We are living in an era of technology, where data and information are considered assets. With the assimilation of technology into every aspect of life, businesses and individuals now have access to unlimited server space that they can never physically see. The emergence of cloud technology has brought about a tectonic shift in the way we share and exchange information. It has helped businesses during unprecedented times to drive efficiency and scale their businesses through digital transformation. While the adoption of cloud technology has been comparatively slow in the fintech sector, the pandemic accelerated the transformation from traditional financial services to digital technologies. Cloud technology is transforming the way payments are processed and delivered across the world. By using cloud-based solutions, payment service providers can offer faster, cheaper, more secure, and more scalable services to their customers.
Demands of the payments industry
- Real-time processing of the transactions with extremely high throughput and low latency
- real-time actionable insights and run (ML) machine learning models dynamically.
- top-notch in compliance and security
- Faster integration and reuse of products from other vendors
- As this is a volume game, cost plays a crucial role.
Payment modernization through cloud technology
The following are a few ways in which cloud technology facilitates payment modernization:
Reduced Cost: Cloud technology reduces the cost and complexity of maintaining legacy systems and infrastructure. It is difficult to manage private data centres (PDC) in the long run. Payment service providers can migrate their core systems and applications to the cloud, where they can benefit from
lower operational expenses using PAYG (pay-as-you-go cloud computing) for better availability and performance. Managed services provided by cloud service providers make life easy and secure the infrastructure provided by the cloud providers. Last, but not least, compliance, as most of the cloud providers are hosted in India, satisfies the RBI requirements.
Provides innovative services and partner ecosystems: Cloud technology also allows payment service providers to access innovative tools and capabilities that are not available on-premises, such as deep learning, machine learning, and artificial intelligence. With blockchain, applications from other vendors can be easily accessed in the marketplace hosted by cloud providers. This helps with reusability.
Cloud technology fosters collaboration and interoperability among payment stakeholders. Payment service providers (PSPs) can use cloud-based networks and protocols to connect with other payment actors, such as banks, merchants, regulators, and other fintech providers. Cloud technology facilitates the exchange of data and information among payment participants, enabling faster settlement, reconciliation, and compliance. It also supports the development of new payment ecosystems and business models, such as open banking, platform banking, and embedded finance.
Key focus areas for cloud service providers
Hardware Security Module (HSM) is one of the key technologies that the payments industry must focus on for greater efficiency. There are many banks that trust HSM, which has to be housed in an on-premises data centre. There are many cloud HSM providers today, and cloud providers must work with the banks for faster adaptation of the cloud HSM.
Cloud technology is a key driver of payment modernization and innovation. By adopting cloud-based solutions, payment service providers can improve their dependability, agility, security, and customer-centricity. Cloud technology also empowers payment service providers to create new value propositions and competitive advantages in the dynamic and evolving payment landscape.
Conclusion
Cloud technology has the potential to drive exponential growth in the fintech sector. It will enable the payments industry to make more efficient decisions and play a vital role in reshaping the future of the payment landscape. Cloud computing extends its influence on the fintech sector by developing and offering advanced products and services,increasing efficiency, and driving business growth.
(This article is written by Sudhindra Magadi, CTO, Wibmo, A PayU Company, and the views expressed in this article are his own)
