Why cloud expansion could define the payments space in 2018

By : Nav Kullar

January 25, 2018 01:00 PM

Cloud computing in financial services - it's a subject NCR has explored in depth in a recent webinar, as well as this white paper.


The impact and benefits of cloud computing
The significance of cloud computing for the financial services industry is growing steadily, largely because businesses are recognizing the many benefits that can be gained from adopting this technology.


One of the key advantages is greater cost efficiency. By reducing the need for large upfront investment in hardware and software, cloud computing allows financial institutions (FIs) to turn substantial capital expenditure into lower, ongoing operational costs. The cloud also provides an extra processing buffer as needed, especially in peak demand, at low costs and without any capital investment or extra fee.


The flexibility and accessibility facilitated by the cloud can also help business to be more agile and reduce the environmental impact associated with on-site, physical IT infrastructure.


Market intelligence provider IDC has predicted that, by the end of this year (2018), around two-thirds of global financial institutions will use cloud computing for key infrastructure needs. It's expected that cloud adoption will help the biggest banks to reduce capital expenditure on infrastructure by 25 percent by 2019.


By 2020, a corporate 'no-cloud' policy will be as rare as a 'no-internet' policy would be today, according to Gartner.


What does this mean for payments?
Payments is one of the key sectors that is driving the trend of escalating consumer expectations in the financial services industry. People now expect their banks and payment service providers to deliver a real-time, seamless, omni-channel service that offers simplicity without sacrificing security.


This level of expectation has been fostered by the success of brands like Uber, which leverage technology to offer an integrated service and give consumers maximum convenience and accessibility.


It's now clear that, in order to give customers what they want in financial services (and particularly in payments), financial institutions need to move away from established core functions and infrastructure, and embrace the next-generation benefits offered by technologies such as cloud computing.


This is particularly relevant in light of the current trend of rising competition and regulation-backed diversity in the industry. Fintechs and challenger banks are able to offer an alternative to established FIs through smart, innovative use of technology. This will continue in 2018, as the industry experiences further effects from PSD2 and open banking regulations.


As part of its overarching goal of encouraging competition, one of the specific aims of PSD2 is to open up access to customer account data through open APIs. This is just one example of an area where cloud computing could prove instrumental in the evolution of payment services, through functions such as API gateways, identity and access management as a service, and cyber security as a service.


Consumer demands, payment services and the industry as a whole are going through a period of great change. For financial institutions of all sizes, the challenge now is to find ways to keep up with and respond to that change, without losing control of costs.


Cloud computing will have a critical role to play in meeting that challenge and continuing to thrive in an evolving payments marketplace.

Nav Kullar

Payments Marketing Manager

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Nav is a marketing manager for Payments at NCR and is based in the UK. She is responsible for the marketing of NCR Payment solutions, with a specific focus on the transaction processing platform Authentic. Nav has over 15 years of experience in the payments business with previous marketing roles at Visa and Elavon.