Surely you have thought about implement Cloud Computing technology in your Fintech Industry. However, there may be issues that are of concern such as the security of your information and that of your clients, for a long time the vulnerability of technology in the cloud was something that caused a lot of concern. Fortunately, times have changed and now there are better options that fit the needs of your company, keeping it competitive in the new era with security solutions, storage, data encryption and better accessibility.
In fact, the Fintech Industry has accelerated the integration of cloud technology into its processes thanks to the pandemic derived from COVID-19, many financial institutions turned to solutions that allow them to work remotely without increasing production costs, especially small and medium-sized businesses. But, if you think that this movement is actually momentary and will be reversible, The Wall Street Journal has mentioned that NASDAQ plans to move its 25 markets to Amazon's cloud computing infrastructure, Amazon Web Services and, it is not the only one, there is also Goldman Sachs that plans to launch Goldman Sachs Financial Cloud for Data.
With these financial industry titans setting the pace, smaller institutions are poised to follow suit. In fact, in 2020 alone, the investment from venture capital was 4 billion dollars, spread over 488 transactions in startups in Latin America, according to data from the Latin American Venture Capital Association (LAVCA, for its acronym in English).
The Fintech Industry was the sector that led such financing rounds, with 39% of the total amount invested. In the first half of 2021, five Latin American Fintech companies achieved unicorn status: Clip and Bitso in Mexico, dLocal in Uruguay, and C6 and Ebanx in Brazil, which has further sparked interest in the opportunity that innovation represents in the Latin American financial sector. In this article, we analyze why the Fintech Industry is implementing Cloud Computing technology and why you should do it ASAP, as well as the benefits they can expect from this change.
Cloud Computing and its Implementation in the Fintech Industry
As we mentioned before, the Fintech Industry has been accelerating to adopt Cloud Computing technology in its different processes and services due to the economic benefits it offers. In fact, signatures as McKinsey have mentioned that by 2030, cloud computing will account for more than a billion dollars in profits in the 500 largest companies in the world. One of the most important reasons for this acceleration is due to the improvements in management, security and decision-making offered by cloud technology. But, it is not the only one:
Enhanced security measures
Cloud Computing technology can greatly improve the security systems of the current Fintech Industry through integrated and automated security processes and controls that we can combine in Development, Security and Operations (DevSecOps), that adjusts to the growth of your development and operations automatically. For example, Microsoft Azure identifies new threats through its global, real-time cybersecurity intelligence services based on analysis of 18 billion Bing pages, 400 billion emails, 1 billion Windows device updates, and 450 billion authentications each month.
In addition, there are other security methods such as Zero-trust verification and encrypted data that are updated every day in the face of the new wave of possible cyberattacks. When used in conjunction with measures such as employee education and proper access control, among others, the cloud proves that it offers better solutions than traditional IT infrastructure. This aspect is essential in the Fintech Industry, since an important point in the competition is to stay at the forefront of the protection of sensitive data, both its own and that of its clients.
Derived from the previous point, another important benefit of Cloud Computing in the Fintech Industry is the ability to securely store large volumes of data and make that data remotely accessible by having the appropriate credentials. For fintechs, cloud technology makes it possible to acquire and work with data with top priority, from onboarding and identity verification processes to account management, balance, verification, analysis of spending habits, etc.
The accessibility offered by this type of process means that no need to wait for an IT specialist Record every login to access vital company information, as long as an employee has the correct credentials. This can be done from anywhere at any time and often automatically.
Continuing with the above, we recommend that you review the encryption policies and procedures with your Cloud Computing provider to select the options that are technically feasible and adequately protect the financial data you use.
Production cost savings
On average, cloud computing can lower infrastructure costs of Fintech Industries by 29% % and reduce downtime of migrated applications by 57% %, which reduces expenses associated with technical violations by 261% %.” These kinds of savings are even greater when We are talking about small and medium-sized companies.
However, you may be wondering, “what if my needs change?” Well, the Fintech Industry tends to be fast growing, which means that you need an infrastructure that can grow with them and not put up unnecessary barriers. Thus, Cloud Computing provides the agility to scale together and maintain savings on local technology infrastructure that needs to be updated. Similarly, having several of your processes in the cloud offers the ability to accommodate branch closures while serving as many people as possible.
The cloud is an agile technology that has enabled some of the latest advances in the Fintech industry. To keep your company competitive, it will be necessary to integrate it into your work, as it allows adapting to new trends or market demands, and even adjusting the strategy to significant world events, such as the Covid-19 pandemic.
In fact, with the rise of remote services in the wake of COVID-19, customers not only value fintech and banking as a service, but also expect to be able to access it from anywhere. Financial institutions with a cloud infrastructure are better equipped to innovate and iterate as financial services continue to become more personalized and digitized. In contrast, those that did not integrate Cloud Computing technology saw a negative impact on their assets, and some of them they reported “a collapse in their finances.”
Continuing with the previous point, the global pandemic has forced companies to implement better remote financial services, mainly those that provide solutions to their main needs. As the crisis continues, and even after the pandemic ends, this market demand will not evaporate and it will be necessary to offer more optimal solutions through Cloud Computing technology.
Individuals and businesses alike need the ability to open and manage their finances remotely, but it's not just that. Internal staff must be able to manage processes remotely without the need for an IT expert person who is available all the time. Cloud-based self-service applications help companies deliver this technology at a relatively fast pace.
The growth of the Fintech Industry in Latin America
Finally, we cannot ignore emerging markets, only in Latin America is expected to grow 30.4% in investment in cloud services by 2022. This means that there is still a wide margin of possible growth for companies interested in this area. In Latin America, the adoption of Cloud Computing tools in Fintech Industries by users and businesses has increased considerably as a result of the e-commerce boom that was triggered by the Covid-19 pandemic, it is estimated that 10.8 million Latin American users they made a first online purchase during the lockdown.
It is also interesting to note that the ecommerce boom in the region is a consequence of the fact that innovation in the financial sector has been triggered mainly by the emergence and success of digital wallets, as well as by regulations that, in cases like Mexico, are already implemented. Although trends in the adoption of digital payment methods are on the rise throughout the region, it is impossible to ignore the widespread use of cash, which with all its associated risks, continues to be the preferred payment method for Latin Americans according to the Central Bank of Chile.
On the other hand, in Mexico, 47% of e-commerce transactions happen with debit cards, while digital wallets take the 19% from that space. This tells us that there is a wide variety of players competing to create payment networks between people and businesses within the Fintech Industry, but rather that different methods compete with each other at the time of each transaction to add value to users, as we mentioned before, This adaptability and innovation is necessary to keep your Fintech Industry competitive.
It is estimated that by the end of 2022, in all of Latin America, 18% of payments in e-commerce and 9% of those made at the point of sale are through wallets, but the challenges of trust, security and acceptance in businesses continue to represent barriers that the Latin American Fintech Industry must seek to break down with the help of Cloud Computing technology.
In such a way that the client has to study in detail which part or parts of their Fintech Industry are likely to be transferred to cloud computing services considering the benefits and challenges that it represents. As we have suggested, A fundamental element will be knowing the data processing that have a special level of protection granted by the legislation (for example, the conditions under which the service is provided must be verified prior to contracting in order to determine whether they offer an adequate level of compliance or not) .
The conditions offered by the providers must be contrasted with a checklist that includes, among others, elements related to the information provided, location of the treatment, existence of uploads, security policies, user rights and legal obligations of the service provider . If you are interested learn more about this, discover the solutions it offers and will offer Codster for the Fintech Industry through Cloud Computing technology, as well as its correct Implementation. Surely we have the perfect solutions for your company such as AWS partners (Amazon Web Service).