Why the financial industry is turning to the cloud

Flexibility and data manipulation is changing the playing field

Skyscrapers viewed from below with clouds in the sky above

It should come as no surprise that the financial services industry is vast. According to data from Research and Markets, the sector is expected to reach a global value of more than $22 trillion by the end of 2021. It’s home to a huge range of organisations, encompassing everything from traditional banks, lenders and insurance companies, to payment providers, wealth management firms and more.

All of these organisations have one thing in common: they rely on immense technical capabilities in order to run their businesses. Financial services organisations have to process vast amounts of data in order to track things like investment trends, market conditions and credit ratings, and all of these analytical processes have to be as close to real-time as possible. After all, time is money.

Historically, this has meant that the financial services sector has almost exclusively been the preserve of giant monolithic organisations, or those with sizeable amounts of pre-existing capital. This is because establishing these technical capabilities traditionally involves significant investment, in the form of data centre equipment and personnel. 

Not only do you need large quantities of high-end server equipment to perform the necessary analytics tasks, you also need storage and networking infrastructure to support it, data centre space to house it in (along with the attendant cooling, power and maintenance costs that go along with it) and a team of highly skilled technical staff to ensure that your data centre remains operational and performant.

That all adds up. Modern cloud platforms like G-Core Labs, however, have opened the financial services market up to organisations that don’t have these resources. Since the turn of the century, the financial services space has exploded with fintech startups, most of whom have leveraged cloud technology to quickly establish their services without needing huge capital investments. This includes household names like PayPal and Venmo, as well as new digital-native challenger banks, boutique lenders and even insurtech firms like TempCover.

Many startups have used the ‘minimum viable product’ approach when designing their applications, which fits well with the cloud model. This method involves focusing on a single, small-scale product or feature, then expanding it over time – which means that the cloud infrastructure required to deliver the service to customers is comparatively cheap and easy to manage. Instead of needing a big, expensive server deployment – which, chances are good, you won’t be fully utilising – you can spin up as much cloud capacity as needed and pay for it on a consumption-based model.

In many cases, this approach also allows cloud-based financial services organisations to be more agile than their more established traditional counterparts, as they can build and test new capabilities much faster. Rather than having to wait for server resources to become available, the combination of highly elastic cloud infrastructure and containerised applications allows for rapid iteration and deployment of new features, which lets financial services companies respond rapidly to the ever-changing needs of the market.

The Royal Bank of Canada, for instance, has used cloud infrastructure since 2018 to speed up the development of its software products. This project is not just a consequence of optimisation, but a part of the bank’s global strategy to transfer business to its data-driven enterprise segment.

The cloud has allowed financial services organisations both old and new to easily leverage another key capability, in the form of big data and AI applications. This emerging technology has enabled financial organisations to rapidly speed up a number of processes, including automatically flagging potentially fraudulent transactions, automating credit reporting and analysing market trends.

For example, Shanghai-based SPD Bank has been using the cloud since 2017 to develop and implement more than 60 applications – including some critical applications – that use artificial intelligence. This enabled it to become an honorary member of the Cloud Native Computing Foundation in acknowledgement of its active use of cloud technology in application development.

This function of the cloud gives organisations the ability to offer new products and services to their customers, as well as introducing cost savings by freeing up employees to focus on more complex and nuanced tasks, but without low-cost, high-capacity cloud resources to enable them, the infrastructure needed to support these workloads would make them prohibitively expensive for many organisations. That’s why G-Core Labs has introduced a cloud AI platform to give customers access to ready-made machine learning models and templates for speeding up development of these applications.

It’s not just about spinning up new services, either – the highly scalable nature of cloud platforms makes them ideally suited for coping with fluctuations in server load. Financial systems in particular require an extremely high level of stability, and being able to rapidly add additional server capacity minimises the chances of an unexpected and costly outage.

The cloud also allows for rapid expansion, as multi-region cloud providers like G-Core Labs allow services to be extended to new geographies at the push of a button. Rather than renting space in a new data centre and installing appliances, existing cloud systems can simply be replicated and placed in the new territory with little to no additional configuration. On top of this, organisations can choose where they hold their data to meet compliance regulations, and cloud platforms like G-Core labs have various certifications to ensure regulatory standards are adhered to.

Security is a top priority for every financial business, and many organisations have chosen to adopt hybrid cloud strategies, allowing them to keep their most sensitive data on-site while also taking advantage of the benefits of public cloud. Alongside a range of robust security protections like comprehensive backup, audit and disaster recovery functionality, G-Core Labs also offers customers the option of maintaining a secure loop within their own security perimeter for additional peace of mind.

The time of big, all-pervading financial monoliths is over. New technologies have levelled the playing field, and nimble startups are taking the opportunity to outmanoeuvre and outperform their legacy competitors. For financial services organisations that want to remain at the cutting edge of data efficiency and customer satisfaction, cloud platforms like G-Core Labs offer the key to ensuring that digital transformation and agility is at the heart of your business.

Learn more about G-Core Labs’ services

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