Cloud Trends in Financial Services
Most financial institutions today have a presence in the cloud, but adoption in the financial-services sector is still at a relatively early stage. Among the financial-services leaders who took part in a recent McKinsey survey, only 13 percent had half or more of their IT footprint in the cloud. But migration to the cloud is gathering momentum as the industry embraces digital transformation in order to remain competitive. At Thrive, our financial services customers are embracing everything from:
- AI for task automation, fraud detection, risk reduction, and investment advice;
- Blockchain technology to create more secure and efficient payment systems;
- Digital identity solutions like biometrics and machine learning to verify customer’s identities and reduce fraud;
- Open Banking that allows customers to share their financial data with third-party providers to cutting-edge financial products and payment services;
- Mobile banking that allows customers to use their smartphones to manage their finances;
- Managed cloud services that enable a more cost-effective and expert approach to infrastructure management, data management and analytics, security and compliance, disaster recovery and business continuity
Despite the huge value potential in the cloud, financial institutions have been tentative about moving to cloud at scale. There is good reason for this hesitancy, since cloud migration can be uniquely complex for financial institutions. Often, the IT landscape at financial institutions is particularly varied, with decades-old applications running alongside more modern systems.
Financial services firms have unique requirements for cloud solutions; for example, they must comply with strict regulations related to data privacy, security, and retention. They also need to ensure that their cloud solutions are resilient and can handle high volumes of transactions with low latency.
To meet these requirements, firms are seeking specialized cloud solutions that are specific to the industry with features such as enhanced security and compliance controls, real-time data processing, and analytics capabilities. For example, security issues pose a 24×7 risk to financial services firms and regulatory requirements demand that a firm’s data is logged, monitored, analyzed and reported upon as it passes through a complex network of IT infrastructure and applications.
As cloud adoption increases, our clients are battling a shortage of internal IT staff expertise to manage certain complex cloud services offerings, and in particular, cybersecurity. Increasing demand for managed SIEMaaS, Security Information and Event Management as a Service, is a result of firm’s clamoring for a centralized view of their security posture and the ability to detect and and respond to security threats in real-time. Given the onslaught of modern security needs, SIEMaaS is more cost-effective than trying to manage an in-house security operations center.
Knowing what to keep on-premise, and what IT ops belong in public cloud vs. private cloud, is overwhelming. What often follows is a piecemealed cloud migration strategy that ends up becoming a huge barrier to capturing the full value of a firm’s cloud investment.
The concerns we hear most from clients are actually reasons to work with an expert managed services provider like Thrive. They include:
- Data Security: the handling of sensitive data and compliance with strict regulations to protect that data from breaches and cyber attacks
- Compliance: numerous regulations, such as GDPR and PCI DSS, require data storage and processing in a specific way. Moving to the cloud may require new compliance measures, such as audits and certifications, which can be time-consuming and costly
- Integration: complex legacy systems that need to be integrated with cloud-based solutions requires significant internal resources and expertise to ensure a smooth changeover
- Cost: upfront costs as firms upgrade infrastructure and try to hire new staff, and ongoing costs for data storage and network fees
- Skills Gap: moving to the cloud will require new in-house skills, such as cloud architecture and DevOps
A 2020 survey by Deloitte found that 90% of financial services firms in North America were using some form of cloud services, with 51% using public cloud services and 38% using private cloud services. The benefits of managed cloud services stretch far beyond reducing operational costs, compliance and higher levels of reliability.
Today, data security in financial services is a critical concern. Firms must carefully evaluate managed cloud services providers to ensure that they have the necessary security and compliance controls in place, such as access controls, encryption, and threat detection, as well as their compliance with regulations such as GDPR and PCI DSS.
Thrive’s financial services-tailored cloud and cybersecurity expertise spans these industry-specific challenges. Our world-class team has decades of financial services experience and understands the unique complexities that organizations face each day from investors, regulators, and customers.