Why fintech companies depend on cloud computing and data centres for their expansion

Fintech is rapidly growing within the cloud as demand drives change. Despite security concerns more and more financial services companies are turning to colocation data centres and cloud computing to host their software and systems. Let's find out more.

Cloud Computing Leading Change

One of the key drivers has been customer demand. This has precipitated a fast migration of traditional fintech services to data centres. However, the fintech sector has seen a slower adoption of cloud technologies than other sectors. This is partly due to financial institutions having security issues and concerns over governing regulations in the sector. Nevertheless, the fintech sector is now embracing data centre technology and the transformation is accelerating rapidly. 

Agile Technology & Fintech

Agile technologies are a crucial part of fintech and its services. Certainly, banking institutions are intricately structured. To keep up with global digitisation, banks are onboarding agile technologies to streamline their organisational processes and to become more simplified and accountable. By outsourcing their technology to a data centre, fintech companies can make important cost savings as they don't need to invest in onsite infrastructure. Also, apps and tools operating in the cloud can be deployed very quickly and help a fintech business stay ahead of the crowd.

Applications and Financial Services

Self-service applications in fintech allow customers much more autonomy and convenience over accessing financial services. Banking applications on mobile devices, self-service machines and so forth, mean that consumers can control their finances much more easily than in the past. 

 Fintech Data Management

Within cloud computing, Fintech companies can control their data in a secure manner and do not have to rely on data silos when using the cloud. Also, the merging and centralisation of data is fast and efficient within cloud computing. In addition to this, storing data in the cloud is protected by robust security systems and customers can access their data and apps at any time,

“Some of the popular methods include using next-gen firewalls, intrusion detection and prevention technologies, securing endpoints, data encryption, audits and penetration testing, tokenization, and (Virtual Private Network) VPN.”

Source: Srijan.net, May 11th, 2022

Customer Segmentation & Data Analytics

Banks by their very nature need to take a more subtle approach to customer segmentation. Indeed, cloud computing for fintech is now a crucial player in helping banks to achieve this by using data analytics to understand customer behaviour and requirements. Therefore, data driven insights allow banks to design bespoke services that are tailored to the specific needs of different customers. 

Fintech Services & Additional Cloud Data

Fintech companies supply a wide variety of services such as payment, investment, transfers, online trading and financial management, insurance, money exchange and standard online banking services. Furthermore, a significant number of fintech businesses now use additional cloud data storage to rapidly and efficiently scale their reach globally with the aforementioned services. 

 Hybrid Clouds

A reported 39 percent of fintech companies use hybrid clouds to back up their data in peak traffic times and during the expansion of traffic to their services. Equally, many companies use cloud computing in partnership with other businesses for collaborative projects. In addition to this, 33 percent of fintechs also said that they,

‘Use hybrid clouds for the development of applications and services), for delivering more sustainable infrastructure (36 percent) and support service operations.’

Source: Register.com, 30th March, 2023

Colocation Data Centres To Balance and De-risk The Cloud

The rise of fintechs has revolutionised the finance industry, and these startups are increasingly relying on colocation data centres like IP House in London to handle their computing needs. Colocation provides a way for fintechs to balance their loads and minimize the risks associated with having everything in the cloud. With colocation, fintechs can place their servers in a secure facility that provides redundancy and backup power, ensuring that they can continue to operate even during an outage.

Equally, fintechs face unique challenges when it comes to data management and security. However, colocation data centres like IP House offer the reliability and stability that these startups need to succeed. By colocating their servers, fintechs can take advantage of advanced security measures and fire suppression systems that keep their data safe from theft and disaster. Also, colocation provides access to high-speed networking equipment and other critical infrastructure that is essential for scaling applications and services rapidly.

Reflections

In summary, many fintechs are successfully using a hybrid approach of colocation data centres like IP House in London and cloud computing to de-risk their operations and balance their loads. Colocation provides a secure, reliable environment for fintechs to store their servers, ensuring uptime and minimizing the risk of downtime. With access to cutting-edge infrastructure, security measures, and networking equipment, fintechs can focus on developing innovative products and services that drive growth.

In terms of cloud adoption, Fintech companies, in particular banking, need to carry out self-assessments to determine the many choices for cloud technology adoption and how they best fit their products and services. Furthermore, they also need to be well informed on the industry regulations for using cloud services, as well as the potential security risks that can arise. 

The movement of fintech companies into cloud computing and colocation data centres is partly since it allows rapid and efficient growth. Cloud technologies are driving growth in the fintech sector, and this is set to continue in the coming years due to its scalability, security and convenience for customers. 

However, a hybrid approach of cloud computing and colocation data centres is a prudent approach for those fintechs concerned about security. The hyrbrid approach reduces the risk to their operations and balances their data loads.

If you would like to find out more about using IP House Data Centre’s services for your fintech business, please fill out the form below.

Sources:

1.Srijan.net

:https://www.srijan.net/resources/how-is-cloud-computing-driving-digital-change-in-fintec

2.Medium.com:

https://medium.com/@lenaztyson/how-cloud-migration-enabled-fintech-firms-to-stay-ahead-in-the-game-4265ca0eb86b

3.Weetechsolution.com:

https://www.weetechsolution.com/blog/fintech-cloud-computing-a-perfect-match

4.The Register.com:

https://www.theregister.com/2023/03/30/fintechs_depend_on_cloud_for/#:~:text=Fintech%20firms%20turn%20to%20clouds%20to%20drive%20global%20expansion&text=For%20fintechs%20with%20the%20low,will%20make%20all%20the%20difference

5.Private Technologies.com:

https://privetechnologies.com/unlocking-growth-cloud-based-fintech-and-scalability/