There’s no question that FinTech technology is revolutionizing the financial sector. Whether you’re a consumer, investor or company owner, you must understand the technology supporting this industry. FinTech relies on cloud computing to access services that store data, provide software, and deploy applications. Each of these functions is a pillar in the operations of a FinTech company. 

So what is “the cloud”? Well, if you’re going to understand what it is, you must first understand why and how businesses leverage it. Let’s say you download a FinTech company's app because its payment features are intriguing. As soon as you open the app you’ll likely have to provide personal information. Then, as you use the service over time, the system will accumulate more information and data. This is then stored in the cloud database which can be accessed by any device with an internet connection. An example would be the way you can access your Gmail or Google Docs by simply signing into google.

Before cloud computing, this information would be stored in a single machine referred to as a “legacy system”. This form of computing is neither reliable nor efficient enough to keep up with the demands of consumers today. If your computer died without any information stored in the cloud, all would be lost. You want real-time information and access, whether it’s your bank account, email, even a stock or coin. The desire for this information is multiplied millions of times across users worldwide. Additionally, if your physical device is damaged, it won’t matter from a security standpoint since the information you have stored in the cloud is always accessible. It’s important to note that this technology is not limited to the FinTech industry. Insurance, healthcare, hospitality, e-commerce, real estate, and education are just a few examples of industries taking advantage of this technology. 

The level of data processing handled by cloud computing cannot be controlled by a local service since the demand for this technology has grown. This is where the cloud comes in, a networked group of elements distributed in numerous locations. These elements include (but are not limited to) analytics, regular reporting, risk mitigation, and managing risk anomalies. A large company will have many complex data variables which would benefit from a secure cloud storage system.

So let's go back to setting up your account with that FinTech app. The information you’ve provided is now sent automatically to multiple servers which can then be accessed by any web-based interface. This will allow you to always have access to the service and your information.

With this sense of how the cloud operates, let’s go over the top 3 cloud service providers (ranked by market share) and the number of regions and availability zones:

1. Amazon Web Service (AWS) - 47.8%

Regions: 26 - Availability Zones: 84

1. Microsoft Azure - 15.5%

Regions: 60 - Availability Zones: 116

1. Alibaba Cloud - 7.7%

Regions: 27 - Availability Zones: 84

With this data in mind let’s begin to dive deeper into what each provider offers:

Amazon Web Service (AWS)

This is the top choice when it comes to cloud computing services. Companies such as Twitch, Netflix, LinkedIn, Facebook, and many more all use AWS. Why is that? 

Background:

Amazon founded AWS in 2006 which made it one of the first cloud computing services. This attracted investors early on which allowed AWS to establish a dominant position over their competition.

Strengths:

AWS is a highly powerful system but the two major draws include scalability and elasticity. The scalability component is seen in the ability to add new servers in just minutes when resources become constrained. This ensures that the application is always available and can handle heavy traffic. 

Depending on the needs of your application, AWS can conform to the necessary resources for the requirements of your application. Whether this is increasing or decreasing resources, AWS is always paying attention to your network. In addition, you’ll always know how many resources you are currently using and can choose whether you want to scale manually or automatically.

Weaknesses:

Like any network, AWS is prone to temporary issues such as servers being down due to connection errors with the cloud provider. This is not a major issue since it can be rectified with support. This does lead us to the next issue which is a lack of professionals. Since AWS is still relatively new to such a complex infrastructure, there are not many experienced technicians. 

One more potential roadblock is price. Being at the top means the demand is high and some companies simply won’t have the budget. Amazon does announce price reductions for their services, but when it comes to AWS the pricing hasn’t changed since 2014. Now, the pricing scheme is a pay-as-you-go structure, though companies may need to allocate their budget resources elsewhere.

Microsoft Azure

The runner-up to AWS is Microsoft Azure, another well-known and highly reliable name in technology. This is the cloud service provider for companies such as LG, Verizon, and Walmart to name a few.

Background: 

Azure was first brought to light in 2008. After an additional two years of development, the service was made public. When it was released, it was dedicated to operating on a system called Windows Azure which was supposed to overtake the cloud hosts, Google Apps Engine and Amazon EC2. They were unsuccessful as the audience who could make use of the service was narrow. After years of development, they have finally developed something that the broad public can use. 

Strengths:

Azure is now a partner of another well-known cloud company called Oracle. This is a big deal for both companies as Oracle is a kingpin database in the computing sector. To keep large databases secure, users need access to a cloud infrastructure that is powerful. With Oracle and Azure recognized as industry leaders, a merger between the two has increased compatibility and flexibility. 

Weaknesses:

Similar to other cloud services, Azure is not exempt from technological issues, especially as an IaaS (Infrastructure as a Service). Contrary to SaaS (Software as a Service) like Office 365, the consumer of information is not an end-user. Instead, the computing power is transferred to the cloud. This means that it requires management and experts to look after it which will eat up time and resources. In addition, be on the lookout for data transfer fees which are present among platforms like AWS or Google Cloud. This is an important aspect to be aware of and plan for, especially as a big company.

Alibaba Cloud

Though a subsidiary of Alibaba Group, Alibaba Cloud (referred to as Aliyun) provides businesses with a solid cloud computing platform. In the realm of E-Commerce, Alibaba has been a dominant force while racking up revenue of over $130 billion annually. The company uses Aliyun to govern their E-Commerce site and is now a lead provider of the service for others.

Background: Alibaba Cloud was founded in 2009, a few years after Amazon released AWS. Dr. Wang Jian is an incredibly ambitious computer scientist who founded Alibaba Cloud, further contributing to the company's foundation of services that make them so powerful. 

Strengths:

Data security is a key selling point for Alibaba Cloud through the results of the platform's advanced encryption. This enables users to access keys to securely call the service’s API. Another benefit of the advanced hardware in this system is anti-DDoS which can protect platforms from attacks. Additionally, they’re similar to AWS in the sense that scalability and flexibility are a big draw for consumers.

Weaknesses:

Considering the state of cloud computing services, Aliyun is still a relatively new platform which doesn’t make them very attractive to big companies like Netflix, Facebook, or Verizon. These players want the head of the snake, where Microsoft and Amazon will step in. 

When it comes to the adoption of Aliyun, they struggle in their on and off-boarding processes. Competitors have well-written methods for their clients to onboard their systems as well as offboard and do not charge for this support. Aliyun’s onboarding typically comes at a price and they rely on the service providers they are replaced with to handle the client's migration.

Takeaway

Cloud computing is essential to handle traffic, store data, and support many other business functions that are essential to effective performance. No matter what provider you choose, there are risks associated with all of them. Take the time to realize what’s best for your business by understanding what your consumers want in order to achieve repeat business.

Written By Ben Brown

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