Buzzwords and acronyms are well known to litter the information technology space. Even as the CIO of a leading Payments bank, it can be hard to keep up. That said, ‘cloud’ is not one of those buzzwords. As Marc Benioff, Founder, CEO and Chairman, Salesforce stated back in 2009, “I try not to get bogged down with definitions. I tell them that, simply put, cloud computing is a better way to run your business.” Indeed, in recent years the cloud has transgressed the trend phase, becoming a necessary utility and cornerstone of business today. It has gone from a fad to a crucial technology that is genuinely empowering all kinds of businesses, including Payments.
The prevalence of digital tools throughout our daily lives has driven an expectation of having everything at our fingertips, exactly when and how we want it. The evolution of consumer expectations is particularly pertinent in the world of payments and banking. Gone are the days of being happy to cash a cheque at the bank and wait a few business days for it to clear. For players in the payments space, remaining competitive is dependent on the speed and ease with which businesses can deliver cross-border payments. The cloud’s promise of maximum speed and minimum resistance makes it uniquely adapted to these demands.
Have FinTechs and Payments businesses missed the cloud memo?
Despite the acceleration of digital transformation in payments and banking, driven by the demand for instant payments, the payments sector has arguably been one of the slowest to move its systems to the cloud. Our recent research found that the cloud is not a priority for many of the 600 Financial Institutions surveyed. Less than 1% of organisations involved currently have their IT or Payments systems based entirely in the cloud, with that small minority being made up of Banks alone. In addition, Payments Businesses and FinTechs have less than half of their IT systems in the cloud, compared with roughly a third (37%) of Banks in a similar position.
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A trick is being missed. With customer demands increasing, payments need to be processed quickly – which the cloud can help facilitate. For many FinTechs and Payments businesses, the problem is they simply don’t have the infrastructure, in-house manpower or expertise to manage a shift to the cloud. In fact, 60% of respondents reported a skills gap in cloud management. Meanwhile, Banks operating with legacy systems they’ve relied on for decades consistently struggle to upgrade effectively.
The power of partnerships
While these challenges are real, they are not unsolvable. Banks, FinTechs and Payments businesses alike need to seriously consider how best to procure the cloud infrastructure and solutions they need to boost experience for users. To build, or to buy? That is the question.
Ultimately, in the fast-moving world of payments, speed is paramount. Often the most effective way for Financial Institutions to quickly add innovation and speed up cross border payments is through partnering with an expert payment specialist that already has a developed and completely cloud-based platform.
Through partnering with strategic payment specialists using the cloud, Financial Institutions gain access to expert talent pools and technologies that could otherwise take years – and huge investment – to build internally. This way, organisations benefit from the cloud’s unique flexibility and scalability, enabling Financial Institutions to be agile in the face of an ever-evolving financial landscape, without having to start from scratch.
Partnering with an innovative, cloud-enabled third-party partner is the quickest way for Financial Institutions to deliver innovation and quality of service that will reduce payment costs, time and friction. The moment you cannot keep up with customer demand, your days are numbered. Financial institutions that ‘um and ah’ for any longer about shifting their tech stack to a predominantly or wholly cloud-based system, or those that are reluctant to embrace the power of partnerships, are unlikely to make it into the next decade.
Written by Michel André, CIO of Banking Circle.
