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Analysis: Cloud computing vital to unleashing potential of local fintech firms
Since its introduction a decade ago, cloud computing has been increasingly adopted by large corporations, medium-scale companies and startups worldwide, including in Indonesia
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ince its introduction a decade ago, cloud computing has been increasingly adopted by large corporations, medium-scale companies and startups worldwide, including in Indonesia.
The application of this technological innovation is set to be more pervasive as it can bring efficiency into productive management, improve performance and enhance the competitive edge of a company.
According to a survey by PriceWaterhouseCoopers (PwC) titled “IT outsourcing and cloud computing,” 77 percent of respondents — comprising chief information officers and other top executives from 489 global companies — planned to fully migrate to cloud computing. A number of them have been moving into it, while others are still developing the system.
Basically, cloud computing is the utilization of internet-based computer technology in various forms and activities, such as servers, databases, networks, data storages and analyses, among other. It enables users to access information anytime, from anywhere, as long as there is internet connection.
For the financial industry, especially financial technology (fintech) players, cloud computing may serve as a catalyst to help companies grow and develop robustly.
New fintech companies do not need to own a specific set of hardware and software, or regularly carry out maintenance of the equipment. Instead, they can take advantage of services, data management and storage kept in the “cloud.” Without the burden to buy and maintain hardware, the firm’s capital expenditure (capex) can be diverted to operational expenditure (opex).
Furthermore, cloud computing is scalable in nature; when the demand for computing resources surges, the capacity will adjust automatically and that also applies when the demand declines.
This is highly profitable, as in general, transactions conducted by fintech companies, such as payment confirmations, purchases of equity and exchanges of foreign currencies at real time prices, run at a breakneck speed.
Cloud computing can adjust its capacity and speed within milliseconds as required by fintech companies and their customers.
The adoption of cloud computing in Indonesia has expanded quite significantly, marked by a rising number of data center providers that offer it, in addition to the larger figure of fintech start-ups and financial services giants that use the services.
Even so, the main challenge is how its services can be used efficiently and benefit many people, apart from the reliability of service providers and the security of financial activities through cloud computing.
Without the support of strong security systems, cloud computing is still vulnerable to a number of risks.
Regulatory support from the government is equally essential to push for cloud computing of better quality. In this regard, the Indonesian FinTech Association (AFI), through the Payment Working Group, recently submitted a list of recommendations.
The group proposes the certification and standardization of cloud computing service providers, as well as Bank Indonesia’s (BI) code of conduct for most appropriate security audits over service providers.
It is believed that the steps can provide certainty and comfort to fintech entrepreneurs to establish cooperation with cloud computing service providers, instead of restricting activities of the latter or prohibiting the use of cloud computing.
Other recommendations include designing regulations that outline the division of authority and responsibility between fintech operators and cloud computing service providers, so that the former can focus on offering their services to clients or customers, while the latter is in charge of guaranteeing secured transactions.
The presence of cloud computing is a necessity and an inevitable fact. Cloud computing introduces major efficiencies in the industry and increasingly reduces costs, particularly in the development of new products.
With cloud computing, fintech operators are able to facilitate the public to further utilize the internet in easily fulfilling daily needs, support cashless transitions and cut transaction costs of a number of financial services, like e-commerce, payments, peer-to-peer lending, insurance, capital markets and so on.
Cloud computing, which enables speed and ease in data processing, has managed to widen people’s access to many products and services offered by the fintech industry.
Finally, this technology also supports economic activities and is believed to help stimulate economic growth.
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The writer is a representative of the Payment Working Group at the Indonesian FinTech Association (AFI) and vice president for business development and government affairs at Xendit.
