In recent times the explosion of cloud technologies in different sectors has sought to change the way that many companies do business, but this is something that hasn’t largely taken off in the financial services industry particularly. With the new adoption of the Payment Services Directive (PSD2), more new-age competitors in the fintech space plus blockchain technology allowing the increase in adoption of security solutions; cloud is beginning to become a viable option for banks.
In the latest report by Nutanix; entitled the “Enterprise Cloud Index Report” specifically for the financial services sector has shown that there has been a 21% rate of adoption of hybrid cloud in financial service sector businesses. This, in context, has overtaken the global average of 18.5%.
Financial services are traditionally a slow mover when it comes to technology. There are many fintech startups that are using their small-business advantage of agility to progress with features and solutions that the banks could only dream of implementing. If you want to see what the future of the mainstream banks are, take a look at what banking apps such as Revolut, Monzo and other banking alternatives are doing. So, this news is a welcome addition; with cloud now a viable option for them; they have a chance to really change the way in which these old, long-standing institutions work for their customers.
There is an issue here in that banks store and process highly sensitive personal data in large volumes and, making the leap to doing so with the cloud – could reduce consumer confidence. Another reason that banks and small fintechs are different is that the small fintechs have cloud at their heart meaning that consumers know; and are consciously choosing, to go with a business that works in this way. Banks have tens of thousands, if not hundreds of thousands of customers who they have to convince that this is a good idea.
In Barracuda’s 2019 public cloud survey, respondents showed a reluctance towards having their highly sensitive data in the cloud with their customer information (53%) and internal financial data (55%) topping their list of concerns. In addition to this, over half of respondents (56%) also admitted that they had doubts over how compliant a particular cloud set-up was with 47% also realising that there was a big cybersecurity skills shortage. This means that the next big exercise in this space is for businesses in the financial services area is to make sure that they can fully understand how to leverage and secure the cloud for their customers.
In today’s world in which things are changing immensely fast all of the time, there is still a large amount of confusion when it comes to deploying cloud technologies and solutions. Over regulation around data classification and the security that is concerned with this is a main focus and a real worry for financial institutions. There is quite a disconnect in understanding over what information is to be kept in the private cloud space and what is to be kept in the public cloud area for people to access, and also the tiers of access plus responsibility of who owns, stores and protects which data.
Financial services businesses would be very good to listen to customer concerns and use them as a sounding board for improving their service if they really want to seriously and effectively adopt the cloud. The best thing for smaller financial services businesses to adopt cloud technology is to take this route also. The main thing to keep in mind is to ensure that you go for a cloud solution that is built just for your business, with security in mind from the ground up. This way, the solution is bespoke and tailor-made to ensure that what you are building not only works for you but also your customers.