Cybersecurity risks grow by the day. Given the amount of personal and financial information banking institutions have access to, their need for cybersecurity is practically unparalleled. As a result, more financial organizations are relying on cloud service hosting providers to meet their compliance needs and protect their clients’ valuable data. 

In essence, the cloud is very much like a bank. If you handed a teller $300 in cash, you expect that money to be recorded in your account. Similarly, the cloud acts as a bank of data, and is always accessible.  

The cloud has no physical location, per se, but rather is a virtual storage system that receives data deposits transferred over the internet. The cloud is safely and constantly backed up, and copies of data files are sent to a secondary location on the off chance of equipment malfunction.  

Additionally, cloud solutions can’t be traced back to computers, and all information is both password-protected and encrypted. Login management systems, encryption and multi-factor authentication provide added protection as well as continuity when handling confidential information and transactions conducted by various financial institutions.  

Secure and Always Accessible 

Cloud-based software is run from secure data centers, and cloud operators are highly vetted, with all employees undergoing background checks. Additionally, cloud service providers have another failsafe in place due to mandatory Service Organization Controls/Tier 2 audits, also called SOC 2 reports. Resulting out of a rise of cloud computing and the outsourcing of risk management functions to service organizations, a SOC 2 report addresses controls related to operations and compliance – including availability, security, processing integrity, confidentiality and privacy. Cloud operators must submit annual SOC 2 reports.  

Another benefit from using the cloud comes from the fact that down time is virtually eliminated, as cloud provides use server farms with redundant hardware. Regardless of severe weather, power outages, fire, flood or other office disasters, constant accessibility is both available and secure so long as the user has internet access. 

In addition to security and all-the-time access, scalability is another feature of cloud computing. A financial institution can adjust the amount of storage space and resources needed based on growth, as opposed to a traditional data infrastructure that is less flexible. Reduced paper consumption, minimized in-house computer hardware, and decreased power usage are all additional benefits of the cloud. 

When selecting a cloud provider, there is specific criteria financial institutions should consider. Look for a firm that conducts regularly scheduled external security assessments to ensure ongoing compliance. Additional factors to consider include a strong service level agreement, robust security and data protection, a range of services, superior connectivity capabilities and expert migration assistance.  

Financial institutions should look for a cloud provider that can build a new system that replications their current one as closely as possible. Doing so will result in minimized workflow disruption and employee learning curve once the organization has been moved to the new system. 

How to Make it Happen 

With some planning and flexibility, the process of migrating institutional data is fairly seamless for the user.  

The data to be migrated is loaded onto an encrypted hard drive with several terabytes of space, and is then shipped overnight to the cloud service provider, who then mounts it to servers and workstations that have been set up in the cloud ahead of time. The data run through the updated servers and the cloud service provider ensures everything is working smoothly for a 30-day time period.  

Once everything is confirmed to be in working order, a “go live” date is set – usually 4 p.m. on a Friday. This allows all new data to update over the weekend via a secure portal over the internet. Training should be in place so all staff is comfortable with the new system, and the local servers usually remain as a back-up for the next 30 days to ensure there are no glitches.  

If a financial institution is unsure about whether shifting to enhanced cloud technology from a traditional data security model is in fact the right move, conducting a technology audit may help make the decision clearer, as well as determine the best cybersecurity solution that can be customized specifically to the organization. 

Although the cost of contracting with a cloud provider may seem more costly initially, reduced software and hardware costs and the elimination of expenditures on computer maintenance, server failures, power expense for cooling and other related requirements help to make the decision more financially comparable. Additionally, the monthly fee doesn’t compare to rebuilding an entire infrastructure should the financial institution fall victim to a cyberattack. 

Financial institutions hold a treasure trove of sensitive information. Keeping it secure in the cloud is the responsible decision that offers some level of peace-of-mind in a world and an industry often lacking that level of reassurance. 

Konrad Martin is CEO of Medfield-based Tech Advisors, a leading technology solution provider founded by CPAs.  

Why Financial Institutions Must Invest in the Cloud 

by Banker & Tradesman time to read: 3 min