The cloud is a buzzword that’s used often and often misunderstood. Even if you aren’t sure what it is, you probably rely on it more than you realize. Online applications like Dropbox, Google Drive, and iCloud use cloud technology to send, receive, and store your documents instantly over the Internet. While familiar apps on your phone or work computer, they only represent a small portion of the cloud’s full abilities. The cloud has applications in the financial world, using its fast and easy data transfer to automate and simplify financial services.
Traditional data storage limits reactive services
In the past, the typical bank branch stored data using old-fashioned department silos that couldn’t share information across systems. That meant updating systems and sharing information between branches took time and the concentration of the IT employees tasked with merging this data.These legacy systems were the best technology at their disposal before the cloud, but by now, they’re out-dated.
The cloud offers a faster alternative to data sharing. It moves storage away from a singular device or department to a network of servers connected by the Internet. These networks, also known as server farms, gives tellers, financial advisors, and customers instant access to data at any time.
The cloud has opened the door for FinTech alternatives
One of the many benefits of the cloud is its price point. Compared to legacy systems that require expensive onsite servers, the cloud is an affordable addition to even the smallest enterprise. While legacy systems may have been too expensive to build and maintain for a small startup, the cloud is relatively inexpensive. It doesn’t need the same upfront investment in the beginning, and its maintenance can be financed over monthly payments. It also doesn’t need physical space to operate, as the cloud relies on remote server farms. This has given rise to a new wave of startups providing online (or branch-free) financials servicesthat challenge conventional products and services offered by a typical retail bank.
What are these FinTech alternatives?
Name a traditional financial service and there’s at least one FinTech company offering an online version of it. Even basic, daily banking tasks have FinTech alternatives in mobile banks and online lenders. A mobile bank like Simple doesn’t have a branch, but they do have online services that can process customers’ requests at any time—day or night. An online lender like MoneyKey may not have a physical location, but they too have a digital platform that processes online loans at every stage of the borrowing experience.
Since they can cut overhead costs, like the branch and onsite storage maintenance, these FinTech alternatives can alter their services to create a faster, more convenient experience. A mobile bank provides no-fee checking accounts with no minimum account balances. An online lender facilitates fast payday loans online with uncomplicated applications and repayment methods.
Regardless of the financial service, customers of FinTech can check in on their accounts wherever they have Wi-Fi, making it easier to maintain these accounts for those who live far away from a branch and for those who suffer from mobility issues.
FinTech companies are gaining ground
While traditional banks are making the move to the cloud as well, their size makes the transition harder to implement quickly. Smaller FinTech companies don’t face the same obstacles. Thanks to the cloud, they can adapt to fluctuating market needs faster than their traditional competition and offer familiar financial services on a digital platform.