Are banks ready for the cloud?

If you’re a techie like me, then you know “the cloud” is one of the biggest buzzwords around. And even if you’re not a techie, chances are that you’ve used the cloud even though you may not entirely be sure what it is. Whether you’ve used Dropbox or iCloud to directly upload and share data in the cloud or you’ve streamed content from Netflix, Spotify or some other service that relies on cloud computing – it’s increasingly unlikely to find someone who hasn’t used the cloud in one way or another. That’s because the cloud is really far more than a buzzword, it’s actually one of the fastest growing technologies around. And now that more and more organisations are switching to cloud storage and cloud based applications, it’s finally getting some of the attention it deserves.

So what about banks? Are banks as excited about the cloud as everyone else? The answer is yes, many banks are already using cloud technology in different ways. But that yes would have to be mixed with some hesitation because the finance industry has been notably reluctant to fully embrace the cloud. In fact, you could even go so far as to say that it’s been the most reluctant industry to do so, not from an unwillingness to innovate but rather from concerns over cloud safety.

We know that financial institutions collect and process huge amounts of highly sensitive personal data on daily basis, making them prime targets for cyber criminals. The advantage of traditional on-premise solutions is that they give the institution complete control over the security of this data. Storing data in the cloud however, requires institutions to hand over some of that control to the cloud provider.

It’s taken some time for cloud providers to earn the finance industry’s trust and confidence in their ability to prevent unauthorised access to the data and applications stored and hosted on the cloud. That’s not to say that the cloud has won over the industry completely, but there is a growing acceptance that under the right conditions, the cloud can actually be safer than traditional options.

And what are those conditions? Well to start, the cloud is only as safe as your provider so it’s important to consider your options carefully, choose wisely and continue to monitor and audit continuously to effectively manage any inherent risks. Second, while cloud providers will employ a number of security measures like authentication, encryption and access control to prevent unauthorised cloud access, the organisations that utilise cloud services also have a responsibility to implement security controls to safeguard the system as well. Of course, no system is entirely foolproof, but the success of this combined approach has done much to change the conversations and the attitudes around the value of cloud computing for banks and other financial institutions.

Also changing the conversation are the many ways that financial institutions can benefits from using cloud technology. The ability to use technologies created by cloud service providers like Amazon or Microsoft instead of devoting a lot of resources into building and maintaining their own IT infrastructure and systems is making a huge difference in the speed and ease with which these institutions can now drive digital transformation. I like the way Bill Glasby, Chief Technology Officer, Heritage Bank, put it. He says “If you’re comfortable building apps to a single cloud platform, then you can leverage their capabilities overnight, and take advantage of tools that would take years to build in-house.” In a nutshell, cloud services allow financial institutions to spend less time and money on infrastructure and more on their core business – financial services.

There’s also the fact that the industry and its customers are changing and the cloud is one of the technologies at the heart of that. The increasing amounts of data needed to keep up with that change and provide customers with the personalised service they’ve come to expect, calls for an unlimited storage option like the cloud.

The transition to the cloud has been a gradual one and, given the finance industry’s unique demands in terms of security, I expect it to continue in that way. But the industry’s changing dynamics mean that the days of avoiding the cloud completely have likely gone, banks and other financial institutions have no choice but to be ready for the cloud.