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Hybrid Cloud Adoption in Fintech: Balancing Security and Performance Needs

By Guruprasad Bhaskaran

 

Fintech firms have given banks a run for their money with some of the most innovative, agile, secure and scalable solutions. Yet, this is not as easy as it sounds since fintechs have to be adept at striking a proper balance between a series of apparently contradictory challenges.

 

For example, to meet steadily rising customer demands, fintech companies must ensure their services are always available seamlessly, providing end-users with the necessary financial data without delay. But simultaneously, they need to strictly safeguard this information to maintain compliance with the industry’s stringent data protection regulations.

 

Moreover, even if they have constraints such as limited resources, fintechs must compete in a highly competitive market by choosing the appropriate IT infrastructure that helps them attain growth, high stability and the requisite innovation.

 

How Hybrid Cloud Helps

Considering these challenging requirements, fintechs should explore a hybrid cloud solution. A hybrid cloud denotes a cloud computing model wherein one or more private as well as public cloud services are used to address the varied challenges fintechs face. Also called data centres, private clouds reside on a company’s internal infrastructure that is physically secured and firewall protected. A private cloud is completely controlled by a solitary organisation without being shared with others. Conversely, public cloud refers to a subscription service offered to every customer seeking such services.

 

Typically, fintechs face a challenging task as their customers always expect much better service levels vis-à-vis traditional banks. These needs can be met through hybrid cloud services, which provide a distributed infrastructure that is both reliable and scalable while delivering low latency to meet the high expectations of customers.

 

Furthermore, fintechs have to drive rapid growth to remain competitive even with limited resources. Again, hybrid cloud offers them the necessary flexibility to scale up and down without upfront costs while also being available on pay-as-you-go terms, ensuring the operational and maintenance spends aren’t expensive.

 

Thanks to the nature of their business, fintech firms must also be ultra-sensitive to data inaccuracies and service instabilities. Therefore, if a firm’s workload surpasses the quantum of available resources, the extra work could be transferred automatically to the public cloud.

 

Driven by these benefits, the deployment of hybrid cloud services is gaining popularity among fintechs as it ensures optimal operations and performance while also adhering to security and compliance norms. To elaborate, the hybrid cloud model requires the blending of in-house infrastructure with private and public cloud services that offer scalability and cost-effectiveness benefits while improving customer experience and satisfaction levels. The simultaneous use of private and public cloud permits fintechs and other financial players to optimise capex and opex costs.

 

Be it remote model management for driving business continuity or promoting efficiency via digital transformation, hybrid cloud can help enterprises reimagine their business and pave the path for a technology-first, data-first work culture.

 

Implementation Challenges and Security Concerns

Nonetheless, there are challenges when it comes to implementing hybrid cloud solutions in the fintech space. These include complexities in integration, data security and regulatory compliance issues. The hybrid cloud model can only be adopted safely and efficiently if these challenges are addressed.

 

While the migration to a hybrid cloud will require some effort, particularly at diverse scales, there are multiple benefits from this. These include agility (on-demand processing capabilities), flexibility (scale and shrink the use according to requirements), cost savings (the pay-as-per-use model), faster deployment (deploy worldwide within minutes at diverse physical locations without service breaks) and improved customer experience (via predictive analysis and customer-centric web applications).

 

Meanwhile, the one element that needs an elaborate mention is security. Since fintechs constantly need to manage sensitive customer information while adhering to stringent compliance norms, the need for fool-proof security always remains high to ward off all kinds of cyber threats. Accordingly, various methods are used to counter cyberattacks, including endpoint security, data encryption, next-gen firewalls, intrusion detection/prevention tools, audits and penetration testing and tokenisation.

 

Hybrid cloud can be used intelligently to split data storage and processing between public and private servers to offer end-to-end data protection. Consequently, all information stored in these data centres remains secure, safeguarding the integrity, confidentiality and availability of even the most sensitive data.

 

In essence, the hybrid cloud comes as a cost-saving boon, helping fintech start-ups curb infrastructure costs and avoid capital-heavy investments with an affordable monthly charge. This is truly a winning proposition for fintech firms and cloud service providers.

 

(The author is Guruprasad Bhaskaran, SVP – Engineering – mPokket, and the views expressed in this article are his own)

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