The transformation seen in the cloud for financial services has been nothing short of phenomenal especially during the last few years. Then when the pandemic hit, cloud services were in such demand that many financial institutions were impressed with the ease with which their workforce was easily able to transition to remote office work without too many hiccups as an “underlying digital transformation” had begun years ago to help modernize the workplace.
Beyond the obvious Zoom meetings and collaboration tools flooding the market both before and during the pandemic, it was obvious that a trend towards greater reliance on cloud basedservices was underway in the financial world. These shifts were seen as advantages from the past where the big banks were at first reluctant to take the big leap into cloud, whereas now are being public about their adoption of cloud tech. For many big banks, it was a question of staying competitive and relevant in an area that has long been reluctant to any rapid changes in procedures and manners of handling sensitive customer data. The notion of putting sensitive information into a product that few were familiar with until cloud technology spread through the workforce at all levels made many in the C-suite nervous about security protocols and relied heavily on outside consultants and their internal IT security experts to educate, innovate, and manage the process of ensuring data security and privacy at all costs.
Flexibility Allows Scalability
The times have changed. Enterprise migration into the cloud has made it easier for large and small fintech firms as well as large traditional banks and other finserv institutions to streamline their workflows and innovate faster and in more seamless ways than before. The implications have been nothing short of impressive and in some cases mind boggling. According to Bloomberg, cloud adoption though in it’s early stages is still happening at a fairly robust rate, as 22% of ALL applications are now run on the cloud with more room to grow. According to the IDG Cloud Computing Study (2020), almost 55% of all financial firms and fintech companies are using multiple public clouds.
Fintechs are often rapidly growing platforms. This means they need an infrastructure that can grow with them and not put up unnecessary barriers or create challenges where there needn’t be any. Cloud technology provides the agility to scale relatively easily while saving on on-premises technology infrastructure, which can be more costly to upgrade. Even for traditional banking structures, the cloud platform delivers the capacity to adapt to branch closures while still providing services to as many people as possible. Moving infrastructure to the cloud measures accessibility, flexibility, and scalability for both fintechs and financial giants.
Another stunning figure is that these companies are dedicating 32% of their IT budgets to cloud migration and other cloud related services. It’s easy to see why this sector is finally running along with other industries in being cloud savvy. Moving to the cloud is allowing for more agile applications, more growth, more scalability and along with all that comes innovation.
Innovation
As mentioned in Bloomberg: Increasingly, businesses are developing innovations that wouldn’t necessarily be possible without the cloud: enabling fintechs to get up and running faster and offer individualized services, which has encouraged a revolution in financial services. This shift is undoubtedly broadening the competitive landscape. Many also say that agility is a major reason for seeing movement to the cloud.
Companies can now harness the resources as needed which allows for more development of applications in quicker more nimble and secure environments. As of late, even large banks are moving at a more rapid pace and sharing data like startups in the industry. Since cloud technology offers companies more options with less risk, as well as more experimentation and invention on behalf of customers, it’s possible to explore alternative data sets and spend time and capital on proprietary analysis.
New Security & Privacy Options
Despite early concerns about security and data protection, the cloud has proved reasonably secure if the right measures are taken. Zero-trust verification and encrypted data have increased cloud security in recent years. When used alongside measures such as employee education and access control, among others, the cloud proves itself no riskier than traditional IT infrastructure setups. For fintech providers, no doubt, security is at the forefront of their minds when adopting new technology, and it’s vital they ensure their systems have adequate measures in place. The financial services sector has a responsibility to safeguard the data of its customers and the cloud is enhancing the way financial businesses do this. From data encryption to zero trust verification and access control, many of the risks that traditional on-premises IT infrastructures present are being mitigated through cloud computing in financial services.
According to Bloomberg “As migrating data, storing data, and using additional services like machine learning on the cloud becomes more ubiquitous, there’s a clear and demonstrated need for organizational oversight. Many of the tools needed to keep data confidential and secure are readily available within public clouds, enabling firms to take advantage of better security than what is available on their local servers, if they plan appropriately.”
Data Management
Acquiring and working with data is a top priority, from onboarding and identity verification processes to account management, balance, checking, analyzing spending habits, etc. Data is key. Companies can use cloud technology to gather and store large quantities of data securely and make it accessible at any time. That means there’s no need to wait for an IT specialist to clock in to access vital information, providing an employee has the correct credentials. This can be done from anywhere at any time and often automatically.
Best Practices For Cloud Adoption In Finance
Working with more documentation and creating, storing and sharing a great amount of financial information make cloud adoption in banking and fintech specific. Here are the things to consider:
- Encryption and access control: Discuss encryption policies and procedures with your provider to select the technically feasible ones and properly protect the financial data you transmit.
- Compliance: Finance executives need to ask providers to demonstrate compliance certificates of the cloud service.
- Data segregation and data management: Cloud services thrive on shared resources, though financial institutions may require a combo of shared resource benefits with the increased security reached by data segregation.
- Disaster recovery plan: Reputable service providers always have it in place, and it’s important to obtain a detailed disaster recovery plan and ensure your digital infrastructure allows all that.
How GoDgtl Partners with the major cloud providers AWS, Azure, and Google
GoDgtl brings a team of experienced cloud experts who work directly with AWS, Azure, and Google to bring value and real solutions for your cloud projects. With direct access to resources and in house cloud consulting talent, GoDgtl is ready to guide you through your financial/fintech cloud journey regardless of where you are on that path. Whether it’s more knowledge-based information on cloud topics such as security, or governance and compliance or basic cloud migration aspects or even if an assessment is needed, GoDgtl can provide a roadmap for your path to project completion and success.
Sources:
https://www.pwc.com/us/en/industries/financial-services/cloud.html
https://www.telehouse.net/blog/the-impact-of-cloud-computing-in-fintech/
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