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When it comes to the public Cloud – banks, insurance companies and wealth management firms are a little late to the party. It’s not that the financial services industry isn’t big on adopting new technologies. After all, this is the industry that introduced ATMs in 1969 and is driving today’s proliferation of mobile payment options.
It’s just that these companies are cautious — and rightfully so. Financial services are one of the most heavily regulated and frequently scrutinized industries, especially in terms of data privacy and security. The list of regulations is long, and includes Dodd-Frank, FFIEC, PCI DSS, GLBA, SOX and the USA Patriot Act, not to mention the impending UK GDPR.
As Multi-Cloud adoption has grown, the financial services industry has steadily began turning to the Cloud. In fact, according to a 2017 survey, 72 percent of US finance executives said they are either using Cloud-based solutions or plan to do so in the future, which is an increase from 62 percent in the 2016 survey.
By 2020, Gartner analysts say that almost 40 percent of enterprises will use the cloud to support more than half of transactional systems of record.
A Matter of Survival
More companies in the financial services industry are adopting the Cloud as a means of survival. Like companies across every industry, those in financial services must undergo a digital transformation if they are to stay in the game. They must leverage the wide array of Data Analytics and Artificial Intelligence tools to help them gather customer insights, drive innovation and open new market opportunities.
They must implement on-demand, easy-to-use services to meet the demands of their tech-savvy customers. They must transform delivery strategies and their customer relationship management approach to drive customer acquisition and retention. They must employ and support productivity, social, collaboration and unified communication tools that enable their employees to work effectively and efficiently wherever they are and on whatever device they are using.
The Proof is in the Cloud
Financial services companies have seen the results and heard the praises of IT leaders in other industries, including those in highly regulated industries like healthcare. They’ve done their research, and know that the necessary controls are in place in the cloud to ensure data integrity, compliance and availability.
They also realize that Cloud vendors want their business, and are taking the extra steps to understand and support their unique needs. Outsourcing infrastructure management to a Cloud services provider relieves organizations of having to build and maintain their own data centers or collocated hardware. Cloud solutions can be used to automate manual tasks, freeing up employees to focus on more value-added endeavors.
The Response of Cloud Service Providers
In recent years, AWS has heavily promoted its Cloud services to the finance and insurance industries. It now counts Capital One, FINRA, Nasdaq and Pacific Life among its customers. Microsoft Azure and Google Cloud Platform are also attracting their share of financial services companies.
Organizations are finally becoming comfortable with the Cloud Services Providers (CSPs) now understand their concerns and requirements, and have tailored their cloud offerings accordingly.
They’ve invested in leading-edge security and implemented data privacy best practices such as file- and volume-level data-at-rest encryption, secure key management and access controls. In most cases, they offer levels of security that most companies lack the expertise or resources to implement and manage on their own.
Some have also gone the extra step to achieve HIPAA and PCI DSS compliance. Doing so demonstrates they can meet the stringent security requirements, enabling their customers to leverage security protocols to meet their compliance requirements.
The Importance of Strategy and Service
In contrast to AWS, Microsoft, Google and other big-name providers, CSPs that cater to mid-market businesses offer personalized, concierge-type services to their customers in the financial services industry with greater peace of mind and return on investment (ROI).
For example, rather than pushing a one-size-fits-all Cloud service, CSPs engineers take the time to understand their customers’ current IT environments and their short- and long-term goals. This approach enables them to help customers put an IT strategy in place that considers and optimizes their current IT investments and legacy systems. It helps them achieve leaner operations and a stronger focus on core business, and it enables them to leverage technology in the most effective and efficient ways — all while meeting compliance requirements.
The Time for Action
It’s time for the financial services industry to leverage the power of the Cloud to make it all happen. The opportunities and capabilities are out there. So are the data privacy and security protocols.