What is cloud computing and why are financial institutions considering the move?
Probably the most motivating factor is the ability to stay competitive.
Traditionally, financial institutions keep all their electronic files and programs on computer systems they directly control, servers and mainframes that are physically housed within the organization.
While this is good for security, it makes advancements in technology slow, painful and expensive. Tapping into the power of the cloud to implement new programs, services and applications can make all the difference from a competitive standpoint.
Dangers Inherent in Cloud Based Systems
Unfortunately, moving to the cloud is not without pitfalls and dangers, which must be addressed before financial institutions can fully reap the benefits of cloud computing. Here are the top five risks to consider when it comes to moving a financial institution to a cloud based service.
1- Customer Security
Without customers, you have no business and nothing is more detrimental than the loss of customer’s private information.
As a financial institution, it is vitally important to maintain the security of your customer’s information, after all their account numbers and vital data are all an identity thief needs to wreak havoc.
2- Legal Regulations
Consumers can rest a little easier thanks to the Gramm-Leach Bliley Act, which sets forth the minimum standards a financial institution must adhere to in order to protect customer information and accounts.
Not only do financial institutions have to maintain measures to protect customer information but they must also move quickly, according to the law, to resolve any breach and notify consumers. This law along makes moving to cloud based technology, challenging to say the least.
3- Vendor Stability
The next problem banks and financial institutions may encounter are reliability of the particular vendor.
Cloud computing seeks to make computer service more like a public utility where everyone connects to a “grid” (data servers) for access to service and programs. This means there are several vendors today offering cloud services and the question is how long will they remain in business?
4- Data- Who owns it.
Anytime you are dealing with data, programming, technology or services you better read the fine print in the contract. (Actually, that is sound advice in any transaction!) In this particular case, you want to know who owns the data once it has been uploaded to the cloud.
This may seem like a no-brainer, but there is a reason for contracts so make sure and read any agreements pertaining to this type of business very carefully.
5- Connectivity
There is only one way to connect to the cloud and that is via the internet. Losses in internet connectivity could result in a loss of business continuity. Service interruptions are going to occur from time to time; however, frequent or long-term problems in connectivity could have serious business implications.
Understanding the risks and more pointedly the response time of the service provider is essential to choosing cloud financial IT solutions.
Conclusion
What can be done? Are you in the financial industry and considering a move to the cloud for better efficiency and options?
You need to weigh all of these trends and potential problems carefully. Before a financial institution makes a decision there needs to be a well thought out plan and response sequence to any potential problems. Each cloud service provider should have more information on their website or in print for you to peruse.
Next Steps
Hopefully this post has been useful for your financial institution.
Determining risk, assessing loss prevention measures, and understanding any regulatory issues is imperative for financial institutions considering a move to the cloud.
If you would like to have a preliminary discussion with someones about cloud-readiness and your financial institution, please call Intelinet Systems at:
