Cloud adoption continues to accelerate within financial institutions driven by rising customer expectations for digital experiences and the need for alignment with financial technology partners. However, security and compliance concerns still present barriers for regulated financial institutions looking to move to the cloud.
Below are some key considerations around evaluating cloud solutions, maintaining compliance, and securing data in the cloud
What's driving cloud adoption?
Two common factors pushing cloud adoption in financial institutions are:
- Client Expectations: Customers want digital experiences on par with tech leaders. 90% of banks plan to embed fintech solutions over the next two years to enable digital capabilities. The cloud allows faster deployment of new solutions.
- Fintech Alignment: Banks are partnering with fintech providers. Migrating to the cloud enables easier integration with fintech systems and tools.
Additionally, the cloud offers a wide range of services, from Infrastructure as a Service (IaaS) to Software as a Service (SaaS), allowing organizations to choose the solutions that best fit their needs. Cloud services provide the ability to scale resources up or down based on demand, enabling businesses to adapt quickly to changing market conditions while providing a simplified IT infrastructure.
Challenges and barriers to entry
While the benefits are clear, some of the top concerns around cloud adoption include:
- Regulatory Compliance: Uncertainty around compliance in the cloud persists. Solutions must adhere to banking regulations.
- Data Security: Financial institutions must ensure financial data remains secure in the cloud.
- Legacy Integration: Cloud solutions must integrate with existing core banking systems.
- Cost Management: Migration and operating costs.
- Staff Capabilities: Financial institutions must assess if staff have cloud skills or if outside help is needed.
Best practices for compliance success in the cloud
Financial Institutions can address security concerns through best practices like:
- Infrastructure Security, including firewalls, intrusion detection, encrypted data storage.
- Operations Security, including access control, multi-factor authentication, role-based access.
- Application Security, including vulnerability scanning, penetration testing, code reviews.
The cloud offers immense benefits, but it also presents compliance challenges that organizations must address to ensure data security and regulatory adherence. By understanding the drivers behind cloud adoption, overcoming barriers, and implementing robust control measures, businesses can simplify compliance in the cloud. Regular monitoring, adherence to best practices, and a commitment to evolving with changing regulations are key to achieving compliance success in this dynamic environment.
Steps to simplifying cloud compliance
With the right strategy and security precautions, financial institutions can confidently migrate to the cloud while ensuring regulatory compliance. While cloud migration across financial institutions has been slow, a thoughtful roadmap can help traditionally on-premise environments better transition to core and customer facing capabilities.
A methodical approach to evaluation is key for simplifying compliance. Steps include:
- Defining objectives and requirements
- Regulatory compliance assessment
- Security assessment
- Data privacy and residency analysis
- Reviewing service level agreements
- Cost and pricing model analysis
- Ensuring technical compatibility
As companies implement the cloud, it is essential to carefully consider various factors to ensure a successful and secure migration. If you’d like to speak to someone at Xamin about cloud migration strategies or download our free Cloud Migration Checklist, contact us today.