Cloud computing in fintech has become an emerging trend that has shown impressive results in the needs of the financial sector and has given it a tremendous growth opportunity. The global market size of the fintech sector is expected to grow to USD 124.3 billion by the end of 2025, at a CAGR projected at 23.84%. Even if more and more personal and professional transactions are taking place in digital format, it has become important for established brands and fintech startups to offer their customers better services that include speed, reliability and security, which is made possible by cloud computing It makes storage larger and important data well backed up and analyzed.
Cloud computing gives organizations access to a cost-effective data storage solution and data sharing options with additional benefits such as secure storage, interoperability, scalability, and 24/7 availability. For the fintech sector, this has the added benefit of being able to operate across platforms/apps and create tailored experiences for clients around the world.
Some of the key cloud computing developments shaping the fintech sector are listed below:
1) Geo-redundant cloud data centers
Unexpected disruptions such as storms, power outages, or hardware failures can disrupt regular business operations, resulting in downtime and data loss. By allowing organizations to easily migrate critical applications and data to one of the geographically dispersed secondary sites, geographic redundancy helps organizations maintain business continuity in the event of a disaster. To ensure that you can easily switch to a secondary location if your primary location fails or becomes unreachable, it is important to ensure that IT systems and applications that require high availability are set up to be geo-redundant.
2) Legal Compliance
All cloud service providers are subject to regulations for the banking sector such as PCI DSS and PCI 3DS. By complying with the minimum security requirements of PCI DSS, financial institutions and consumers can guarantee that the risk of loss from fraud and cyber attacks remains within acceptable limits.
3) Self-Service Applications
Without cloud services, managing the financial data could have become difficult given the exponential growth. FinTech companies are now able to securely and reliably store and manage data thanks to cloud technologies. It also allows businesses to use clever techniques for credit, payments, and fraud prevention. It offers a highly secure platform, advanced technology and configurable services that enable companies to provide excellent customer service.
4) Easy deployment of managed machine learning
A key component in predicting financial trends is the use of machine learning algorithms in companies. FinTech companies’ use of ML algorithms can help them predict market risks, identify potential business opportunities, mitigate fraud, etc. Large amounts of data including financial transactions, loan repayments, company shares, customer interactions, etc. can be used by companies, their models to train for machine learning.
5) Cloud Native
Rather than creating entirely new environments for application development, cloud native enables business creation of microservices, which helps reduce vendor lock-in and increase portability. Because of the flexibility of cloud-native applications, fintech organizations are able to innovate, launch new services quickly, and continuously deliver enjoyable experiences, regardless of the volume of traffic hitting their systems.
6) Quantum Computing
Quantum computing in the fintech sector is increasingly recognized for solving critical problems such as cybersecurity, where it plays an important role in protecting customers’ financial data through next-generation cryptography; Financial data encrypted with quantum cryptography is highly secure than current levels of digital security.
The risks associated with cloud computing in fintech are listed below:
1) Data Security
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 information. As cyber attacks become more sophisticated every day and it is difficult to ensure absolute security in the digital world, financial institutions have always been at risk of data leakage.
To protect the security of shared sensitive information, financial services organizations must comply with a number of standards and laws. Compliance is a significant concern for fintech companies as it requires the use of strict security procedures to ensure there are no loopholes for hackers to exploit. That being said, compliance must not come at the expense of software and application performance. While certain restrictions apply uniformly to all financial institutions, others are specific to the company’s line of business – for example, lending and borrowing, insurance, financial advisory – and therefore only relevant to certain types of financial institutions. Financial institutions risk hefty fines if they don’t comply.
Fintech companies have understood how the agility potential of cloud computing could help them dominate the sector. Partnering with an expert in this field can further help fintech companies and corporations not only to optimize their solutions but also to gain a competitive advantage through bespoke innovation. By expanding their impact through the development and delivery of innovative products and services, fintech companies can leverage cloud computing to seamlessly connect with customers and grow business revenue.
The author is CTO & Co-Founder at Goavega Software Pvt. GmbH
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