Is It a Pitfall for Financial Services to Move to Cloud Computing?

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Financial services move to cloud computing

With the advent of cloud computing, almost every enterprise wants to move from traditional web hosting services to the cloud.

This includes financial services and digital finance too.

More often than not, moving to a cloud computing solution has worked well for most businesses, cloud migration considerations are higher when it comes to financial services.

Financial services are a broad range and combined term for a distinct set of financial transaction services like banking, investing, trading, insurance, and many more.

With increasing demand, ease, and speed of financial transactions, millions of global customers depend on digital finance systems and networks for processing billions worth of trade and investment transactions as part of financial services every day.

Cloud computing has fundamentally changed the way the financial services sector works.

With systems like Amazon Web Services, the digital finance and financial services domain has undergone a revolution in the way systems and services are used for transaction processing.

More effectively, the financial sector is moving fast into the cloud computing spectrum for achieving operational efficiency, reducing the risks of IT infrastructure, and other benefits that improve holistic development while being conscious of cloud migration considerations.

The impact of migrating financial services systems into the cloud computing environment and its advantages for financial institutions is huge.

Speed, reliability, security, significant reduction in the infrastructure, and easily scalable systems are the potential benefits integral to using cloud computing services.

Despite all this, certain financial institutions are worrying about moving their digital finance systems into cloud computing networks.

Some of the reasons perceived as constraints are discussed here, and the intricate inputs related to them are being addressed.

Regulatory and Compliance Challenges

Financial institutions serving millions of clients must ensure compliance with confidentiality aspects of customer information irrespective of whether they are into digital finance or a full-fledged financial service provider like CIMB.

Securing customer data and adhering to the heavily regulated data policies within complex frameworks and guidelines is paramount.

This necessity to ensure regulatory requirements causes a dilemma and apprehension within the financial services industry to move their operations to cloud computing.

Reports published in this regard by Google and Harris Poll financial services survey highlight financial institutions being concerned of regulatory approval process, and related complexities.

Many organizations use the cloud selectively and have reservations about exposing their core or mission-critical systems and databases to the cloud. 

Resource and Expertise

Handling the financial systems over cloud computing needs resources to manage the system effectively.

It is paramount for the institutions to have the right kind of people managing the operations and security of a cloud environment.

A wide scope of responsibilities in handling such compliance elements requires the right kind of resources internally within financial services providers to be on the right track.

If the service provider does not offer holistic security systems and processes, it can be challenging for organizations to reap the potential benefits of cloud-based digital finance systems.

Shared Responsibility Issues

Digital Finance systems once transitioned into the cloud computing; have defined and classified responsibility among the service providers, clients, and the end-users. 

While the fundamental security related operations (for internal applications and software) have to be taken care of by the financial services entity themselves, the cloud computing provider is responsible for infrastructure support and overall uptime.

When there is an issue which is caused because of one of these, there is always a question of whose fault it is and who would fix it. 

MSPs have a very systematic and streamlined operations methodology to avoid such face-offs which makes life easy for digital finance and financial service providers to migrate to cloud computing.

Also, depending on the framework and features integral to the selected cloud computing systems, internal teams must update with the respective systems frameworks and processes which needs additional training the teams. 

Data security 

Among the major challenges envisaged in cloud computing systems, data security stands come first in the list.

Financial services and digital finance service providers always worry about the controls on the servers being with an external service provider, the servers themselves being at third-party locations, remote accessibility.

These factors have to be solved for when cloud migration considerations are listed.

Is it a real Pitfall?

Data security

The emergence of cloud computing systems led to a paradigm shift in IT infrastructure management and how easily organizations can manage the scalability of the respective IT systems using the cloud computing service offerings.

Across the multiple streams of financial services, including digital financial, the scope of using cloud computing solutions is vast.

Despite some practical security limitations, issues of shared responsibility set of challenges resulted in the early stages of cloud migration considerations, over time there are enhancements and evolution of cloud computing into a more secured and robust system.

Platforms like amazon web services and other cloud computing services providers continuously evolve and improve the reliability and security of their systems.

Today, even regulatory bodies are advocating the use of the cloud computing services to improve the efficiency of digital finance transactions.

Any apprehensions about cloud migration considerations for digital finance applications are addressed to a great extent when the right kind of cloud computing service provider is chosen.

Some of the noteworthy elements in the process of selecting a cloud computing platform are, compatibility of the systems, and the Quality of Services (QoS) offered by the service provider.

For instance, there are some exclusive set of cloud servers and cloud computing systems designed to cater to digital finance applications.

Selecting such systems for the deployment offers customized security features and adherence to compliance frameworks.

However, one important factor to consider in the cloud migration considerations is about choosing the right kind of service provider with expertise in cloud computing.

Exabytes has deep seated expertise in managing, proposing and solutioning for cloud computing as a service.

With a wide range of service offerings from managed AWS, private cloud solutions, VMWare, Veam Cloud Connect, Disaster Recovery and more – Exabytes is known for its expertise in working with a very wide cross section of service providers including financial services and digital finances in adopting cloud computing systems.

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Related article:

Why Adopting Cloud Computing Among Malaysian Enterprises?

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