The cloud is quickly becoming the de facto standard for payments infrastructure. We look at some of the challenges as well as the business benefits of the cloud for payments.
The migration to cloud infrastructure is happening at exponential rates, as industries like the financial sector discover the full range of benefits available via cloud computing. This digital shift is occurring both at the consumer and corporate level, with consumer engagement levels promising substantial revenue opportunities; global payment gateway systems are predicted to grow by US$23.45 billion between 2020 and 2024, according to Technavio.
The cloud allows payments companies to meet their customers at the intersection of behavioral changes and new technological advances. With added flexibility, agility, and power to scale, the cloud empowers organizations to keep up with the rapidly evolving demand of digital payments while also providing deep insights and impressive analytical power. The business benefits of the cloud are broad and deep — and for those who take advantage, could prove to be game-changers in the new payments landscape.
Considerations for Cloud Implementation
Migrating to the cloud is no small feat. Even with its numerous benefits, moving to the cloud includes many challenges. One of the biggest is getting executive buy-in, which should go beyond getting the C-suite “on board” and also aim to earn their full commitment to this endeavor. It will be key to company-wide adoption further down the road, which will be critical to see the full benefits of such a migration.
From a logistical standpoint, payments companies and financial institutions must consider how much they can invest and embark on the right strategy accordingly. Those with a lower initial investment available may try to target the areas that will generate the highest reward from the cloud, scaling from there as time and resources permit. This is a well-traveled road for many organizations who are not able to “rip and replace” their entire legacy system in one fell swoop.
There should also be plans in place to remove silos between those working in the cloud and those who have not yet migrated over, to maximize the application of that technology. Ultimately though, companies should be preparing for an eventual total shift; Cisco predicts that by the end of 2021, the cloud will process 94% of workloads, with the U.S. the most significant public cloud market. This will require clear long-term planning and communication throughout the organization.
Reaping Cloud Benefits
Despite the numerous challenges and considerations that accompany a migration to the cloud, the benefits far outweigh all of them. A well-laid plan followed by on-point execution can open up payments organizations to a world of benefits they would have never realized without the technology.
As a facilitator of services rather than a set service itself, cloud infrastructure can function as a gateway to a myriad of solutions and technologies in the market. By making this investment now, companies are laying the groundwork to leverage these benefits both immediately and over the long haul. We’ve outlined some of the key benefits below.
Hosting financial data in-house can pose a significant burden for payments organizations that face the upfront costs of software installation alongside the expenses associated with upkeep and maintenance. Alternatively, the cloud offers enhanced security features without the hefty price tag.
Businesses that opt for cloud infrastructure benefit from ongoing updates to technology, antivirus software, and other security features. Many cloud providers even test systems via ethical hackers to ensure they are keeping up with the latest threats and identifying any vulnerabilities before bad actors. Perhaps most importantly, the cloud allows sensitive financial data to be encrypted, eliminating the risk associated with data breaches.
Financial data that undergoes multiple layers of sophisticated encryption can keep sensitive data secure, even if a breach occurs. While encryption is also possible via in-house software, the upfront costs for such measures are sizable. The cloud opens the door to enhanced security measures for payments organizations of all sizes.
While the initial costs of cloud migration can be significant, the long-term savings can trump those costs several times over. In the long run, cloud infrastructure can significantly lower operations costs via automation and the ability to run multiple processes simultaneously. Not only can these abilities remove manual labor and reduce human error (think: batch processing and fraud prevention), but they can also eliminate redundant tools.
Agility, Scalability, Flexibility
Arguably the most important benefits of the cloud include the inherent agility, scalability, and flexibility afforded organizations that leverage this technology. New integrations can happen faster than with legacy systems, allowing organizations to quickly roll out new products and solutions and more easily pivot to serve new markets or offer new services.
Investing in the cloud can be daunting, but the effort required can yield significant and lasting short- and long-term benefits that result in time and cost savings not to be discounted. It’s only a matter of time before the cloud is considered the de facto operating system for payments companies, and those who fail to adopt new technology and adapt to the changing landscape will find themselves left behind.