Banking institutions and financial technology startups are putting their differences aside and working to find common ground. The chasm that has traditionally existed between the two is due primarily to their divergent approaches in providing financial services.
Fintech startups utilize innovative technology to make financial systems more efficient, taking advantage of cloud data storage and blockchain technology. Other financial institutions are stuck in legacy mode, reluctant to give up the “paper trail,” and fail to provide customer portals through which clients can upload and share documents with advisors. They want to get on the cloud, but have concerns about the security of customer data, and are afraid of violating the numerous compliance requirements they must adhere to.
While blockchain and high-frequency trading are options for some, it is not a recipe for success for others. However, there are several easy ways for small- and mid-size banks to make big changes in how they function internally and with customers, without sacrificing security or compliance.
With teams spread across the country and the globe, and thousands of pages of documents in play on any given day, both internally and externally, financial services firms have a big challenge on their hands. For one, all of those documents must be organized and archived not just for clients, but for compliance purposes. Secondly, the end user has to be able to access documents on desktops as well as mobile devices. Thirdly, all transactions and sharing must remain secure and lastly, banks must retain control of all information.
Data Storage and Sovereignty
The solution is something that takes advantage of the speed, scalability and easy file sharing of the cloud, but is tightly locked down and gives financial IT complete control. It should be data-sovereign—meaning the locations of data centers are always disclosed—with data-, user- and device security. For compliance, it should store data as long as needed (seven years, forever) and should include deep, granular audit capabilities. If someone asks you what files a specific worker shares, whether she commented on them and who else it was sent to for a date three years back, you should easily be able to retrieve that information.
The system should be extensible and scalable to any existing IT architecture, rather than forcing a replacement. It should be equally usable for a mining company with low connectivity as well as the New York Stock Exchange (NYSE). Finally, it should have scalable storage and enable easy file sharing on any device.
Security and Compliance
In addition to protecting data and regulatory compliance concerns, you must be prepared to handle the ever-evolving threats from hackers at home and abroad. You can assure your customers that their data is safe by following a few basic guidelines. Look for cloud solutions that allow you to control how your data is stored and protected. They should provide multi-factor authentication, real-time auditing of user data activity, as well as device and network security. Because the financial services industry is highly regulated, utilize FINRA-compliant solutions that allow you to secure sensitive data to successfully meet regulatory requirements.
Looking Ahead to 2016
With Millennials reaching the peak of their spending power, and an ever-increasing number of tech-savvy consumers, banks need to get on the cloud and modernize their system, if they have not already done so. Try not to look at it as something to be feared. It can be a gradual and measured process, with solutions that allow you to build upon your existing system. In the long run, moving to the cloud will increase efficiency, provide greater flexibility and adaptability to market trends, and strengthen client relationships.
Rajesh Ram is Chief Customer Officer and Co-Founder of Egnyte. As Chief Customer Officer, his charter is to maximize customer acquisition, satisfaction and retention.. Rajesh works with Egnyte’s customers and internal teams to ensure that the comprehensive voice of the customer is reflected in the company’s corporate strategy and execution.