Financial Institutions & Security in the Cloud

Financial institutions are not strangers to cloud computing adoption. One of the earlier cloud uses in banks and financial institutions were for SaaS deployments, which allowed for more social media components to banking.

However, now FI’s face the issue of security due to the increased number of data leaks. As a result, cloud within IT strategies and architecture for FIs will increase the risk of a security breach among servers and networks unless there is an adoption of a multiyear cloud strategy to keep data protected – as was outlined by John Gubala of CapCo and Milo B. Sprague of Silicon Valley Bank in Wall Street and Technology.

A recent article in Bank Systems & Technology by Rodney Nelsestuen, a senior research director covering financial services and research for the TowerGroup, outlines  what he believes are the “3 Steps to Securing the Cloud’s Future,” which discuss the long term steps banks need to take to have a secure cloud architecture for a successful future in the cloud:

1) Network issues need to be resolved by having “an open and transparent industry dialogue about tomorrow’s physical network business model…and foster marketplace competition.” Marketplace competition and an open dialogue will aim to create a secure network that will reinforce all of the data that resides within the cloud.

2) Financial institutions must have a standardized cloud by working with groups such as the Cloud Security Alliance and the IEEE.

3) Mandated best practices in cloud risk management will reduce the risk of financial crime. As security breaches do become more prevalent and more money is being spent online than ever (Gartner predicts that cloud services revenue is forecasted to reach $148.8 billion in 2014– up from $68.3 in 2010), systematic structure will help to create a plan of action in case of any data leakage.

The plan of action aims to reduce the risk of cloud architecture, and financial institutions will reap the benefits of the cloud than has been experienced in the past.  By following the steps as defined by Nelsestuen, financial institution IT infrastructures can take steps to ensure security in the cloud and continue to find more uses of this relatively new technology.

Is your financial institution taking steps towards the cloud? Do you think regulation is the next logical choice for all banks to adopt the cloud for their IT architectures? Let us know in the comments section below, or Tweet @bankingdotcom.

Written by Staff