‘Fighting the financial industry’ will almost always sound like a losing battle. After all, most major banks have a shared interest in everything that runs our lives: from our cars and houses to our places of work and enjoyment.
While it’s true that these institutions have a stranglehold on how our money moves, the technology on which it’s built on is incredibly archaic (which, some people believe the banking industry wants to keep it that way). However, the business is quickly transforming as many FinTech companies are challenging the very infrastructure we traditionally have looked at as outdated.
To learn more about this trend, we caught up with Burstorm CEO Brandon Abbey on how cloud infrastructure is changing the landscape for banking. As one of the early innovators offering analysis and advise on cloud-based technology solutions, Brandon and company have been at the forefront by delivering analytics to help organizations understand and take advantage of this transformative shift.
The Early Bird
“Like with the transition from mainframes to client server 30 years ago, in the beginning, people just didn’t trust cloud-based computing citing limited features and possible security vulnerabilities.”
While Brandon’s right that early users were timid, there was one major company not afraid to take the leap: Starbucks.
After the global recession, the coffee giant was losing customers fast. To combat this trend, they implemented a mobile rewards system. The process was simple: customers would pay an annual fee for discounts, load their cards or phones, and spend away. This practice helped Starbucks reduce their interchange fees, as well as remain holding consumer-loyalty.
However, while gift cards have been around forever, the way they implemented their system set the standard later for NFC payments. As the cards were on the customer’s phone, Starbucks used a cloud-based wallet system to keep track of balances, instantly exchanging data via the scanners on their already established POS systems. And as easy as it was, Starbucks innovated a cloud-based payments system without having to change a single piece of hardware.
Picking Up Steam
Over time, cloud services improved features and security requirements and more and more people started to realize the economic benefits of using cloud. Particualrly the ability to spin up computing as you need it and then decommission it when you don’t. This makes it possible for companies to innovate faster and more economically than in the past and FinTech has started to capitalize on this revolution.
While it’s still considered early, cloud-based databases are helping banks and their customers. As one of the largest global financial institutions, this move is unprecedented by a major bank.
Another example from the start-up realm is Simple, who uses AWS not only for payment card industry (PCI) and data security systems (DSS) compliance, but also for their virtual banking platform in general.
While all of these innovations have been great for the industry, progress for FinTech has been regarded as relatively slow. But according to Brandon, this industry has reached a level of maturity today that it seems time for a huge burst.
Moving Towards the Future
“ Consumer behavior is driving a lot of new technologies in financial services and cloud computing is the foundation supporting much of the innovation. Eventually I’d like to see an entire banking system that’s completely cloud-based. You’re talking automated lending systems that can handle regulatory compliance, credit/background checks, payments, etc. all in a matter of seconds…it’s a challenge and also a huge opportunity for those in the financial services sector.
While it may seem lofty, there’s a lot of players in the startup realm already working towards this goal.
“Bare in mind; we’re only at the beginning. A lot of what’s being built right now is the foundation to build on top of.”
Which, in looking at the current landscape of FinTech, has largely been true. Companies like Plaid have developed an array of tools to help make payments easier, while there are other players helping ease the regulatory processes such as Alloy.
“We still have a long way to go, but it’s going to be an exciting process. With the amount of potential in this industry, I don’t see a lot of resistance coming from the financial giants. Leaders like Fidelity Investments already invested in their cloud strategy for years and even Goldman Sachs has been developing a program.”
It goes to show that the financial industry isn’t just paying attention, but they’re trying to keep up. And while some insiders may consider it ‘just a fad’ or even too scary to enter, they better hop on quick. Because even though they may be ‘too big to fail,’ technology is enabling new paradigms that will give them a run for their money.
This post is part of our contributor series. It is written and published independently of TNW.