There isn’t a single industry that is free-and-clear when it comes to data breaches. Data breaches are, generally, performed for a hacker’s economic gains. For this reason, banks and financial institutions have long been cautious of cloud technology, despite its benefits. Although concerns of both banking supervision and data security pose hurdles to banks wanting to outsource infrastructure to Cloud Service Providers (CSPs), businesses can find success in “the cloud.” Financial institutions need “the necessary compliance know-how” and awareness of the requirements and criteria they might have of their service provider.
Financial institutions have numerous options for cloud computing, so companies can decide on the delivery model that fits their requirements. There are four different models, with administrative factors determined by each model:
- Private cloud: the cloud infrastructure is available solely to a one, specific institution.
- Public cloud: the cloud infrastructure is rent flexible, and available to multiple users based on server capacity.
- Community cloud: the cloud infrastructure is only available to those within a particular business community, i.e., finance.
- Hybrid cloud: availability is diverse; integration of various cloud infrastructures.
However, it is important to note that these models’ specificities may vary slightly from provider to provider. Companies need to research and ensure the nature of the services their CSP provides to pick the correct infrastructure for their business. Operating sensitive data, banks typically opt for a “private cloud environment,” the purpose of which is to “prevent customer data from different institutions being mixed or visible to other cloud users.”
Safe & Secure
For banks and financial institutions across the globe, “the cloud” has become more of a destination than a technology. It’s where they “store data and applications and access advanced software applications via the internet,” effectively becoming their key to a proper and successful operation. Arguably most important, cloud technology enables banks to enhance their IT security. Security within the cloud varies due to the different nature of the tools provided by each particular CSP’s cloud infrastructure. Moreover, “cloud providers typically take responsibility for the security of the lower-level infrastructure layers,” creating a shared responsibility between CSPs and businesses/users. With the uttermost security standards, CSPs can provide comparable — and in some cases, superior — security to that which existed on-premises. However, cloud infrastructure supplied by a CSP can only do this “when implemented correctly and with skilled and trained security.”
A 2018 study found that IT security was among the top two concerns for banks and financial services firms in making the transition to cloud computing, and compliance. In short, this study concluded that “the benefits of cloud solutions include a high level of security.” More often than not, critical security breaches occur within internal IT systems, as opposed to “the cloud.” With constant updates to both the infrastructure and needs of security systems, cloud technology effectively guarantees data safety.
Using the Security of the Cloud to Invigorate Your Business
As the expectations of consumers change and their patience shortens, technology will continue to evolve. New technologies and new business models require banks to keep up with the advancement. The banks that will exist 10 or 20 years into the future may operate in an entirely different way. Top-level executives are keeping their eyes locked on evolutions in cloud computing to help mitigate and manage these changes.
Banks and financial services firms are — at increasing rates — turning to cloud technology and infrastructure as means of both “creating new business frontiers” and optimizing organizations. With “better integration of business units” via data sharing and sped up processes, customer relations run with more ease. And by “creating common, connected data sets, enabling deeper, more sophisticated insights and analytics, enhancing collaboration through new[,] shared platforms and tools, and increasing [the] speed of decisions,” cloud transformation acts as value-added for enterprises. Furthermore, “the cloud” can successfully “enhance companies’ overall resilience,” while also allowing for the replication of “data and app services across more than single data center or region.” Through cloud transformation, banks can maintain the security, reliability, and efficiency that consumers expect in modern times.
Sternkopf, Christian. “Banking Goes Cloud: How Security and Compliance Stay on Track.” Knowis. AG: Credit Solutions and Digital Banking Platform, 17 June 2019.
Tang, Michael. “Cloud Banking: Financial Services and Banking of the Future.” Deloitte United States, 16 July 2019.