How Fintech Startups Are Leveraging Cloud Computing To Scale Securely

Cloud computing in fintech has become an emerging trend that has had a significant impact on the needs of the financial sector and has given it a tremendous opportunity to grow. The global market size of the fintech sector is expected to reach $124.3 Bn by the end of 2025, with a compound annual growth rate of 23.84%.

Even as an increasing number of personal and professional transactions occur in digital format, it has become critical for established brands as well as fintech startups to provide their customers with better services. This includes services such as speed, reliability, and security, which is possible through cloud computing as it allows for the secure storage and analysis of large and important data.

Cloud computing has provided businesses with a low-cost solution for data storage and sharing, as well as the added benefits of secure storage, interoperability, scalability, and 24/7 uptime. This has the added benefit of allowing the fintech sector to operate across platforms/apps and create customised experiences for clients all over the world. 

Some of the key cloud computing developments shaping the fintech sector are as follows: 

Geo-Redundant Cloud Data Centres

Storms, power outages, or hardware failure may disrupt regular business operations, resulting in downtime and data loss. Geographic redundancy will help businesses maintain operational continuity in the event of calamity by allowing them to easily migrate vital applications and data to one of the geographically distributed secondary locations. 

It is critical to ensure that IT systems and applications that require high availability have geo-redundant setups in order to easily transition to a secondary location in the event that your primary site fails or becomes inaccessible.

Regulatory Compliance

All cloud service providers must comply with banking-related regulations such as PCI DSS and PCI 3DS. 

Following the minimal security requirements set out by PCI DSS enables financial institutions and consumers to guarantee that the risk of loss from fraud and cyberattacks is kept within acceptable bounds.

Self-Service Applications

Given the exponential growth of financial data, managing it without cloud services could have been difficult. Cloud technologies have enabled fintech companies to securely and reliably store and manage data. 

It also enables businesses to use clever loan, payment, and fraud prevention techniques. It provides businesses with a highly secure platform, advanced engineering, and configurable services that enable them to provide excellent customer service.

Ease Of Deploying Managed Machine Learning

The use of machine learning algorithms in businesses is an important component of predicting financial trends. The use of ML algorithms by fintech companies can help them forecast market risk, identify potential business opportunities, reduce fraud, and so on. 

Businesses may use large amounts of data to train their machine learning models, such as financial transactions, loan repayments, company shares, customer interactions, and so on.

Cloud Native

Instead of creating entirely new environments for application development, cloud native allows businesses to create microservices, which reduces vendor lock-in and increases portability. 

Due to the flexibility of cloud-native applications, fintech organisations are able to innovate, quickly launch new services, and consistently deliver positive user experiences regardless of the volume of traffic hitting their systems.

Quantum Computing

Quantum computing is increasingly being recognised in the fintech sector for solving critical problems such as cybersecurity, where it plays an important role in safeguarding customers’ financial data using next-generation cryptography. 

Financial data encoded with quantum cryptography is more secure than current levels of digital security.

The following are some of the risks associated with cloud computing in fintech:

Data Security

Identity theft and data breaches are major concerns for the fintech industry. Fintech companies use one-time passwords and other authentication methods to protect the payment system. Hackers continue to gain access to these systems and steal financial and personal information. 

Financial institutions have always faced the risk of data leaks because cyberattacks are becoming more sophisticated by the day and it is difficult to provide total security in the digital world.

Compliance

Financial services companies must follow a number of standards and laws to ensure the security of shared sensitive information. Compliance is a significant issue for fintech companies because it necessitates the implementation of stringent security procedures to ensure that there are no gaps that hackers can exploit. Aside from that, compliance must not jeopardise software and application performance. 

While some restrictions apply uniformly to all financial institutions, others are industry-specific (for example, lending and borrowing, insurance, and financial advice) and thus only apply to certain types of financial institutions. Financial institutions risk severe fines if they don’t comply.

Fintech companies have recognised how the agility potential of cloud computing can help them dominate the sector. Collaboration with a subject matter expert can help fintech companies and businesses not only optimise their solutions but also gain a competitive advantage through customised innovation. 

Furthermore, by developing and delivering cutting-edge products and services, fintech firms can leverage cloud computing to establish seamless client contact while increasing business revenue.

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