Transitioning Your Financial Institution To The Cloud
While migrating to the cloud may seem complex, the benefits can be worth it.
Articles published February 22, 2019 by Ben Killion
Last year, we published a blog about the reasons why financial institutions are making the switch to the cloud. This year, we’ve seen that trend continue, and we want to expand upon our original blog.
Here are five reasons our clients chose to make the transition:
- Customization: Depending on the focus of the bank or financial institution, some have different IT demands and priorities. With the cloud, many of the options and services are customizable. There are also different platforms, such as Infrastructure as a Service (IaaS) and Software as a Service (SaaS), that can meet various business demands.
- Payments are already there: Most banks are already doing some payment processing in the cloud. Many vendors already offer services, such as hosted online banking and card processing, which run virtually. Just the knowledge that they’re already dipping their toes into those waters is a conversation starter for banks who may be hesitant to move to the cloud due to legacy architecture or regulatory concerns.
- Cost savings: If anybody knows the value of a dollar, it’s a bank. Moving to the cloud may offer significant cost savings, and it’s important to note that approximately one-third of a bank’s IT spend is on payment processing. Processing payments in the cloud allows banks to conduct real time analysis of customer data, which is a huge advantage in how a bank interacts with their customers.
- Preventing disintermediation: Payments is an area where a tech firms can assist banks. Similar to how record companies were left holding the bag when iTunes and other digital music services came out, vendors are able to optimize parts of the supply chain since the services are hosted remotely. So, although banks will always be around, if they don’t adapt, they risk being marginalized.
- Small bank, big data: Turning to the cloud can be especially helpful for smaller banks that don’t have the resources or expertise to launch big data and analytics projects. Often times, smaller banks want these capabilities but don’t want to worry about the infrastructure. The cloud enables smaller banks to leverage analytics capabilities, although they may still need to invest in IT resources to assist with data analysis.
For banks that may still be hesitant to switch to the cloud, here is some additional information that might be helpful for conversations with cloud providers.
Have exceptional security
Ensure your cloud provider has a strong focus on network and data security. Since you’re trusting them with your data, you want to be assured it’s going to be protected at all times. Understand the security layers, processes, and services they have in place. For example: do they provide 24/7 network monitoring and support? Do they provide data backups in an alternate location? Do they have certifications or follow standards for compliance, such as SOC2?
Check for penetration testing
When considering a cloud provider, choose one that allows for penetration testing. This will be critical for audits and can improve your security posture by identifying possible vulnerabilities within the network or applications.
Network segmentation can reduce security risks and also enhance network performance. With segmentation, your data and environment is segmented across different areas (or zones), so if one area is breached, you don’t lose everything.
Ensure your applications are cloud-ready
Before signing on the dotted line, find out if all of your applications are compatible with the hosting environment. In addition, it’s important to understand licensing parameters and requirements.
While migrating to the cloud may seem complex, the benefits can be worth it. Knowing the right questions to ask and what to be prepared for can help you identify a good fit and, ultimately, make your transition easier.
Is it time for your financial institution to make the switch?
Read our case study: Credit Union Improves Productivity and Network Security