Industry intelligence: Why multi-cloud is the future of payments

While many financial institutions operate their payment gateways on premises, there are definite advantages to using cloud-based technology here. With the increasing number of transactions being made, the scalability of cloud services means that the system can deal with any peaks and troughs.

However, much of the debate around cloud migration for banks was whether it was best to take a public or private approach. The former gives the bank complete ownership of their cloud but comes with a great deal of expense, while the latter offers virtually infinite scale but means the bank is at the mercy of the cloud provider to some degree.

My view is that while this debate is valid, it misses the point somewhat. The achilles heel of a single cloud approach—whether the bank owns that cloud or not—is that there’s a single point of failure.

For payments, the best way forward is the multi-cloud approach. Rather than migrating to the cloud and choosing between Amazon, Google or Microsoft, you choose all three. This means if one of these three has an outage, then you can redirect activity and data to another one. It’s basically the ultimate resiliency play. Don’t rely on a single provider, spread the risk across multiple providers instead.

Multi-cloud will pay dividends in a number of ways. The growing demand for real-time settlement and the increased volume of payments being made require robust, flexible infrastructure; the kind that a multi-cloud approach can provide. Due to the interconnected nature of the global economy, the volume of international payments has picked up a lot in recent years. These cross-border payments are happening not just for large trade items, but also for smaller exchanges of services. Using multiple clouds is a solid basis for providing the support required for the increased number of cross-border payments being made.

Operating a payment gateway on premises is very expensive. There are the facility costs and hardware to consider, and an awful lot of connections to make depending on which territories you deal with. Standards change all the time, so maintaining all of these connections, applying all of the security patches and so on is a considerable drain on resources. Think about all the work involved in supporting Swift's migration to ISO 20022 or connecting to the forthcoming FedNow platform—it's a real headache.

By moving the payment gateway to the cloud, facility and hardware costs are taken out of the equation, and management and maintenance also becomes a lot easier too. Of course, cloud migrations have to be handled carefully. It will also provide a steady foundation for the continuing evolution of payment services in the future.