In the past, financial organizations have struggled with migrating data to the cloud due to security concerns. Recently, however, more of these establishments are turning to cloud-managed applications as a means to increase operational efficiency and functionality.
Prevalent financial organizations including JP Morgan, Citigroup and HSBC are all currently utilizing cloud technology to power their applications. Additionally, organizations outside of banks and credit unions are utilizing the cloud for financial applications, including programs for accounting as well as bookkeeping.
Furthermore, the cloud computing industry as a whole saw increased worldwide spending in the last year, growing from $2.3 billion in 2012 to an estimated $2.8 billion by the end of 2013. This illustrates increased adoption of the cloud for a variety of applications across numerous industries.
Scratching the surface of cloud-managed applications
Cloud applications can greatly benefit a firm seeking to reduce costs and reduce deployment times. These programs can also boost utilization and lessen unused capacity within a firm, according to the news source. Overall, financial organizations can save 10 to 15 percent in operational costs by shifting their applications to the cloud.
These financial firms are also communicating amongst themselves to boost cloud capabilities and adoption throughout the industry.
"There is more cooperation among banks," HSBC CIO Vittorio Severino said. "We are talking to each other more about getting together and creating utilities which are another manifestation of the cloud."
On-premise applications will certainly not be replaced by cloud-managed programs, while the latter does offer increased mobility and flexibility. A cloud application can be accessed from nearly any platform, both by in-office employees as well as those who travel. While this offers boosted adaptability for all types of workers, it does raise questions regarding data security.
Data security in the cloud
While many financial firms have already migrated data to cloud-based applications, adoption rates have been slowed by safety concerns.
"The problem with the adoption of the cloud in general across financial markets is the one of the overriding concerns of security and privacy and, therefore, a lot of firms have been very nervous about simply putting client and customer data outside their control," said Fidessa head of post-trade services David Pearson.
Although the government has certain standards in place for data security relating to cloud applications, organizations must also have their own measures in place to mitigate risks to the safety and privacy of sensitive customer data stored and worked with in the cloud.
In a cloud-managed system, the data associated with applications are overseen by a third party, putting this organization in charge of maintenance, upgrades and security. While this may take some of the stress off the financial firm itself, decision makers must be very careful about which third party they select to perform these duties. Administrators should thoroughly investigate their cloud solution provider to ensure they have the proper security in place not only to meet industry standards, but to satisfy the data safety concerns of the firm as well.
Cloud security should include several layers of data protection for optimum safety, including password protection and other measures to prevent unauthorized access as well as strong encryption for data in transit.
Many financial organizations utilize private clouds for their application management. This solution offers increased data security, especially applications that work with sensitive financial and personal information, as only those within the organization can access programs in a private cloud.
Experts also advised these organizations store this information in another location in addition to their cloud applications. Financial firms should maintain copies of all sensitive data within cloud-managed programs on their internal systems to prevent any kind of data loss from their third party provider. Furthermore, these organizations should utilize a system restore solution as a means to protect the data on their own systems. This program can be utilized to bring a compromised system back to predetermined settings, preventing data loss.