Over the last few years, more and more financial services organizations have adopted public cloud services for a unique competitive advantage. That’s why MarketsandMarkets predicts that the financial cloud market will grow at a CAGR of 24.4% to reach $29.47 billion by 2021.
“In the past, banks and financial institutions showed hesitation in adopting cloud-based offerings, citing potential security concerns and risks associated with migrating from on-premises systems,” Martin Häring, the chief marketing officer at Finastra told InformationAge. “Today, it’s more common for financial institutions to embrace cloud-based applications, as they realize the benefits they can deliver in terms of cost reduction and efficiency.”
Public Cloud Services and Data Protection Regulations
The public cloud offers many incredible benefits for financial institutions. It can deliver innovation, customization, and security on a greater scale. It offers agility, increased efficiency, new investment opportunities, and reduced operational costs—all huge benefits. PWC estimates that the public cloud will become the dominant infrastructure model in FinTech by 2020.
Public cloud services offer financial institutions:
- The ability to scale at a moment’s notice. It can be difficult for financial institutions to change—they are big and bulky. However, the cloud helps banks meet demand quickly and scale their services in order to fix the problem.
- A way to cut costs. When the World Bank switched over to Microsoft Office 365, they were able to cut the annual costs of running their email from $12 million to $6 million, while also offering their employees the ability to work remotely.
- The ability to keep up with the evolving technological landscape in a way that improves customer responsiveness and enhances employee workloads.
Popular Public Cloud for Banks
There’s a reason why over half of banks and their consultants are already using public cloud services, and 64% of banks plan to migrate to a public cloud in the next two years. Some of the most popular public cloud services that banks use include:
- Office 365: Office 365 helps financial institutions do everything from improving customer responsiveness to increasing business agility. For example, World Bank migrated to Office 365 along with Singapore-based DBS and Bank of America.
- Google Suite: Google Suite is also a popular public cloud service used by ATB Financial, BBVA banks, and Bci (Chile’s largest bank). It’s used to increase employee productivity, drive innovation, and strengthen customer connections.
Data Protection Regulations and Risks
Unfortunately, banks and other financial institutions face many regulations and security protocols that other industries never have to consider when it comes to bank data protection. There are very high standards for data protection, data privacy, business continuity, and disaster recovery.
So, while moving to the cloud is essential for the financial services industry in 2019, it’s also fraught with risks and challenges. 22 percent of banks worry about data security and 29% of banks see regulation as a barrier to cloud adoption, according to a recent Temenos banking survey.
Data Breaches in Banks
And there are many reasons to be concerned about your data security and protection in the cloud.
- In 2008, Heartland Payment Systems was hacked revealing the credit cards of more than 130 million customers.
- In 2009, CheckFree Corp was hit by cybercriminals, affecting 5 million customers who had their credentials stolen.
- In 2014, Korea Credit Bureau had an employee who secretly copied data of more than 20 million victims including credit card numbers, identification numbers, and addresses.
- In 2014, JPMorgan Chase reported a data breach that affected 76 million households and 7 million small businesses.
- In 2017, Equifax reported that a data breach compromised 400,000 British accounts and 143 million U.S. accounts.
How Do Banks Back Up Their Data?
So, if financial institutions are using public cloud services, how do banks back up their data and protect it from hackers and more? Good question. The answer is, “Not easily.”
- Risk management and oversight
- Threat intelligence and collaboration
- Cybersecurity controls
- External dependency management
- Cyber incident management resilience
With data a priority, there’s a need to have a powerful backup system in place that offers comprehensive security as well as a way to restore data quickly in the case of a breach. There’s also a significant need for service continuity in the cases of mishaps on the cloud.
CloudAlly for the Financial Services Industry
The key is that financial institutions can’t focus on just meeting regulatory cybersecurity standards and data requirements; they should focus on beating them. That means that the financial services industry must take extra measures to protect and utilize their data in the cloud. To do that, your organization should implement a data backup solution that gives you extra security, data accessibility, and restoration capabilities.
A service such as CloudAlly offers additional protection for commonly used cloud computing services such as Office 365 and Google Suite, allowing you to store all your data—including millions of transactions—for as long as you need (not just five years, but indefinitely). You also gain reliable backups, Amazon S3 secure storage, and ISO 27001 certification for information security management.
Learn more about how CloudAlly can work for your financial institution today.