Interpreting the forecast for payments in the cloud

As recently as two or three years ago, moving a mission critical system like payments to the cloud was a “non-starter” for banks. But the industry’s perspective on locating and installing payment systems is evolving rapidly: from on-premises, to data centers, and now increasingly, payments in the cloud. Today, moving payments to the cloud presents financial institutions with a variety of opportunities, including enhancing the customer experience and enabling greater agility and economies of scale.

Delivering a seamless customer experience

The challenge of managing rapidly evolving consumer expectations is a common pain point in the financial services universe, and the payments space is no exception. Thanks to new entrants into the payment space like Paypal, Venmo, and Zelle, customers are conditioned to expect instant gratification from payments experiences. And these expectations are not limited to consumers: corporate treasurers and other B2B customers are also looking for seamless, instantaneous payments solutions.

Shifting payments to the cloud enables a bank’s payments infrastructure to more easily interact with entities outside the bank’s own ecosystem in order to better meet customers’ needs and expectations. From ISO20022 to the Federal Reserve’s 2019 announcement that it will introduce a real-time payments system for banks, the payments sector is undergoing swift changes. Leveraging solutions in the cloud can make these transitions easier and more seamless for all parties involved.

Boosting speed, agility, and economies of scale

In general, acceptance of and comfort with the cloud is steadily increasing throughout the global finance industry--and this is largely because it offers so many operational benefits to banks. For instance, the cloud provides dynamic scaling capabilities that on-premise systems and data centers do not. With a legacy system, a bank must build infrastructure with enough computing power to handle peak activity, even though most of the time it only needs to use a fraction of that capacity. But in the cloud, computing power can be scaled up or down as needed to satisfy demand--which can dramatically change cost structures for the bank.

Additionally, speed and agility are among the most compelling reasons to adopt the cloud. Given the current pace of change in the financial sector, banks and other legacy institutions recognize the need to be nimble and adapt quickly to evolving industry standards and customer demands. With shifts happening every day, predicting which challenges the payments sector will need to solve three years from now is virtually impossible. By locating payments systems in the cloud, institutions can enhance their ability to innovate quickly in ways they have yet to imagine--while also achieving valuable economies of scale.

Last but not least, financial institutions need to contemplate payments in the cloud not just in terms of greater computing capability, but as an opportunity to rethink current business processes. The cloud offers capabilities that can transform the payments experience banks offer to clients today and in the future: and the sooner the industry embraces this mindset, the more innovation will flourish.