For some, the future lies behind.
by Randy Davis, VP Sales and Marketing OperationsBanks and bankers are not, I suppose, usually perceived as harbingers of trends in technology, but kudos go to +Michael Harte, CIO at Commonwealth Bank of Australia, for getting it right back in 2010.
In our blog post at the time, Putting the Kibosh on Soaring Software and Maintenance Costs, we noted that Michael had recognized that select cloud vendors had solved his hardware/software problem, and that he didn't need to:
"We're saying that we will never buy another data center. We will never buy another rack or server or storage device or network device again. I will never let any organization that I work for get locked into proprietary hardware or software again. I'll never tell my teams in the business that it will be weeks to get them hardware provision. I'll never pay upfront for any infrastructure and certainly would never pay for any, or rent any, infrastructure that I would never use. I will never implement an internal solution for a common problem that I could procure on subscription across the Web (emphasis mine)."Now we read in an article by Bank Technology News titled, "Banks Are Finally Embracing Cloud Computing," that "banks are warming to cloud computing after nearly a decade of hesitation about trusting their data to outsiders." Michael Harte might say, "Welcome to the past, boys and girls."
(Reported by Finextra.)
However, the Institute of Financial Operations just published a report on "2013 Trends in Cloud-based and Mobile Technology in Financial Services," sponsored by eGistics (click the link and look under Media>Brochures). This study shows that many financial services companies still have a long way to go in recognizing the benefits of cloud-based services. Concerns about security, perhaps based on misinformation or misplaced fears, still prevent some FS organizations from embracing cloud solutions that have been carefully vetted by other banks and or bank servicing companies. This is an example of "The Emperor's Clothes" in reverse.
Rather than "seeing" what's not really there (higher security risks in proven cloud service providers), many banks may be ignoring what's really in plain sight (higher security capabilities provided by cloud providers consumed with protecting data).
Our view, of course, as a provider of "hosted" or "cloud-based" solutions to banks for almost 20 years, is that carefully vetted and chosen cloud-providers can (and do) deliver superior security and data management services. In our blog post, "Cloud Security Concerns Are Dead..." we argued that just as we have come to trust third-parties (banks) with our money, we will also come to trust third-parties (data banks) with our most sensitive data. It is the way of things.
So what should you do if you are hesitating to use cloud services? Here are some suggestions:
- Recognize that there are different kinds of cloud service providers. Understand the difference between general practitioners and specialists in handling financial services data
- Determine your requirements: Tier 4 data centers, certifications, experience with banking practices and operations, regulatory compliance, SLAs, scalability, etc.
- Visit the facilities and meet with the staff of prospective cloud service providers
- Talk to banks and FS companies that are using cloud services
- Don't focus just on high-profile cloud service providers. Consider that you may not want your cloud service provider to be "well known"
