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Cloud-based Meets Fintech

Mike Decktor, General Counsel and Head of Compliance, examines cloud computing in the fintech space and regulatory considerations that Anovaa discusses with our clients.

Cloud computing in fintech has quickly become the industry standard means of storing and archiving data due to the advantages of portability, accessibility, and security.  Cloud has even been credited with helping to produce the sector’s forecasted compound annual growth rate of nearly 24%.  However, given the diffuse and non-localized nature of the Cloud, both regulators and responsible corporations are very motivated to keep the move to the cloud secure and managed responsibly.

Fintech start-ups and established financial organizations are racing to provide customers and end-users with more speed, reliability, and 24/7 uptime in their digital products and services.  With the elimination of the limitations of physical hardware and data warehousing, companies are seeing delivery speeds and reliability metrics that were simply impossible prior to the introduction of the Cloud.

The Cloud: Advantages to Fintech

Data is the lifeblood of the financial services industry. It is crucial from everyday account management to verifying user identities, displaying balances, analyzing spending habits, and a myriad other uses. Cloud technology allows fintech companies to store, manage and access huge volumes of data securely, cost-effectively, and autonomously, from anywhere and at any time.  Further, the processing agility that cloud computing has brought to the fintech industry has accelerated the sector’s innovation exponentially. Cloud enables financial organizations to develop their products and bring them to market with more speed, while also allowing them to react quickly to changing demands and emerging trends.

The Covid-19 pandemic brought many challenges to the fintech sector which cloud computing helped financial services companies overcome, avoiding the issues associated with overly localized data, limited personnel, or compromised locations.

Because of the extremely sensitive nature of the data being held by financial technology companies, our customers and clients are becoming increasingly aware of how their personal data is protected. Both in the eyes of regulators and the public, the financial services sector has a responsibility to safeguard the data of its customers.  The advantages of Cloud-based computing have made those responsibilities much more achievable and sustainable.  From data encryption to zero trust verification and access control, many of the risks that traditional on-premises IT infrastructures present are being mitigated through cloud computing in financial services.

What Will Regulations Look Like?

A good place to look for the direction of potential coming regulations in this region is those that have already been put into place.   For trading industry organizations, the use of the cloud is not so new, and Regulation S-P – relating to the protection of customer information, has been in place since 2005 after being put into place by the Securities and Exchange Commission.  The Fintech industry’s predominate use of technology may subject it to similar standard and practices, further underscoring the need for proactive management of cloud-based computing policies.  At Anovaa, we believe that the SOC-2 annual audit standard, alongside PCI Compliance and periodic self-audit, should be more than sufficient to maintain corporate responsibility while balancing the concern of not “over-spending” on independent audits or evaluations simply to underline the fact that you are behaving responsibly.

Regardless of what the future holds, as it pertains to specific regulations or responsibilities applied to Fintech companies, the move to the Cloud is here to stay.  Good corporate citizenship requires that, as we are leveraging the processing, innovation, and security benefits of the cloud, we are maintaining fidelity to the duty of care we owe to each and every customer and client who entrusts their most personal information to us.

Good corporate citizenship, and faithful client and customer information stewardship are at the very core of the Financial Technology and Services Industry.  At Anovaa, we firmly believe in these values, and they are reflected in every element of our business.