start by choosing the right cloud service partner that is ideal for their needs. The decision will largely depend on the specific needs of the organization, the overall strategy, and the regulatory requirements that the organization is required to meet. Assessing what data is appropriate and necessary to migrate to the cloud is also vital – and it doesn’t necessarily have to be an all or nothing approach. At the same time, partners need to have a firm understanding of the relevant compliance landscape and devise strategies that can drive higher levels of compliance.
FinTech teams have to move beyond their comfort zone
Due to the regulatory nature of the industry, FinTech teams have long been accustomed to using legacy technology, on-premises data centers, and LOB systems to carry out day-to-day tasks. However, for teams to improve visibility, and remain competitive, adoption of digital technologies such as cloud and mobile and IoT is needed to really drive value. Since only the businesses that can deliver value and convenience through digital channels are the ones that are going to succeed in the future, FinTech roles have to undergo a significant transformation. Team roles have to convert into support and consultation for various aspects of cloud adoption, including service selection, provider selection, engagement, and management. Teams also have to allow for a new operating model, so they can quickly implement new ideas and tap into new revenue streams and acquire new customers.
Providers need to assure higher security
As the regulatory landscape intensifies, security is becoming a major challenge for those looking to embrace the cloud. 66% of professionals say security is their biggest concern in adopting an enterprise cloud computing strategy. For cloud adoption to experience a surge in FinTech, vendors should drive efforts to guarantee higher security. It is important for the cloud hosting environment to comply with the highest standards of information security management. At the same time, they need to look at more secure technologies like Blockchain to strengthen their security posture. Maintaining the confidentiality of financial information of customers and internal company data is crucial in Fintech. Blockchain can ensure the required levels of encryption and enable secure storage of confidential information to minimize chances of risk.
Regulatory transparency has to improve
Given the nature of the FinTech industry, the risks involved in outsourcing data to the cloud carry far greater potential consequences. For the cloud to become an integral part of FinTech, it is essential that regulatory bodies respond to changes in the use of cloud, while continuing to place strict compliance requirements on financial institutions and their associated cloud partners. Transparency across the regulatory environment also has to increase, so providers and financial institutions can work in tandem to provide a robust and agile compliance framework – that is able to meet the ever-growing needs of the industry – and carefully plan for, and monitor compliance.
Are you ready?
To enjoy scalability and resilience benefits offered by cloud solutions, financial institutions, cloud providers, and regulatory bodies need to take steps in the right direction and work towards bringing the barriers to cloud adoption down. Is your organization ready for the cloud transformation?