Fintech adoption is at an all-time high — up 17% since 2015 — due in part to mass adoption in emerging markets and the rise of digitally-minded millennials. As a result, the financial industry is often an early adopter of IT services and technology, with their success stories being studied and adopted by other Industries.
In the past, the majority of IT innovations within the financial industry were focused on impacting internal processes and operations. But once mobile devices came to mass adoption, the tables turned to the consumer — in an effort to deliver a mobile-first experience which is convenient, fast and not limited to physical branch interactions. Today, many of these innovations are widely available including contactless payments, e-deposits, digital lending, capital markets and P2P payments.
However, rising consumer adoption introduced a new challenge for fintech companies — compelling them to move to the cloud, in order to meet such demands.
The sky isn’t the limit; only the beginning
This move to the cloud, coupled with new, smart technologies has opened up further avenues for fintech innovation and a better customer experience than before. For example, leveraging blockchain and advanced analytics together, a fintech company can offer near-instant loan approval, which would take at least a day in the current digital banking system.
What’s more, big banks and large institutions have begun to recognize fintech innovations like these, often resulting in partnerships with fintechs — where necessary funding and crucial backend services are provided to fuel new innovations.
How fintechs are leveraging the cloud
So how are fintech companies best leveraging the cloud to win over the big banks? Here are five cloud-enabled optimizations and accelerations that fintechs are using today:
- Dynamic Provisioning – Fintech companies are packaging their digital solutions to be provisioned rapidly in cloud environments by taking advantage of dynamic provisioning features. Instead of waiting for weeks and months to roll out a new solution setup, it can be done in matter of hours with high-performance servers configured for production or test deployments. Even the traditional core banking solutions like Finacle by Infosys are production certified, to be deployed on AWS cloud in a matter of hours.
- Hyperscale Data Management – The volume of data is exploding in the financial services sector, with a variety of sources. Traditional IT created data silos, making operation of scalable data management platforms a challenge in the pre-cloud era. Cloud platforms enable fintech companies to build data lakes, data aggregation and create data compliance frameworks quickly, to take advantage of intelligent approaches to lending, payments and fraud detection.
- Advanced Analytics and ML Technologies – Leveraging on-demand Big Data as a Service (BDaaS) and Machine Learning as Service (MLaaS) to perform specialized tasks in financial services like credit scoring, fraud detection and lending workflows — ranging from analytics to security — can be achieved faster in the cloud. Even regulators like FINRA are leveraging cloud technologies for capturing and processing 37+ billion events on a daily basis.
- Self Service Catalog and DevOps Automation – The cloud brings self-service capabilities to the financial industry, accelerating and automating processes such as access management, feature deployments and application provisioning to allow engineers to focus more on product innovation, instead of spending time on operational issues like procurements and system provisioning.
- Cloud Partner Ecosystems Maturity – With cloud providers getting their underlying cloud services certified for financial and banking regulations compliance, we are seeing more utilization of Cloud Partner Ecosystems like AWS Financial Services, to effectively meet financial industry and banking regulatory requirements on availability, performance, disaster recovery and security — enabling faster time-to-market for deployment of fintech solutions.
Today, every business must embrace digital transformation, however challenging it may be — and in particular, the financial services and banking industry, where increasing security and data growth issues can result in large penalties. While digital is leading the way for the fintech revolution, the cloud is the underlying platform catalysing innovation.
With innovation from fintech organizations and cooperation with big banks and large institutions, the banking industry no longer has to focus on risk aversion, and instead can leverage emerging technologies. And looking at the bigger picture, these successes will be used as roadmaps for industries of all types and sizes.