FinTech, a dynamic segment formed by the integration of financial services and technology sectors, is innovating the products and services of the traditional financial services industry. The FinTech revolution is gaining significant momentum due to the cloud technology that with evolution, has moved from experimentation to implementation.

Based on the figures from McKinsey & Company, the adoption of cloud technology will increase in the coming years: 25% of the core activities of the largest global banks are already on the public cloud, and 40%-90% of the workload of global banks could be on the public cloud in next ten years.

Some experts say that public cloud adoption in FinTech firms will accelerate in 2020, setting it among 2020’s biggest FinTech trends, says PwC. 

Embracing the digital transformation brought forth by the cloud technology is helping financial institutions operate more effectively, better address digital native clientele needs by offering convenience, enhanced accessibility and customized products.

FinTech revolution and influence on market structure of financial sector

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Source: Flickr

There are many reasons for the FinTech revolution, such as technology innovations, regulations, and evolving customer preferences. Despite banks being available everywhere, they are unable to meet the demands of the present generation who does not want to wait in a queue in a bank branch. With the mass-market penetration of smartphones, users now want simple yet quick banking procedures on an automated digital platform like Google Wallet or Alipay.

Furthermore, the use of advanced technologies like cloud computing, blockchain, Artificial Intelligence, data analytics and robotic process automation has increased exponentially. The rate of adoption of FinTech innovations has increased, impacting the banking and insurance sector across the globe. Moreover, increase in the mandatory regulations in the finance industry is also a driver of the FinTech revolution.

Fintech on cloud

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Source: McKinsey

Currently, financial firms are using the cloud for mainly non-core processes, but as service offerings improve, the use of the right technology becomes necessary to process that core activity, with deployment in areas, including customer payments, billing, credit scoring, etc.

Interestingly, smaller banks have more quickly made the change by moving all their core services to the cloud. As these and other larger banks adopt new FinTech, their service offerings will excel in the competitive landscape, helping to drive the digital transformation race.

Also read: 5 biggest cybersecurity challenges for fintech enterprises in 2020

How cloud adoption is transforming the FinTech landscape?

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Source: Alizila

Cloud technology’s applications and advantages are key to rapid adoption in the financial sector. Businesses of all sizes have much to gain from the cloud, from agility to innovation to cloud savings and more, as mentioned below.   

Advanced data management

The volume of financial data is explosively growing today. Cloud technology allows FinTech firms to store and manage data in a secured and trusted way. It also enables businesses to take benefit of intelligent methods to lending, payments, and fraud detection.

There are innovative cloud solutions for FinTech and banks from leading cloud services providers like Alibaba Cloud.  It provides highly secure platform, advanced architecture, customizable services enabling financial organizations to provide great customer experience. 

Seamless cloud migration

Many companies embrace the hybrid security environment, so that the cloud works along with the existing infrastructure. Many are operating hybrid model to deploy cloud-based sandboxes to quickly validate customers’ acceptance of new service offerings without interrupting their existing business. The cloud can reduce risks related to traditional infrastructure technology where redundancy and resiliency are the main business concerns.

Cloud’s scalability also provides flexibility to the banks that enables them to scan around thousands of transactions per second, which overall enhances the business’ capability to combat financial crime, like fraud or money laundering.

Security

According to Information Age, 42% of financial services firms lack the information security skillset. Thus, information security remains the main concern for CISOs. When properly deployed, cloud applications provide almost same level of security as traditional deployments.

Cloud service providers like Alibaba Cloud ensure that they meet regulations and security needs of the financial organizations. Businesses can use them for better security of their data.

Competitive advantage through agile innovation

The cloud increases a financial firm’s capability to innovate by improving agility and productivity. A firm can quickly onboard services when compared to the traditional model. With the cloud, launching a new service to the market is instant without security risks. Further, the scaling up or down of services is quick, which can help businesses to reallocate resources, innovate and rapidly deliver products and services to the market.    

Zero CAPEX, reduced OPEX

On-premises data storage uses in-house hardware and software which can be of the high cost. On the other hand, cloud storage solutions are owned and managed by third parties, hence, reducing the overall initial capital investment and operational costs associated with server maintenance.

With managed Alibaba Cloud services by ZNetLive, you get a range of cost-effective solutions. There are pay-as-you-go options and low rate subscription services that give you the pricing model choice to meet your business needs.

Conclusion

Cloud technology is fast becoming a key influencer in global digital disruption, particularly in the financial services and the banking industry. The cloud is the essential platform for catalyzing innovations in the FinTech sector.

Regardless of the size of your business, it is important to implement this technology to ensure your business security, continuity and to adhere to the regulatory compliances.

Also read: 5 advantages of Alibaba Cloud hosting over traditional & other cloud providers