Fintech is advancing rapidly. To power commerce and serve customers efficiently, fintech providers need a flexible, secure, and adaptable infrastructure. Danny Fields, CTO at Avalara, explains why this can be achieved most efficiently with a cloud-native approach.
If you’ve made a purchase today or moved money from one bank to another, there’s a good chance the systems you used are built-in and run on the cloud. This fact is mainly because commerce is always-on, and financial transactions must happen in real-time – something that requires an infrastructure designed to handle high traffic volumes and be always available. As a result, many fintech companies have adopted the cloud as they’ve undergone digital transformation. However, not all cloud strategies are created equal, especially when it comes to specific fintech applications. The need for highly scalable fintech applications will only increase with time, which will move most, if not all, of fintech into a cloud-native environment.Â
The Factors Impacting Fintech Today
The way commerce works have changed dramatically in recent years. We now live in a digital-first, global economy where instant transactions happen around the clock. The growth of online transactions has created ample opportunity for those in the fintech ecosystem – most notably, an increase in revenue from more digital transactions. Still, the rapid shift to online-first has directly impacted how fintech companies must think about their underlying infrastructure. From handling drastic increases in digital payment processing to demands for improved checkout experiences, fintech companies have had to adapt their infrastructures to process higher volumes of traffic and offer new or expanded services to meet customer needs.Â
See More: Cloud-Native Architecture: The Modern Way to Develop Software
Cloud-native Fintech in the Age of Digital-first Commerce
The fintech industry is no stranger to the cloud. Over the past decade, cloud-based strategies have become the norm for many fintech companies due to the improved storage and security capabilities and the cost benefits that come with no longer managing on-premises data centers. Still, as the industry has evolved and the demands of fintech applications have increased, creating new requirements needed to keep pace, including enhanced scalability, always-on reliability, outage-proof performance, and global deployment capabilities.Â
Cloud-native applications are built, designed, and maintained in the cloud for the cloud. Because the design is inherently tied to the cloud, these applications simplify delivering new features and solutions quickly. On the other hand, applications in a standard cloud-based environment exist in on-premises applications moved to the cloud but not optimized for the environment.
The nuance of cloud-native is vital for fintech because of the always-on, fast-paced nature of transactions. For example, at Avalara, having a cloud-native infrastructure has enabled us to keep pace with more frequent spikes in transaction traffic to our systems and created a foundation for expanding our existing platform to include a robust API ecosystem. The scalability and reliability of cloud-native applications help minimize disruptions created by outages, even during peak volumes. This can also allow an easier move toward an API-driven platform to deliver critical building block components for customers and partners to build compliance into their existing systems.Â
Benefits of Cloud-native Fintech
Some key benefits of cloud-native for fintech companies include:
- Developers can work at their own pace to build new applications based on customer needs and market demands – without disrupting core services and revenue-generating applications.Â
- New applications can be built using database services supplied by cloud providers instead of building entirely new environments for application development.
- Maintenance of existing applications creates minimal disruptions due to microservices that reduce the impact of entire application services.
- Applications can be easily upgraded or scaled as needed.
The flexibility of cloud-native applications gives fintech companies the ability to innovate, deliver new services rapidly, and consistently offer positive experiences regardless of the traffic hitting their systems.Â
Cloud-native Will Evolve alongside Fintech
While cloud-native is the ideal choice for fintech today, we all know change is inevitable. As we look to the future, we will likely see the need for a poly-cloud or multi-cloud environment increase among fintechs. This shift will be driven by three key factors: customer preferences, reliability requirements, and application development optimization.
More often, fintech customers have a preference when it comes to what cloud service processes their data. As a result, fintech providers will need to develop applications that run across multiple cloud environments natively. Similarly, as fintech companies scale their operations, having fail-safes across cloud platforms increases the reliability of services. Lastly, fintech companies will want to use different clouds to develop specific application components. Using the strengths of each cloud platform, companies can optimize application development for the best user experience.
Fintech defines the way we all go about shopping and will set the tone for the future of commerce. To meet customer expectations and deliver innovation for years to come, a cloud-native infrastructure will be a requirement for fintech.Â
Is cloud-native the natural next step in our digital evolution? Tell us what you think on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to know!