How Can Cloud Make Fintech the Engine of Financial Services Transformation?

This article explains how Alibaba Cloud enables fintechs to transform banking and financial services through innovation and enhanced customer experience.

Of all traditional industries, banking and financial services has been among the most ripe for disruption. Legacy processes, technologies and cultures made incumbent players vulnerable to challenges from agile new entrants, while the number and scale of opportunities lured high caliber entrepreneurs, innovators and capital to the sector.

Financial technology (fintech) – emerging technologies that transform banking, insurance, wealth management, trading and other financial services categories, with flow-on impacts and opportunities for businesses across a range of industries – enables startups and companies known as fintechs to create and launch new products quickly while reducing costs and improving efficiencies.

The fintech market is booming – professional services firm Deloitte predicts the market will grow to 188 billion euros (about $201.66 billion) in 2024 and notes the Asia-Pacific is a particularly fertile market, with fintech in the region about 40% of the global market and the fastest-growing in the world.

In Australia alone in 2021, the fintech sector reaped the rewards of record investor capital, new job creation and an increase in the number of fintech businesses preparing for international expansion, a census undertaken by EY and FinTech Australia revealed. Deloitte points to the success of fintechs in defining innovation across almost every financial services subsector and in prospering as standalone businesses and crucial elements of financial value chains.

They are also – through innovations like rapid loan adjudication – raising the bar for user experience in financial services, the firm says.

However, entering new markets and meeting elevated customer expectations – while continuing to innovate and transform antiquated practices – requires a laser-like focus on the business itself, including fast development and go to market, increased efficiency and delivering a high-quality customer experience. To succeed in every market in which they operate or intend to enter, fintechs need access to proven infrastructure, expertise, services and solutions. Below are some examples of how Alibaba Cloud is helping fintechs transform financial services across new and existing markets.

Infrastructure

A highly scalable, reliable and cost-effective infrastructure is key to the success of fintechs across the Asia-Pacific – and beyond – and several fintechs have turned to Alibaba Cloud to overcome their challenges. Xendit – a fintech that provides payment solutions and simplifies payment processes for businesses in Indonesia, the Philippines, and Southeast Asia, ranging from SMEs and e-commerce startups to large enterprises – needed a reliable infrastructure capable of scaling seamlessly to support rapid growth in the number of users.

The business also needed an easy-to-operate and integrate platform to minimize the cost of DevOps and maintenance. This meant seeking out a trusted cloud provider with a presence in Indonesia that could deliver solutions enabling innovation, agility and flexibility. Xendit now relies on Alibaba Cloud's infrastructure-as-a-service (IaaS) offering to handle its critical and growing production workloads, including products such as Elastic Compute Service (ECS), Container Service for Kubernetes (ACK), and Server Load Balancer (SLB). Xendit also utilizes various data storage and database solutions on Alibaba Cloud, such as ApsaraDB RDS for PostgreSQL for relational databases, ApsaraDB for MongoDB for NoSQL database, and Alibaba Cloud Log Service for real-time data logging.

NCX – a global trading platform designed to be robust, secure, scalable and deployable in any jurisdiction at a rapid pace – chose to run on Alibaba Cloud in Australia and Chief Technology Officer Thushara Weerakody says, “We use the latest Infrastructure as Code (IaC) processes to manage and provision the entire platform. This greatly improves resilience. We can move from one availability zone to another in minutes. We can also deploy the entire platform to a new country in days.” Using Alibaba Cloud enabled NCX to sharply reduce its operational load, freeing resources to spend more time adding value to the business. In addition, the faster, more efficient infrastructure cuts costs without requiring long-term commitments, thanks to Alibaba Cloud’s innovative pricing and sustained usage discounts.

A scalable infrastructure was also key to AdaPundi, one of the largest online loan platforms in Indonesia and owner of flagship app AdaPundi-Pinjaman Uang Online, when the coronavirus pandemic prompted a rapid increase in demand for online loan services in Indonesia. The organization faced the challenge of a sudden surge in the number of users and daily transactions on its online loan app and wanted a flexible, resilient cloud infrastructure that could scale computing resources based on the volume of user requests. AdaPundi turned to a cloud-native architecture and deployed its core loan application on Alibaba Cloud IaaS including Elastic Compute Service (ECS) clusters and Server Load Balancer (SLB). This helped AdaPundi streamline its application O&M by scaling computing resources depending on the peaks and dips in the incoming traffic. AdaPundi further leveraged various cloud-native data storage solutions on Alibaba Cloud to efficiently manage the massive amount of user and transactional data and ensure high application availability. These included ApsaraDB RDS for PostgreSQL for database management and ApsaraDB for Redis for caching. In addition, AdaPundi used Alibaba Cloud Log Service for real-time collection, consumption, shipping, search, and analysis of large amounts of log data, and Object Storage Service (OSS) to easily store and access daily transactions and events. It also leveraged Alibaba Cloud’s powerful big data capabilities to support its users with more automated processes and better data-driven decision-making.

Service, Support and Expertise

Alibaba Cloud’s service, support and knowledge has also proved invaluable to fintechs aiming to optimize the contribution of cloud products, services and infrastructure to growth and customer experience. For example, the Alibaba Cloud team provided exceptional service and support to NCX, with the added benefit of 30% in cost savings. “I think they’ve made about 40 tweaks to APIs, terraform, product availability and billing plans in the last two weeks so, if we had to review their service, it would probably be the best I’ve ever experienced in my life,” says Dean Bailey, Head of Security Architecture, NCX.

Robust technical support from Alibaba Cloud also enabled INFT – one of Southeast Asia's most prominent digital payments partners – to focus fully on its mission of bridging the finance and banking gap for underserved micro-, small- and medium-sized enterprises in Southeast Asia.

Compliance

Compliance is a particularly critical issue for fintechs as regulators and governments recognize and respond to their increasingly important role in financial systems. In Indonesia, leading payment technology provider and digital transaction pioneer DOKU holds licences from Bank Indonesia, the country’s central bank, which required the company to locate its disaster recovery site within the country.

This meant DOKU had to access world-class data centers onshore that were certified to local and international standards. The organization turned to Alibaba Cloud, which had a strong presence in Indonesia with two world-class local data centers at the time and a third planned, to deliver on its disaster recovery and production requirements.

Security

For fintechs to retain customer confidence and avoid regulatory action, they must effectively secure their systems and data. Alibaba Cloud supplies a security architecture, assurance and services that minimize the risk of breaches or disruption and a number of fintechs base their decision to use the provider based on these offerings. For example, for each NCX trade platform (located initially in Singapore and Australia) all critical servers holding application services, user wallets and coin nodes are securely protected behind Bastion hosts designed and configured to withstand attacks. Meanwhile, Xendit relies on Alibaba Cloud Key Management Service (KMS) to encrypt and protect its sensitive data assets, while INFT uses the cloud provider’s holistic security product-set to keep its business data secure.

For its part, AdaPundi regards security as key to its long-term business growth and success, and its selection process involved looking for a trusted Infrastructure-as-a-Service (IaaS) provider that could ensure strict compliance with regional and international security standards. AdaPundi relied on Alibaba Cloud to successfully deploy its systems, comply with the necessary data security and protection standards, and expand its business with minimal downtime. The company benefited from Alibaba Cloud's strong presence in Indonesia, with three local data centers, to comply with local data management regulations.

Cost

Managing cost is particularly critical for fintechs as they build out their offerings and capabilities and scale to support user demand. For example, GCash – a Philippines micropayment service that transforms the mobile phone into a virtual wallet, had struggled with rapid user growth on an on-premise legacy platform. Scaling the legacy platform proved time- and cost-intensive so GCash signed up to Alibaba Cloud for solutions including Infrastructure as a Service, the MaxCompute data warehousing platform, the E-MapReduce big data platform and Web Application Firewall (WAF). This solution enabled the business to scale its infrastructure in real time to meet demand, while the ability to add and remove services through the cloud reduced O&M costs.

In Indonesia, leading digital wallet provider DANA – which has over 85 million users and five million daily average transactions – used to run its infrastructure on-premises and on a public cloud. As transaction volumes increased, the organization faced a range of challenges, including unpredictable operational costs to host its entire infrastructure on-premises. The business opted for Alibaba Cloud and deployed multiple IaaS and Platform as a Service products and services to deliver a simplified and modernized IT infrastructure, with benefits including upfront savings on its server investments.

With Alibaba Cloud, fintechs are successfully jolting the legacy banking and financial services industry into an agile, dynamic sector relevant to the businesses and consumers of today.

Community

How Can Cloud Make Fintech the Engine of Financial Services Transformation?

Infrastructure

Service, Support and Expertise

Compliance

Security

Cost

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