Whether they realize it or not, cloud computing has changed millions of people's lives globally in an increasingly digital age.

More precisely, the cloud has changed how technology is used in business settings on a daily basis, not to mention how businesses operate more broadly and how products and services are provided.

This inevitably applies to the financial services industry as well. Cloud-based capabilities have changed and continue to shape customer service, payments infrastructure, product development, cybersecurity tactics, and much more.

"Cloud and financial service excellence are seen as indivisible by the biggest and most innovative finserv businesses," claims Steve Morgan, Pegasystems' Global Banking Industry Lead. The scale and efficiency required to provide banking and insurance services today are just not available with on-premises solutions.

The opposite is true now, notwithstanding our caution when transferring frontline apps and data to the cloud. Nowadays, a large portion of retail banking as well as growingly corporate banking are operated on cloud platforms.

Chief Strategy Officer Rory Yates of insurtech pioneer EIS concurs wholeheartedly.

He continues, "We're almost at a point where we could characterize financial services and the cloud as synonymous." The attitude has changed from one of "we need to experiment" to one of "cloud is in our future."

"Cloud is a game-changer for how financial services organizations will operate and is a catalyst for enterprise business transformation."

The basis for innovation in fintech

Steve Williams, Orange Business's Financial Services & Insurance Lead, is adamant that this specific technology development is crucial to enabling fintechs to compete with more established finserv institutions.

Williams claims that "a lot of the innovation that is reshaping the fintech industry for the better is built on the cloud."

Fintechs can now swiftly launch new services and expand them smoothly to meet market demand while still upholding performance, security, and compliance thanks to cloud platform suppliers.

The biggest innovation in fintech has come from cloud providers who cover the whole value chain of digital services, from regulatory knowledge and cloud-enabled data management to global reach. In the end, they offered fintechs the advantage over established financial services organizations with antiquated IT infrastructure by enabling them to concentrate on expansion.

In the insurance industry, the tale is much the same.

Similar to banks, insurers have had to reinvent their business models and technological underpinnings around clients as a result of several market, customer, and regulatory challenges in recent years.

Most importantly, the cloud has enabled these businesses to quickly adjust and stay up with the quick speed of change.

According to Yates, cloud techniques are now essential to the insurance industry rather than merely desired or optional due to their scalability, adaptability to change, and extensibility.

"Cloud technologies provide these companies significantly more capacity to develop, test, and implement solutions with ease and efficiency. Crucially, this makes it possible for business transformation to occur more frequently, with less risk, and at a lower relative cost.

An uptick for banks

Fintechs and banks have been working together more recently, which has forced the former into a new phase of modernization.

It has become imperative for traditional institutions to replace their antiquated IT infrastructure, and cloud migration has unavoidably been a key component of this shift.

This breakthrough has made it more easier for banks to integrate fintech technologies and give their customers more value.

As Morgan clarifies, they can interact with fintech companies on their own terms.

"A bank can more readily adopt the specialized capabilities of a fintech when they have a cloud platform," he claims.

"The bank can think and act more like the fintechs it wants to work with if it migrates more data to the cloud and adopts a cloud-native mindset."

Williams agrees that banks can achieve more agility, creativity, and efficiency by embracing, implementing, and moving to the cloud. This will help them stay competitive and deliver exceptional client experiences in a financial sector that is changing quickly. But it's not all sunshine and roses. To put it mildly, the integration of historical financial platforms with contemporary systems is difficult due to their inherent rigidity.

This may result in high maintenance costs and security concerns in addition to impeding innovation.

Williams continues, "Data sovereignty, security, and privacy remain top concerns for banks migrating to the cloud." "They have a major role in how quickly conventional banking has embraced cloud computing, therefore choosing the correct cloud is crucial.

In order to guarantee a seamless transfer and ongoing compliance, banks must carefully prepare and have the necessary experience when managing the migration process.