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Fintech and Regtech driving increased cloud adoption in Finance

Author: Adam Edwards, Chief Customer Officer at AppNeta

In finance, digital transformation has had the most visible impact on the consumer-side of operations. While customers can access a wealth of apps and mobile payment solutions, the back-office functions of these tools have largely remained glued to legacy hardware and workflows. 

On its face, the financial sector's weariness about optimizing and modernizing their legacy back-office network architectures for the cloud isn't wholly unreasonable. The well-managed data-center-centric network model of years past (complete with bulky MPLS backhaul networks) allows organizations to store data on premises at headquarters, enabling teams to put a virtual citadel of firewalls around it. This is especially attractive in an age of increased regulations, ala the EU's GDPR and California's own Consumer Privacy Act, which call for greater scrutiny of security best practices where customer data is concerned.

However, these regulations also demand financial services to be more agile with how they store and share data. Chapter 3 of GDPR, for instance, outlines the Rights of the data subject, including the right to immediately access, delete, or modify PII. To quickly grant consumers access to this information, financial services will inevitably need to employ less rigid--though no less secure--fortifications around their data than those they've employed in the past.

As a result, the barriers of cloud adoption are coming down within this sector as more sophisticated technologies related to finance (fintech) and regulation (regtech) are maturing and becoming increasingly viable -- if not inevitable -- ways of reshaping the business. And former perceived limitations of cloud are no longer at play, as teams can leverage solutions that help businesses maintain visibility when they retire their old workflows and help ensure user experience wherever data is hosted or delivered.

Regulation driving cloud migration, not halting it

The conventional wisdom is that when data leaves a private data center, the security vulnerabilities are so great that it's not worth the risk. But between 2008 and 2015, regulatory change has increased by 492 percent, which has called for companies to quickly adopt strict protections and transactional standards, lest they be on the hook for hefty noncompliance fines.

Regtech solutions delivered "as-a-Service" can help teams contend with the unprecedented rate of regulatory change without slowing down their ability to support and grow their customer base. It's not dissimilar to how companies have adopted SaaS solutions to help them quickly adopt and deploy new workflows without exhausting their budgets when other potentially bank-breaking roadblocks spring up.

Regtech can offer consistency of regulatory application, speeding up the time it takes to identify information and documentation that requires specific protections or permissions. This kind of software can also evolve immediately with new regulation, putting the control burden on the regtech provider to stay on top of best practices opposed to financial IT.

Fintech answers the "digital-first" call from consumers

The rise of fintech has been less of a response to how banks can function than a reaction to both consumer tastes and industry disruptors. As consumers have become more accustomed to using mobile apps for almost every transaction, traditional banks need to look into developing their own solutions to stay competitive.

This signals a big departure from the days when digital transformation was only considered the realm of retail banking. Today, corporate, commercial, business and investment banking clients all demand fast and convenient digital experiences akin to what's available through every other channel they interact with in their day-to-day lives.

We're approaching a tipping point in our society where an entire generation will have grown up in a primarily digital world by the end of the decade. Regardless of industry, the businesses that are able to deliver value and convenience through digital channels are the ones that are going to succeed in the future. That means old-school banks will need to shake off their fears about moving to the cloud, leverage solutions that help them implement new workflows with ease and security, and maintain visibility across their networks.

Alongside these changes will be a greater emphasis on the need for financial organizations to shore up their IT and network operations teams with the tools they need not just to secure data, but to keep the wealth of new tools and workflows performing up to acceptable business standards. Just as finance is now leveraging regtech solutions to help speed up compliance, SaaS-based network monitoring and management tools should be employed to help smooth the industry's cloud migration. By using a SaaS solution that can see into an array of network architectures -- from legacy data-center-centric models to highly decentralized structures based heavily in the cloud -- at every stage of cloud migration, financial IT can keep tabs on performance throughout to ensure success.

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About the Author

 

Adam Edwards, Chief Customer Officer at AppNeta

Adam leads the customer success team for AppNeta, where he specializes in C-Level customer management, solutions design, customer interactions and inside sales teams. Prior to his time at AppNeta, Adam was the vice president of customer success at Reveneer.
Published Wednesday, June 19, 2019 7:33 AM by David Marshall
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