Fintech’s Cloud Evolution: Key Trends and Insights
Hwai-Siang Khor
We are all masterpieces in progress. We grow in wisdom and strength by taking chances and embracing setbacks.
Introduction?
With rapid digitalization, cloud technology plays a vital role, but it's not without its debates. As financial institutions navigate the dynamic landscape of technology and security, a discourse has unfolded. The question arises whether the cloud, with its promises of efficiency and scalability, is indeed the panacea for all.?
Security becomes a top priority, with more significant investments to keep data safe. On one hand, the cloud is getting faster and more powerful. Cloud computing is also integrating with technologies like artificial intelligence and ML thereby supporting businesses to be more efficient with increased connectivity across devices. On the other hand, there are several considerations that each organisation must weigh before making a strategic decision. A recent study on Fintech institutions by Celent outlines areas across 3 domains: Security, Risk and Compliance; Ecosystem Management; and Operational and Strategic.
While some companies are considering returning to an on-prem system, we need to keep in mind that earlier data centres did not cater to sophisticated automation, governance and resiliency strategies. Through our experience with the public cloud, the data centres are witnessing an evolution with better governance and resiliency strategies, the use of infrastructure as code, auto healing and fully automated CD/CD pipelines.
Evolving Cloud Technologies Trends (In Finance)
Hybrid Cloud Adoption
While public cloud adoption has gained traction, financial institutions (FIs) have been more cautious. Primarily due to strict regulations regarding the handling of confidential customer data. FIs need to prioritise information security, risk management, and compliance adherence, making hybrid cloud solutions an attractive choice. Hybrid cloud solutions allow integration within their ecosystem while harnessing the scalability and cost-efficiency of public cloud resources. Several financial institutions, for example, Blackline have employed hybrid cloud solutions, partnering with Google. ?
Multi-Cloud Strategy
The multi-cloud strategy, which involves using multiple cloud service providers, is becoming increasingly popular for various organisational needs. Beyond major players like AWS, Azure, and Google Cloud, organisations are exploring alternative cloud providers as well. This approach offers several advantages , such as improved security management with regulatory compliance, increased agility and scalability, access to best-of-breed cloud services and applications, enhanced business agility and innovation, cost reduction in cloud services, and greater business resilience and recovery capabilities.?
Form3 is one such FinTech company that has adopted a multi-cloud strategy. As a digital payment based out of the UK, it had to cater to at least five types of payment gateways. With the use of a multi-cloud platform such as CockroachDB and Kubernetes, Form 3 has been successful in building a highly scalable, adaptable, resilient system.?
Cloud Security Measures
Securing cloud-based financial systems is of critical importance due to the sensitivity of financial data, evolving cyber threats, remote data access, business continuity needs, and the involvement of third-party cloud service providers. With highly sensitive information at stake, breaches can lead to identity theft and significant financial loss. Dealing with such threats requires robust security measures, including encryption, multi-factor authentication, intrusion detection systems, and ongoing security audits.
Vention discusses some interesting multi-step cybersecurity steps to ensure your cloud safety. Including but not limited to - multifactor authentication, secure APIs, White-box cryptography, etc. One of the leading companies - Stripe , ensures the safety of its customers by complying with PCI-Level 1 guidelines, employing infrastructure safeguards, and use of secure connections.
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AI in the Cloud
Role of AI Alongside Cloud Technology
AI complements cloud technology by enhancing data analysis, customer service, and operational efficiency. These solutions enable fintech companies to scale their operations efficiently and securely. AI-driven applications are used for services like risk assessment, fraud detection, and personalised customer experiences. Additionally, the integration of AI within the cloud enhances data analytics, allowing fintech firms to make data-driven decisions and offer innovative financial products and services.?
AI-Based Customer Service
AI-powered cloud solutions, like chatbots and virtual assistants, are revolutionising customer service. These technologies offer 24/7 availability, personalised interactions, and improved customer experiences. Financial institutions like Bank of America (Erica) and Capital One (Eno) employ chatbots to provide real-time responses and address customer inquiries promptly.?
Smart Data Analysis
Ant Financial , a subsidiary of Alibaba Group specialising in financial services, has effectively harnessed AI and big data analytics, to detect and mitigate fraud. Their most recent innovation, TitAnt, boasts the remarkable ability to identify online transaction fraud in a matter of milliseconds. This technology's effectiveness has been substantiated through empirical evidence.?
Bukalapak , a prominent e-commerce platform in Indonesia, leverages AI methods to identify deceitful sellers and safeguard its customer base from fraudulent schemes. By employing machine learning algorithms, Bukalapak scrutinises the conduct of sellers, transaction trends, and customer responses to pinpoint and address dishonest activities effectively.
Conclusion
What has your experience been with integrating cloud technology with our industry? What are some trends in the cloud industry that you have developed a keen interest in? I look forward to your views and insights.?
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