How FinTech Startups are Leveraging Cloud to Accelerate Innovation
Every few decades we experience a shift in the way banks do business. Just think about all the changes we’ve seen over the last 50 years: the automated teller machine, the standardization of cheque processing, and online and mobile banking, just to name a few.
Today’s banking world continues to evolve. With the explosion of data and shifts in consumer behaviour, the industry is searching beyond traditional financial solutions to get more done faster – and with cloud.
Imagine a person who needs to make an account deposit. This individual happens to be a regular online shopper and steady user of mobile apps. Like many consumers who are constantly on the go, this individual also depends on his or her smartphone to accomplish day-to-day activities. As a result, the customer is accustomed to easy and efficient transactions and will look for banking methods that help keep them out of physical branches to avoid waiting in lines.
Now more than ever before, financial institutions are realizing the need for cloud. According to an IBM study, 83 per cent of banks say cloud initiatives are already part of a coordinated program or a fully integrated strategic transformation, compared to 58 per cent of banks in 2012 who were planning, testing, or adopting cloud.
In fact, across all industries, banking is the biggest adopter of cloud and attributes to 16 per cent of the total global cloud expenditures. And by 2019, the spending on cloud for banks is expected to reach USD $100 billion, with cloud-enabled workloads of top-tier banks anticipated to double annually.
You may ask yourself: why cloud? Simply put, cloud gives financial institutions more security and better agility to meet customer’s growing needs at lower costs. The technology helps banks better manage data and deliver computing solutions globally, while at the same time providing consumers with secure and innovative products.
Rise of Financial Technology with Cloud
Interestingly, an area in the industry that’s witnessing a massive upsurge in cloud adoption for transformation is with financial technology firms..
Fintechs are nimble and can easily harness emerging innovation solutions. These groups can access cloud technologies to help pave new paths in banking that push industry boundaries by supporting different ways that expand customer reach and streamlining digital strategies to become more flexible.
For instance, Dream Payments discovered a real need to improve how financial services are delivered to small and medium-sized business; particularly those that need to accept payments. Nowadays, consumers complete transactions with either credit and debit cards, or using contactless methods such as mobile wallets. Dream Payments is helping to change financial business models by providing a cloud-based platform for banks that connects to mobile devices and makes it easier for traditional merchant customers to keep up with consumer demand.
What used to take the fintech one to two weeks to procure servers and up to eight weeks to acquire the goods they needed, including hardware, now just takes them a matter of days with cloud. This new process is helping Dream Payments provide financial institutions around the world with the ability to deliver, secure, reliable, user-friendly mobile payment solutions to their merchant customers.
Big Terminal, a Toronto-based startup, is making it easier for wealth management and capital market users to receive important and timely information by providing an online hub that filters through global financial data, including market reports, industry news, bank stocks, and technology innovations.
The financial market moves quickly. On top of this, there is a sheer abundance of information that makes it extremely difficult for one person—or a team of people—to keep up with. To address this challenge, Big Terminal has developed a search engine supported with cognitive and cloud capabilities that aggregates, consolidates and analyzes financial data from around the world into one easy location, and in real time. Cloud enables the fintech to host millions of financial data while offering the required capabilities to scale and expand computational power as their business continues to develop.
Thanks to the nature of fintechs, financial institutions have additional point of entry to adopting cloud, including its ability to quickly scale and support business and innovation growth, while remaining agile and cost effectiveness.
Naturally, consumer behaviour and demand are changing the landscape of financial services. We’re in the midst of the latest industry shift where groups like fintechs are helping to provide consumers with innovative financial solutions. Cloud is how they’ll get there.
Frank Attaie is the Vice President of Financial Services for IBM Canada.