Resistance to cloud computing in financial services is finally crumbling now that solutions exist to address the security and compliance challenges that have created cloud FUD in the past. That’s a very good thing for financial services organizations.
The latest Ovum research shows that the financial services industry is increasingly investing in cloud computing, encouraged both by a growing variety of applications and by the development of newer, better cloud security solutions, according to Datamation‘s David Linthicum. Order management systems (OMS) and portfolio management systems (PMS) are among the most popular financial services applications to put in the cloud, Linthicum reports.
The applications may be specific to the financial services industry, but the benefits are not. As in other verticals, financial services organizations adopt the cloud in large part to improve their business agility, upgrade their operations, save on procurement, and streamline and speed up provisioning of new infrastructure resources. All these benefits add up to greater elasticity, scalability, and the opportunity to create a better fit between technology resources and business needs: vital components to a competitive advantage.
It’s been a long time coming, but it’s perfectly understandable why the financial services industry has carefully adopted cloud computing. By their nature, financial services organizations deal with some of the most sensitive and personal customer information out there. The breach and/or theft of consumers’ financial and personally identifiable information can be disastrous to the individual and catastrophic to the business. That’s why financial firms must labor under a web of data privacy and security regulations, like SOX, GLBA, and PCI DSS, which govern how they store and use data and who can access it, and that mandate stiff penalties for noncompliance.
Now, however, a new generation of cloud information protection and cloud data security solutions has emerged that enable financial services businesses to leverage the benefits of the cloud without creating security vulnerabilities or violating relevant data privacy regulations. Technologies like persistent encryption from the client side into the cloud, tokenization for extra-sensitive data, and DLP to detect potential violations all go a long way towards protecting data and controlling its access and usage. In fact, in some cases, cloud computing can actually improve security, as Linthicum points out. Linthicum writes:
There is a myth that public and private clouds are a hacker’s dream, and that we should not move to the cloud due to security vulnerabilities. The reality is that, if financial services firms do just a bit of planning, most public or private cloud computing systems should provide better security than your applications and data currently enjoy. At the same time you upgrade security, you can install a data and service governance approach and system that will provide better managed and controlled IT infrastructure.
It boils down to four things:
- Awareness of your regulatory and data privacy obligations
- Clear policy and governance to meet those obligations
- The right technology to protect your data
- The right systems to control data use and enforce policies.
With these four things in place, cloud computing can prove a major win for the financial services organizations that adopt it.
- Get the free white paper – “Best Practices for Cloud Information Protection in Financial Services” – Learn how 5 banks complied with 10 laws in 20 countries with 1 solution
- Watch the on-demand webinar – “Financial Services and the Cloud: Solving the Security Dilemma” – learn best practices for securing sensitive information before it leaves your organization and while it resides in the cloud.
Have you migrated any systems to the cloud? Why, or why not? Tell us your thoughts in the comments.