By Kathryn Van Nuys, North America Lead, Fintech Startup Business Development Team at Amazon Web Services & Sam Edge, EMEA Lead, Fintech Startup Business Development at Amazon Web Services

As consumers, our expectations are consistently being raised by new technology and we’ve become used to a certain level of speed and convenience across all aspects of our modern lifestyle – even when it comes to managing finances.

This trend has supercharged the growth of mobile-first, challenger banks which have stepped into the expectation gap that Financial Services incumbents were too slow to close. One in five of us now use challenger banks or mobile only solutions. And it’s unlikely that this trend will go anywhere any time soon.

But as the market becomes increasingly crowded, customers’ expectations continue to grow, and the regulatory landscape evolves, the question is, how can fintech companies stay agile, compliant, and competitive?

Staying abreast of regulation

Customers expect their bank to have a strong mobile presence, but one of the biggest challenges for challenger banks when they seek to address this demand is staying compliant given the number of new solutions and technologies involved.

For example, Starling Bank, one of the UK’s most recognised mobile-only challengers, saw a gap in the market for a bank that could combine the convenience of a mobile-first user experience with the functionality of a fully licensed bank. So it set out to build a new type of bank that would deliver a new kind of customer experience. To do so, one of the company’s core goals was to build a completely new, cloud native financial offering, all the while staying fully compliant with banking regulations.

Today, the Starling Bank marketplace, which allows customers to access the products and services of other FinTechs through open-APIs, can be seen as a trailblazer in the ‘banking as a platform’ business model which is likely to become more prevalent in the wake of open banking.

Regulators such as the Financial Conduct Authority or the Prudential Regulatory Authority were supportive, especially as they had been looking for ways to increase competition in the market in the wake of the 2008 financial crisis.

Having a strong cloud infrastructure helps mobile banks, like Starling Bank, to remain compliant. For instance, when Starling Bank used AWS to build all of its infrastructure, it was clear to the regulators that all technology would be secure and compliant as standard.

In a regulated industry like financial services, moving to the cloud isn’t a simple lift-and-shift exercise. Instead, financial institutions use a formal service-by-service assessment process, called whitelisting, to demonstrate how cloud services can help address their regulatory obligations.

The first step in the whitelisting process is to establish that the underlying components of the cloud service provider’s (CSP’s) services can meet baseline compliance needs. AWS’s shared responsibility model, where the secure functioning of an application on AWS requires action on the part of both the customer and AWS as the CSP, played an important role. This is because as AWS manages the security of the cloud, providing and maintaining proper operations of services and features, protecting AWS infrastructure and services, the company also maintains operational excellence, and meets all relevant legal and regulatory requirements.

According to The Financial Times, regulators want mobile banks to innovate, but they need to understand how they will accomplish this both safely and securely. The first step to fostering and delivering innovation is satisfying compliance requirements.

Staying agile and receptive to customer demands through cloud infrastructure and services

Working with cloud providers allows mobile banks to stay agile and scale up, while remaining secure and resilient.

Take Monzo, another well-recognised British challenger bank. Monzo, the bank that “lives on your smartphone,” has already handled £1 billion worth of transactions for more than four million customers in the UK. The fintech runs its core banking services in the AWS Cloud, and opted for a microservices architecture to make deployments in a seamless and agile way. This means that Monzo can run its operations with a team of just eight people dedicated to infrastructure and reliability.

Beyond the world of mobile banking, fintech companies are also innovating in other aspects of the financial services industry. We are already seeing companies increasingly turn to machine learning and artificial intelligence to bring greater efficiency to existing processes, to extract deeper value from data sources, and to drive even more innovation.

For instance, Aella Credit helps customers in emerging markets take the hassle out of identity verification and validation when applying for instant loans. Leveraging a deep learning-based image and video analysis services, it provides customers a route to biometrically verify their identity through their phones.

Without this solution, underpinned by reliable cloud infrastructure that supports the company’s web-based loan-processing software, many customers in emerging markets such as Nigeria, would struggle to access instant loans as they cannot easily verify their identity.

Using these types of services, the financial services industry will be able to derive greater insights, deliver hyper-personalised solutions, develop completely new ways to engage and interact with customers, while driving loyalty and innovating on behalf of customers.

Turning to a resilient architecture to build a loyal customer base 

Mobile-only banks cannot risk disruptions to their service, as their customers do not have other means of accessing services. If customers are forced to put up with delays or loss of service, they will very quickly look elsewhere.

A microservices infrastructure can be key to ensuring that a mobile bank prevents single faults from disrupting their entire system. The use of microservices is central to supporting a mobile banking platform, so that it remains agile and adaptable to market conditions and demands.

Microservices infrastructure provides mobile banks with agility and fault tolerance – meaning that if a service is unavailable, the platform doesn’t just stop working. With microservices, applications can handle service failure by degrading functionality and not crashing the entire application meaning that in the interim, customer experience is not affected.

Keeping up in a mobile world

The key lesson from the growth of fintechs is that idleness is never an option. Mobile banking has embraced the cloud to underpin new solutions and services to meet the evolving expectations of their customers.

Leveraging the cloud has enabled the most innovative financial thinkers to stay compliant with regulations and build trust in the sector. Organisations that have turned to the cloud have been well-positioned to quickly respond to customer and market demands, and to make sure their platform is resilient and agile.

But this is just the beginning. The way consumers bank in the UK and globally will continue to evolve as more companies innovate and bring new solutions to the market. All these changes will need to be underpinned by a powerful infrastructure that can provide security and reliability; because behind every successful mobile bank is a well-architected system that ensures every step is seamless, secure, and compliant.