No longer “frenemies”, the financial industry and the cloud are working together more and more as past concerns fade away and the benefits of their union become more apparent.
One of the main reasons that companies in the financial industry are moving to the cloud is because of the fear that they will fail to follow regulations on-premises, which can result in hefty fines and decreased investment from current and potential investors. By moving to a cloud provider, financial companies are guaranteed to meet the compliance regulations and are able to worry less and focus their attention on growing their business.
In conjunction with regulation concerns, financial companies are also concerned about their ability to maintain data privacy, data and system security, business continuity, and liability and risk management on-premises. Companies are specifically moving to private cloud solutions because they know that private cloud providers are experts in maintaining a secure environment.
Walk through the different levels of cloud security in our on-demand webinar: “Protect Your Infrastructure: Basics of Cloud Security”
Financial institutions are also drawn to private cloud solutions over public cloud solutions because of their concerns about having controls over the data, which private cloud provides them with both full control and access to the data. Data sovereignty is a very important to companies in the financial industry as well as they do not want their data passed all over the world without their knowledge. Other draws of the cloud include its scalability, which allows institutions to adapt quickly to new markets and acquisitions, and the smaller monthly expenditure available with cloud deployments over a large capital expense on-premises.
What Should Financial Companies Expect from their Cloud Providers?
After deciding that it’s time to start the transition to the cloud, an even bigger decision follows…what cloud provider to choose? This step is very critical and it’s necessary to do your due diligence on all the companies that you’re considering. For companies in the financial industry, there are additional things they should expect from a cloud provider, including:
- Ongoing monitoring
- A secure environment (SSAE16 datacenter audits help confirm this)
- Archiving and recovery capabilities
- 24/7 access
It’s especially important that the cloud provider you choose meets all the necessary security standards for two reasons:
First, because specific security standards are required thanks to government agency regulations that include the Gramm-Leach Bliley Act Safeguards Rule and the National Credit Union administration Board’s guidelines for Safeguarding Member Information.
Secondly, high security standards are important because investors are not comfortable having their data shared via public clouds.
Learn how to prepare for vetting a cloud provider in our on-demand webinar: “Come Prepared: What to Bring to the Cloud Conversation“
How Can Financial Institutions Benefit from Private Cloud Hosting?
When deciding to move to the cloud, it all comes down to how it will benefit you. For financial institutions, the private cloud in particular offers four key benefits:
- Agility – The financial industry is very fluid with institutions entering new markets and acquiring new companies frequently. These constant changes make it critical for institutions to be able to adapt their environments quickly in order to stay competitive.
- ROI – The cost savings of moving from on-premises hosting to a cloud environment are critical considerations especially in the financial industry because investors look closely at budgets to determine if institutions can adapt to the changing industry, acquisitions, or new markets without major budgeting issues or additional large investments in IT infrastructure.
- Security – The private cloud can offer enterprise level security to smaller financial institutions that are still required to meet the same laws, regulations, and agencies expectations as the larger companies. In addition, high levels of security are very important to both current and future investors.
- Scalability – Being able to scale up and down on the fly as needed without spending large amounts of dollars is key for a financial institution’s success.