Cloud adoption by financial institutions has been on the rise. According to PwC, by 2020 core financial services like credit scoring, statements management, payments, and billing will use the cloud for processing and computing. From retail banking to collection agencies to asset management and investment banking, the cloud provides many use cases to bring scalability, cost savings and higher security to financial institutions.
The largest financial institutions have already adopted cloud technology. But it’s not just the J.P. Morgan’s or Bank of America’s of the world. Smaller financial institutions are finding the same benefits in cloud computing and cybersecurity practices that enterprises are leveraging. Here are 7 reasons financial institutions need cloud computing and cybersecurity.
Financial institutions are leveraging the cloud to move IT operations to an operating expense model (OpEx). IT hardware and underlying infrastructure is expensive, and financial institutions are concerned about the rising costs associated with running data centers. Additionally, on-premise data centers are difficult to scale, and any growth requires large capital expenditures. Instead, hybrid cloud strategies allow banks and collection agencies to safeguard mission-critical data in the cloud without the high cost and maintenance that typical on-premise centers come with.
Similar to cloud computing, cybersecurity services also help save money for financial institutions. Banks and collection agencies can either purchase Security as a Service (SECaaS) as a bundle or they can purchase its individual solutions like Intrusion Detection and Prevention (IDS/IPS), Security Information and Event Management (SIEM), Identity Management and Email Security. Ideally, these institutions would best benefit from the entire cybersecurity bundle, however, they have the leisure of picking and choosing. In a nutshell, businesses only buy what they need and never purchase more than necessary.
Financial institutions face growing data storage and backup management concerns. Backing up on-premises means a dedicated team is needed and responsible for the management of the backups. Cloud backup employs the “set it and forget it” process to data backup, which frees up IT teams from managing mundane backups and allows them more flexibility to scale for incremental backups. Additionally, instead of having an IT team at each individual branch, a single IT team could remotely manage cloud backups for each location to the offsite data repository.
With money always flowing in and out of these types of businesses, financial institutions need constant maintenance including managed backups, consistent threat detection and immediate remediation. This is possible through Backup as a Service (BaaS), powered by Veeam Cloud Connect and Security as a Service (SECaaS) solutions like Intrusion Detection and Prevention (IDS/IPS) and Identity Management.
With managed backups, financial businesses can be at ease knowing their data is constantly being monitored and backed up by their cloud service provider. Also, Intrusion Detection and Prevention (IDS/IPS) detects threats as soon as they happen and quickly mitigates them to prevent any damage on businesses. No matter what day or time, financial institutions are protected with managed cloud services.
Whether cloud computing or Security as a Service (SECaaS), custom solutions are ideal for any business, including financial institutions and they come in handy particularly for reducing backup and cybersecurity costs in addition to the amount of management a bank or collection agency desires. To reiterate, these businesses have the options of choosing between public, private and hybrid clouds and purchasing individual Security as a Service (SECaaS) solutions. They can also decide how involved their cloud service provider should be and who holds their key.
Banking has become digitized and on-the-go. More users are looking to complete transactions from mobile devices, mobile phones, laptops, tablets, you name it. To ensure optimal customer experience and to stay competitive, financial institutions must undertake new application development. Some financial institutions have opted to move application development to the cloud where they can avoid expensive hardware costs and always have access to the latest software upgrades. Others have moved to the cloud for infrastructure services to process big data like large investment portfolios and other core banking systems.
Additionally, Multi-Factor Authentication (MFA) is a must-have for both banks and collection agencies and a prime solution for better customer experiences because it increases efficiency without sacrificing security. Multi-Factor Authentication (MFA) adds a quick and extra step to the user login process for identity verification. Whether a fingerprint, a one-time token, a secure access code or an answer to a security question, it streamlines the experience for both parties.
Customer trust and loyalty fall under the previous point. The better the experience the customer has, the more they trust their financial institution, and the more loyal they are. Customer trust is typically number one priority for any bank or collection agency and both cloud computing and cybersecurity services are pertinent to retaining customers.
Customers assume that their personal information is secure when they bank through an institution, however, this trust is only built by what’s happening on the backend, meaning the bank has invested in cloud solutions to back up and replicate customer information and has instilled cybersecurity solutions to detect and prevent malicious activity from harming this information. Identity Management can be specifically useful for direct customer communication. For example, when a customer calls in with a question about their bank account, Identity Management ensures that whoever picks up the phone to help is trustworthy and authorized.
Understanding your network is a huge part in understanding your overall business. It’s another reason why cloud computing and cybersecurity are imperative to any business. Financial institutions handle highly sensitive information on a daily basis, which makes Security Information and Event Management (SIEM) crucial to those networks. It allows banks and collection agencies to look deep into their networks, find patterns and analyze trends to ultimately close any vulnerable gaps. Without it, these gaps remain open, increasing their potential for cyberattacks. In a nutshell, if you don’t know what areas of your network that hackers are most drawn to, then you can’t secure them.
This same concept also applies to choosing customizable solutions. Institutions can’t pick and choose what information they want to back up and replicate if they don’t know what data needs it most. For financial institutions, it’s typically all of their information, but regardless, backing up, replicating and securing your data starts with understanding your network in its entirety. Security as a Service (SECaaS) solutions help institutions do just that.
Creating well thought out disaster recovery strategies is also a major perk of moving to the cloud, especially for institutions with several branch locations. In the cloud, branches can backup and/or replicate data to a data center or co-location 500+ miles away to create redundancy and protection from regional disasters. Instead of building out an offsite data center, financial institutions can utilize the network of data centers from a cloud provider like Otava that has been strategically built for DR without incurring large upfront costs.
The financial services industry is one of the fastest growing industries for cloud adoption. Scalability, cost savings, improved disaster recovery, data security and protection along with access to production resources on-demand are some of the major benefits of the cloud that financial institutions are enjoying. If you’re in retail banking, investment banking, asset management, or other financial services, let us help you protect your data and processes with compliant cloud solutions from Otava. Contact us today.