Banks run on data. The global shift towards cloud-hosted data solutions has ushered in an era of advanced data analytics and accessible machine learning, further augmenting banks' decision making processes. The C-Suite fully embraces data as an asset. But those that work with sensitive data, such as client data, understand that data is also a liability that requires stringent security measures. A litany of massive data breaches (e.g. Equifax, Adobe, and First American) convey the dangers of using lackluster security practices to safeguard your client data, and these data breaches have forced CIOs and CTOs to re-evaluate their cloud strategy, especially as it pertains to sensitive client data.
The global move to the cloud has been driven by two primary factors: cost and scalability. On-premise data solutions require hardware investment, upgrades, and maintenance; a large IT team for implementation, maintenance, and 24/7 support; data back-up and disaster recovery processes; and additional upfront and ongoing expenses. To scale an on-premise environment, additional servers need to be purchased, set-up, and tested and physical server space needs to be prepared. The cloud overcomes these on-premise obstacles and provides incredible scalability and operational efficiency. This scalability opens the door to new business opportunities leveraging AI and machine learning. The cloud also provides data accessibility, which COVID-19 has proven is an essential piece of a business continuity plan. Despite these clear benefits, only 30% of organizations plan to move most or all of their consumer data to the cloud in 2020.
"The cloud on its weakest day is more secure than a client-server solution."
- Sean Roche, Associate Deputy Director of Digital Innovation at CIA
Why are banks reluctant to pursue the technological benefits of hosting their client data in the cloud? 33% of financial institutions cite security as a key inhibitor to cloud adoption. But through our experience developing the Kingland Data Platform, cloud-hosted solutions are more secure than on-prem solutions. Major cloud providers, such as Amazon Web Services, Microsoft Azure, and Google Cloud, have invested billions of dollars in securing their cloud offerings. Azure alone has spent over $1B USD in security R&D. And after the announced partnership between Amazon Web Services and the U.S. Government, Sean Roche, Associate Deputy Director of Digital Innovation with the CIA declared, "The cloud on its weakest day is more secure than a client-server solution. It’s been nothing short of transformational."
Cloud security continues to receive the blame for data breaches, but that criticism is misplaced, or at the very least, misunderstood. The cloud is incomprehensibly secure. Data breaches, including the three mentioned in the first paragraph, are not caused by lapses in the cloud's security but instead by sub-optimal security processes and technologies used in the development and maintenance of the application. Data breaches occur when business leaders are so blinded by the opportunities afforded by the cloud that they fail to recognize that their technology teams are ill-equipped to make the transition.
It's this lack of cloud-oriented technical expertise that leaves the banks paralyzed. While unable to move their client data to the cloud, firms are unable to leverage the advanced analytics capabilities, AI, and machine learning to mitigate risks, identify opportunities, improve data quality, reduce operating costs... the list goes on and on. The first banks to migrate their client data to the cloud will be positioned for considerable competitive advantages. There are three ways to improve your bank's cloud-proficiency, and the path you take depends on your bank's budget and appetite for risk:
|Train your current talent||AWS, Azure, and Google Cloud all offer comprehensive training programs and certifications that can uptrain your current talent.||These certifications are reasonably priced. They will provide good foundational knowledge, but tend to be rather generic. They are a less-reliable means of achieving cloud-proficiency.|
|Hire new talent||Hiring a CTO or managing director from outside the firm that has experience using the cloud to manage sensitive data can accelerate your move towards cloud.||Good talent is never cheap but can definitely be worth it. However, it can be challenging for a new tech leader to generate buy-in from the development teams, and a single weak link in your development team could mean a weak link in your entire infrastructure.|
|Leverage a third party vendor||Some third party vendors specialize in developing and managing software in the cloud. Third party vendors can implement a customized, regulatory-grade cloud-hosted solution for your client data.||Third party vendors tend to be the most costly of the three options, but that cost comes with years of experience working with cloud technology and processes, making it the least risky path to cloud-proficiency.|
Banks will move their client data to the cloud - it's not a question of if, but when. Is your bank going to be an early adopter or a laggard? To answer that question, you need to evaluate your cloud-proficiency. Are you confident in your people and processes? And if not, do you have a plan developed and budget set aside to invest accordingly?
Learn more about cloud-proficiency within the Kingland Platform on the Kingland Platform Security page.