There’s no doubt fintech startups are establishing their presence amid an industry of large, established financial institutions. In fact, Australia’s fintech space is booming. It has been predicted that our fintech sector will reach $4.2 billion by 2020 (up from just under $250 million in 2015).
While the large financial organisations and institutions are encumbered by legacy technology which makes it difficult to innovate with speed, fintechs are moving quickly and scaling easily. They are doing this by keeping costs lean and accessing the latest cloud technology.
Here are some of the ways fintechs are utilising cloud solutions to outpace larger incumbent players.
1. Cloud first business models
A characteristic of most fintechs is end-to-end adoption of cloud solutions. This approach allows them to provide their customers with products and services at competitive prices and delivered with the click of a button, helping to make their offerings sticky.
By leveraging cloud, rather than on-premise IT, they can deliver strategic differentiated value to customers through operational excellence without the costs involved in buying, maintaining and upgrading expensive IT infrastructure, like servers.
2. Scalability
By using cloud, fintechs are able to scale much easier. Whether it’s adding new users, capacity or expanding to new regions, achieving growth is more straightforward when your entire IT environment is based in the cloud. It’s almost as easy as flicking a switch. No need to worry or manage capacity as it is on tap when you need it most.
3. CapEx v OpEx
Moving to cloud computing enables you to account for your IT investment as operational expenditure as opposed to capital expenditure.
Why this matters for fintech startups is they don’t have to worry about finding cash to invest in big ticket items like servers or software licences upfront. Plus, unlike capital expenses which have to be amortised and deducted over many years, operational expenses are ‘expensed’ in the same financial year (as you’re not expected to derive value from your investment over time). It really is pay-for-as-you-go rather than spend it all at once.
4. Mobility and automation
Having everything under one roof in the cloud that can be accessed over mobile devices from almost anywhere is making new age businesses more agile. Plus, new breeds of cloud workflow management tools are making automation less expensive and easier to implement, opening the door to competitive advantages never before available to startups.
5. Improved security
Cloud technology and security have improved greatly over the past few years. In most cases, your data is actually safer in the cloud than on a physical server in your office. Plus, most cloud providers offer a reliable backup and recovery service.
Escalating technology, changing customer expectations and disruptive new service delivery models, are opening the door for innovative, nimble fintech startups to revolutionise the market. It is their savvy use of cloud computing which is helping them to fuel their innovation, growth and impact.
Andrew Tucker is the CEO of ITonCloud which helps businesses simplify and automate their IT systems by leveraging the cloud. With ITonCloud businesses have their entire IT environment in the cloud, including email, files and business applications, making it easy for your workforce to access anywhere, anytime, on any device with comprehensive security. Using ITonCloud’s proven and state-of-the-art cloud desktop platform eliminates the need for businesses to invest in on-premise servers, expensive hardware and support.
