The days of traditional, on-premises infrastructure seem to be numbered as more and more businesses transition to cloud-based solutions. Research and Markets predicts the global cloud computing market will reach $947.3 billion by 2028.
The innovative cloud approach impacts all industries, but fintech, in particular, must adapt quickly due to regulatory and security concerns surrounding financial data. In the last year, 37% of US organizations failed an audit or experienced a cloud data breach. This is an alarming number, highlighting the significance of having strong cybersecurity measures in place when operating in the cloud. We will discuss the topic of building a secure cloud infrastructure in this article, and advise you on how to mitigate the associated risks.
What will you learn from this article:
- What are the benefits of using cloud computing?
- Why is scalability important in fintech cloud systems?
- How to build a cloud for financial services?
- How to prepare your business for cloud-related threats?
- What are the essential components to secure when moving to the cloud?
- What are the best practices for fintech cloud computing?
- How will the future trends affect the cloud approach?
Table of Contents
What Are the Advantages of Cloud Technologies for Fintech?
Fintech is among the industries that are swiftly adopting cloud technologies. It should come as no surprise, as there are numerous advantages that cloud computing can offer financial institutions and organizations.
- Cloud computing is largely cost-efficient - It often allows businesses to reduce expenses such as servers and data storage devices and gives them the opportunity to scale their resources up or down.
- The improved scalability is a crucial benefit - the need for extra resources will likely arise as your business grows, and cloud services can provide the scalability necessary to accommodate the growth without the need to physically upgrade your on-premises infrastructure.
- Cloud providers can offer low-latency connections to users from different areas, as they have a network of servers and data centers worldwide.
- Companies working in the cloud can deploy and scale their applications quickly, allowing them to adjust rapidly to any market conditions or customer demands.
- Cloud-based big data analytics tools are fantastic for making data-driven, informed decisions, and leveraging advanced technologies to get valuable insight can be a game-changer for businesses.
- Cloud computing offers higher agility and speed. Cloud computing is a perfect match for Agile development methodologies, as the on-the-go development teams can collaborate seamlessly. It also works great for continuous integration and delivery cycles.
- Cloud providers ensure higher levels of safety of their infrastructure, as they commonly use the best security practices and data encryption methods to protect their clients’ data and regularly maintain and audit their systems.
Moving away from premise-based solutions allows you to future-proof your company's operations, and the cloud computing approach might just be what your business needs to thrive.
How to Build Cloud Infrastructure for Fintech?
There are several steps you need to take when planning to build cloud infrastructure for your fintech business. While it does not differ much from any other industry, there are specific considerations for fintech. Our recommendations are based on years of experience and technical expertise, so you can trust that they are reliable and proven successful.
Define Your Business Goals and Needs
Assess your current technology stack and determine what core functionalities are required for your organization. Before moving to the cloud, establish your expectations for the infrastructure and its scalability, cost-effectiveness, and other features.
Understand Regulatory Requirements
Navigating data sovereignty may be difficult when your business operates internationally. When moving to the cloud, you must comply with the local laws of every jurisdiction in which you operate. Make sure your cloud infrastructure will adhere to all applicable regulations and laws.
Choose the Right Cloud Platform
There are many different cloud service providers, but not all offer the same quality of services. Whether you are interested in AWS, Google Cloud, Microsoft Azure, or someone more niche, it is important to thoroughly evaluate each provider's offerings and compare them to your specific business needs. Do not only look for a rich list of features and a low price, but consider factors such as reliability, security, and customer support.
Implement Robust Security Measures
This one cannot be overstated. As the number of businesses reporting data breaches in their cloud environment grows every year, it is crucial to prioritize strong security measures when setting up the cloud. Think about SAST tools, extra encryption protocols, firewalls, and intrusion detection systems. To effectively handle the threats you may face, stay informed about them at all times.
Set Up Monitoring and Logging
By better understanding what's happening with your cloud systems, cloud function monitoring can help you make better, data-driven decisions. Analyzing the logs lets you see patterns and trends in system behavior that you can use to your advantage.
Disaster Recovery and Data Backup
Keeping regular data backups and having a strong recovery plan in place is essential for mitigating the impact of any threats or system failures that might happen. It is critical to be able to recover lost data and re-establish your systems' functionality quickly.
Scalability and Performance Optimization
There is no point in investing in something that cannot handle the demands of your growing business. Optimization means lower costs, enhanced efficiency, and improved user experience. Your architecture has to be designed in a way that allows accommodating for any possible fluctuations, as well as future growth and expansion.
Collaboration with Experts
Collaborate with CloudOps experts to find out what specific strategies and technologies will work best for your business. If you have any questions, they can provide guidance and recommendations backed by years of experience. They can guide you through the whole process of implementing cloud for financial services and help you make the most out of your investment.
To establish a truly successful cloud architecture for your fintech company, you should only work with skilled professionals and choose the cloud service provider that offers high scalability, data security, and reliability.
What Are the Specific Threats in Cloud Infrastructure for Fintech?
Cloud solutions are amazing, but there are disadvantages that have to be addressed to avoid potential loss. According to statistics, 80% of companies have experienced at least one cloud security incident. It does not mean that cloud solutions are inherently insecure, but it highlights the importance of implementing robust security measures.
You need to protect your business from cyberattacks, which are one of the most common threats to cloud infrastructure for fintech. These cyberattacks can include data breaches, ransomware attacks, and phishing attempts.
Additionally, regulatory compliance is another specific threat that needs to be considered. Fintech companies need to ensure that they are meeting all the necessary regulations and guidelines to protect customer data and maintain trust. It can get difficult when you operate in multiple different countries with varying regulatory requirements. Not adhering to local regulations may result in legal consequences and financial penalties, as well as loss of trust.
You also need to be sure that your cloud service provider is reliable and can provide the necessary infrastructure. Frequent hardware failures, downtime, or security breaches are major concerns for fintech companies, as they can disrupt operations and compromise financial data.
Having adequate threat protection is important not only for you but also for those who will use your services. Naturally, individuals don't trust financial institutions that can't guarantee to keep their sensitive data safe, so only choose cloud technology solutions that are built with strong security measures.
9 Key Components of Fintech Cloud Infrastructure You Need to Secure
Let's take a closer look at nine of the most crucial aspects of cloud infrastructure you need to keep in mind when considering cloud solutions for the financial industry. You can trust the advice of our CTO, who has extensive experience working with cloud solutions and provides insight into fintech cloud security here.
Identity and Access Management (IAM)
A critical security discipline, identity, and access management act as a barrier to prevent unauthorized users from gaining access to your resources and data. It plays a great role in maintaining the integrity of your cloud computing architecture, as it helps safeguard sensitive information.
Look for cloud providers that let the admin grant and edit permissions easily but still have strong authentication measures in place, such as multifactor authentication and role-based access control.
High-Level Network Security
Implement verification for each user and device attempting to connect to the network using zero-trust network architectures. Check if the cloud computing provider you have chosen offers advanced protection against DDoS and other web-based attacks.
Some cloud security solutions that are worth looking into are inspection of SSL/TLS traffic, encryption of data at rest and in transit, and centralized security administration. Micro-segmentation of networks is also a good way to enhance cloud security.
Cloud Technology Data Security
To keep your data as secure as possible, maximize the effort that goes into implementing and maintaining the highest levels of data security. This includes regularly updating your cloud security software and systems and conducting regular audits and vulnerability assessments, but to protect the data itself, you have to go beyond that.
It is recommended you use multifactor authentication, secure password management services, and extra-strong encryption techniques.
Endpoint Security for Cloud Services
Endpoint security procedures are meant to protect the endpoints and entry points of end-users. This involves securing devices such as computers, phones, tablets, or anything else that can connect to your cloud network. Among the top endpoint security tools for cloud-based solutions you can use are Microsoft Defender for Endpoint, Fortinet Endpoint Visibility & Control, and CrowdStrike Falcon.
Application Security and Vulnerability Management
While cloud-based applications are becoming increasingly popular when not properly secured, they pose a significant threat to your financial institution's safety. Vulnerability management solutions are key to protecting an organization's systems and data. They can identify, prioritize, and remediate vulnerabilities (like SQL injection flaws) efficiently, fostering secure environments. These solutions typically include a range of built-in security checks and tools that protect your cloud-based operations from threats, help you understand the root causes of vulnerabilities, and provide recommendations for successful risk mitigation.
Cloud Security Posture Management
Cloud Security Posture Management involves monitoring and assessing the security of your cloud environment's configuration to ensure it is secure and up to compliance standards. Cloud Workload Protection Platform oversees the security of your cloud workloads and helps identify and mitigate any potential risks or vulnerabilities in your cloud containers. Finally, Cloud Access Security Broker is meant to provide visibility and control over the use of cloud services within your organization. It allows you to manage and monitor user activity, enforce security policies, and detect any unauthorized access in real-time. Implementing all three in your cloud security framework lets you better protect your cloud environment from threats.
Adequate Physical Security
When thinking of cloud solutions, people rarely think of physical security, but it is just as important as digital. Cloud service providers maintain network and infrastructure security but also should be able to guarantee the security of their physical infrastructure that your data is stored on. This includes measures such as extra access controls, surveillance systems, and backup power systems to make sure no physical damage or unauthorized access can compromise the integrity of your cloud network.
Incident Response and Monitoring
As with the cloud resources, you do not physically own nor have direct control over the hardware, so it can get tricky to react to security incidents in real-time. Make sure your service provider offers rapid response and is proactive in monitoring your cloud network for any potential security breaches.
Additionally, you can use automated monitoring tools to alert you of any suspicious activity or misconfigurations.
Employee Training and Awareness
Last but not least comes employee education. It is a crucial aspect of maintaining a strong cloud security posture. According to a study performed by security company Tessian and Stanford University Professor Jeff Hancock, human error was to blame for 88% of data breaches. By providing adequate training and raising awareness about potential threats among your employees, organizations can reduce the likelihood of mistakes that may lead to unauthorized access or data loss.
Cloud Best Practices: A Checklist for CTOs
CTOs in all industries are responsible for overseeing the organization's technology and policies related to it to ensure efficiency and security. Following a few universal best practices can help simplify this complex task. Let's examine the steps to take to ensure the best outcome with fintech cloud computing.
- Implement a secure cloud infrastructure. 80% of businesses using cloud solutions have experienced at least one data breach, mostly due to poor cybersecurity framework, so do not let that happen to your company.
- Ensure compliance with regulatory requirements. Financial institutions are highly regulated, with local regulations varying from region to region, so it's crucial to stay informed about legal obligations in each jurisdiction your company operates in.
- Leverage cloud-based data analytics. Big data and predictive analytics offer valuable insights for identifying potential issues and boosting business growth, allowing for data-driven decisions regarding potential threats.
- Implement disaster recovery and business continuity plans. Organizations must put in place solutions to mitigate the effects of any potential incidents, as well as restore data, protect assets, and reputation, and reduce financial losses while continuing operations.
- Conduct compliance audits regularly. Inadequate results and a lack of proactive updating of your compliance measures can lead to legal penalties and reputation damage.
- Provide training and education for cloud adoption in your organization. Employees who are well-informed about your FinTech cloud infrastructure are less likely to overlook security measures or make mistakes that could compromise data integrity.
What Trends Impact The Future Of Fintech And Cloud Computing?
There is a lot of talk about the future of financial technology now that cloud computing is widely adopted in the industry. How will the new trends affect the fintech landscape?
Decentralized finance, for one, heavily relies on cloud computing to enable seamless transactions without the need for intermediaries. It has been growing in popularity, as it offers greater accessibility for users outside of conventional banking systems.
Artificial intelligence is expected to significantly impact fintech companies and cloud computing, improving data analysis, risk assessment, and customer service, while cloud-based platforms can provide the necessary infrastructure for AI-powered solutions. It can also be useful in terms of cybersecurity, for example for threat detection or fraud prevention, as AI has the ability to quickly identify patterns a human eye would not have noticed.
Hybrid solutions in fintech combine the advantages of the traditional approach with the convenience of cloud infrastructure. These fintech solutions integrate traditional banking services with innovative technologies, utilizing cloud infrastructure for real-time data processing, enhanced security, and scalability. They are growing in popularity in the financial industry as they are cost-effective and allow for fast operations.
Open banking facilitates secure financial information sharing between third-party providers and banks, often utilizing cloud-based APIs for seamless communication between systems. When fintech companies can access customer data, analyze it, and enhance services in the cloud, they can create innovative solutions better tailored to their customers' needs.
Financial companies can benefit from smarter banking by implementing cloud computing and AI technologies. According to a Capgemini report, 89% of financial executives believe cloud solutions are critical for providing banks with the flexibility and agility required in the digital era. Streamlining operations and lowering costs are advantages that will not be overlooked in the near future.
Summary: Cloud Computing Can Be Highly Beneficial if It Is Both Secure and Scalable
Cloud computing's level of scalability, flexibility, and cost efficiency helps businesses shorten time-to-market and enhance productivity. While cloud-based infrastructure is not without its challenges, such as potential security risks and regulatory compliance issues, the benefits largely outweigh the drawbacks.
As long as you know how to implement cloud-based solutions in a way that is secure and ensures scalability, everything should run smoothly.
Remember the core best practices such as employee education, regulatory compliance, and regular security audits to mitigate risks. Put extra focus on data protection, reliable virtual machines, and the safety of any financial transactions that you might conduct.
If you do not feel confident enough to venture into cloud-based infrastructure on your own, it may be helpful to consult with reputable cloud service specialists.
