Cloud payments and PaaS are taking hold

Cloud delivery models are currently dominating the payment infrastructure market, but this was not always the case when it was initially considered an unregulated fringe technology. Traditional financial institutions have always had higher standards for risk tolerance, which is why banks have typically been more reluctant to use cloud technology, but better regulations have made the cloud more resilient and appealing even for conservative banks.

Many conventional banks began adopting cloud technology in 2020 when the pandemic made it essential for businesses to increase efficiency and cut costs to survive. Embedded finance as a service in the cloud has a remarkable ability to streamline costs through its flexible offerings. Cost savings that the cloud can offer are more appealing than ever during this evolving phase of economic uncertainty marked by bank failures, inflation, and rising interest rates. As a consequence of the pandemic’s unilateral shift to online services, consumers—particularly younger generations—have come to expect cloud-enabled mobile capabilities from the businesses they patron including their banks.

Banks have ultimately had to reassess the services they offer to stay relevant, especially since other non-traditional competitors have been using cloud services all along to cater to underserved customers seeking cloud-enabled services.

Facing the Future—Cloud Deployment Methods

1. Private Cloud—The most secure option, which appeals to banks but is not as efficient as other cloud models. Private clouds operate solely for that company, even if they do not manage it themselves.
2. Public Cloud—The most cost-effective, scalable, and flexible of all the cloud models, but also the riskiest. Public cloud infrastructure is designed to be made available to the public to use without the cost of maintenance.
3. Hybrid Cloud—This model combines the flexibility and control of the private cloud with improved cost-effectiveness, which makes it easier to quickly scale operations—a crucial ability in this volatile economy. Hybrid cloud models are composed of two or more clouds that remain separate but linked to provide services as needed.

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