The Aligned Stars Of Fintech And Cloud

With the world’s second largest Internet user base, India has been fairly quick to adopt fintech technology. In fact, the country ranks third on the list of the largest fintech ecosystem, valued at $ 31 million. This segment is expected to continue to grow at a CAGR of 22 percent over the next five years, according to a report from BLinC Insights. The main drivers of this fintech revolution in the country are lower prices and fees, easy to set up an account and 24/7 access, innovative and customized products and services, and compatibility with companies and infrastructure.

The sector can be roughly divided into four categories, including banking, lending, insurance and asset management. And the opportunities for fintechs to grow in all these categories are plentiful as internet users continue to grow. In addition, India will add 140 million middle-income and 20 million high-income households by 2030. When these statistics are combined with government initiatives such as Digital India, India Stack (Open API Platforms), Startup-India and Aadhaar, it is easy to say that the only way is up for fintech in the coming decade.

But fintech stars depend on the technology available today and its growth in the times to come. And much of that weight is carried by cloud technology that enables financial organizations and fintechs to deliver their services with speed and data access 24/7 for 365 days, every year.

“Fintech fully functions as a ‘Cloud First’ sector, thanks to the development and maturity of cloud technologies with a fascinating track record and validation of delivering scale, availability, reliability, agility, security and favorable economy,” said Souparno Bagchi, COO, TrueBalance .

Cloud computing also allows fintech teams in the product upgrade process as they assist with revisions and quality. The technology can even help fintechs expand into newer markets and expand their reach.

Without cloud computing, fintech companies would be forced to invest in their own physical infrastructure, which is both expensive and time consuming. In addition, they would have to hire employees to manage this infrastructure, which further increases their costs. By using cloud services , fintech companies can avoid these irreversible costs and focus on what they do best: providing innovative financial services to their customers, ”explains Manoj Dhanda, Founder and CTO of Microhost Cloud.

The collaboration between cloud and fintech is quite organic, as the former can easily provide the infrastructure and bandwidth to help fintechs scale. At the same time, the latter can focus entirely on building creative, innovative products and services for customers. After all, Cloud is also a great platform for testing and distributing the latest products and services.

Enough challenges

While the symbiotic relationship between the two can help both to thrive, there are also certain challenges that test it.

Fintechs is under constant pressure to distribute features to provide renewed groundbreaking experiences to its customers, and it is not easy to consistently deliver this while managing security. Vulnerabilities can appear from anywhere, including app development, development process, and even third-party integration.

According to IBM’s 2021 Cost of a Data Breach Report, the average cost of a data breach for financial services is $ 5.72 million. These statistics are second only to the health service. And when you add the sensitive nature of fintechs data, the issue of security becomes even more serious.

From being a disruptive sector over the last decade, fintech has pretty quickly transitioned to being the poster child of disruption. The success is undeniable, but it has also attracted a lot of malicious interest, and is working to get money and data.

“As we all know, data security is of paramount importance to any business, but it is especially important for fintechs. This is because fintechs handles sensitive financial information on a daily basis. Should this information fall into the wrong hands, it could have catastrophic consequences That is why cloud providers go to great lengths to ensure that customer data is always secure, says Dhanda.

One of the ways cloud providers protect user data is by encrypting all the data they store. Cloud providers also keep data secure by offering two-factor authentication and setting up strict access controls, which means that only authorized personnel have access to the data stored on the servers.

Governments around the world have identified the dangers lurking around fintechs and are now setting strict rules to protect consumers. Fintech companies in India are subject to a number of regulations from RBI, IRDA, TRAI and the Consumer Protection Act. Cloud service providers are expected to ensure that their services comply with all applicable regulations.

The regulations primarily affect fintechs that want to expand globally as they must comply with local government regulations. “As fintech expands globally and with evolving government policies, there is a growing need to add new cloud features that help the local environment in the region and meet its regulatory compliance,” said Kapil Sharma, Collabera Technologies Sales Manager. He further says that Collabera consistently works with the fintechs to help them expand seamlessly without affecting the core processes and operations.

Fintech startups have attracted over $ 23 billion in venture capital funding since 2014. But one of the challenges these companies face when it comes to adopting cloud technology is not having sufficient funds to distribute large cloud infrastructure, as the initial set-up costs are high despite the fact that they are enormously advantageous and cost-effective in the long run. This is one of the pain points for startups that want to enter the fintech area, as the cloud is still important for providing services to consumers. And consulting companies need to close this gap between solutions available in the market and those fintech needs. “This will help fintechs optimize costs so that they can become much more competitive in the market,” adds Sharma.

Outlook

Fintech is one of the fastest developing markets in the world going forward, and the cloud is one of the top trends that will drive growth, as it has done over the past decade. “The prospects for Cloud and Fintech collaboration are very optimistic and reassuring. For the next decade, core cloud computing and its marketplace solutions should serve as a Direct to Business offering,” said Souparno Bagchi.

Going forward, there must be greater collaboration and cross-pollination of ideas, knowledge and talent, which can stimulate deeper domain-oriented solutions that meet business, product and regulatory needs. Cloud-fintech collaboration also needs the development of computing power with a lower consumption-to-cost ratio and faster time to market.