Cloud computing has emerged in financial technology as an emerging trend that has shown impressive results in the requirements of the financial sectors and given them a huge opportunity for growth. The global market size of the Fintech sector is expected to grow to $124.3 billion by the end of 2025, at an expected compound annual growth rate of 23.84%. Even with an increasing number of personal and professional transactions taking place in digital form, it has become important for established brands as well as startups in the field of Fintech to provide their customers with better services that include speed, reliability and security that can be achieved through cloud computing as it makes the storage of big and important data secure And a good analyzer.
Cloud computing empowers businesses with access to a cost-effective solution for data storage and sharing options, with the added benefits of secure storage, interoperability, scalability, and 24/7 uptime. For the FinTech sector, this comes with the added advantage of being able to work across platforms/applications and also to create personalized experiences for clients across the globe.
Some of the major developments in cloud computing shaping the FinTech sector are listed below:
geographic redundant cloud data centers
Unexpected disturbances such as storms, power outages, or equipment failures may stop regular business operations, resulting in downtime and data loss. By allowing businesses to effortlessly migrate applications and vital data to a geographically dispersed secondary location, geographic redundancy will help businesses maintain operational continuity in the event of a disaster. To be able to easily transition to a secondary site if your primary site fails or becomes inaccessible, it is important to ensure that IT systems and applications that require high availability have geographically redundant settings.
Regulations related to the banking sector, such as PCI DSS and PCI 3DS, are in effect for all cloud service providers. Following the minimum security requirements set forth by the PCI DSS enables financial institutions and consumers to ensure that the risks of loss from fraud and cyber attacks are kept within acceptable limits.
self service apps
Without cloud services, it would have been difficult to manage financial data due to its exponential growth. Fintech companies are now able to store and manage data in a secure and reliable manner thanks to cloud technologies. It also enables companies to use smart technologies to obtain loans and payments and prevent fraud. It offers a highly secure platform, advanced architecture, and configurable services that enable businesses to deliver outstanding customer service.
Ease of deploying managed machine learning
One of the main components of forecasting financial trends is the use of machine learning algorithms in business. The use of ML algorithms by fintech companies can help in predicting market risks, identifying potential trading opportunities, minimizing fraud, etc. Large amounts of data, including financial transactions, loan repayments, company shares, customer interactions, etc. can be used by companies to train their machine learning models.
Rather than creating whole new environments for application development, cloud-native enables business creation for microservices that help reduce vendor lockout and increase portability. Fintech organizations are able to innovate, launch new services quickly, and consistently deliver enjoyable experiences regardless of the amount of traffic hitting their systems due to the resilience of cloud-native applications.
Quantum computing is increasingly being recognized in the fintech sector for solving critical issues such as cybersecurity, as it plays an important role in protecting customers’ financial data with next-generation encryption; Financial data encrypted with quantum cryptography is extremely secure compared to current levels of digital security.
The risks involved in cloud computing in financial technology are:
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 and steal financial and personal data. As cyber-attacks are becoming more sophisticated every day and it is difficult to provide complete security in the digital world, financial institutions have always been exposed to the risk of data leakage.
To protect the security of shared sensitive information, financial services companies must comply with a number of standards and laws. Compliance is a big issue for fintech companies as it calls for strict security measures to be in place to ensure there are no loopholes that hackers could exploit. Regardless, compliance should not come at the expense of software and application performance. While some restrictions apply uniformly to all financial institutions, others are industry-specific – for example, lending, borrowing, insurance, and financial advice – and are thus relevant only to certain types of financial institutions. Financial institutions risk heavy fines if they do not comply.
Fintech companies have understood how the capabilities of cloud computing can help them dominate the sector. Partnering with an expert in this field can help fintech companies and businesses not only improve their solutions but also gain an edge over the competition through customized innovation. Moreover, by expanding their influence by developing and providing advanced products and services, fintech companies can take advantage of cloud computing to create seamless connections with customers, and increase business returns.
(The author is the co-founder of Goavega Software Pvt Ltd.)