With customer expectations rising, banks must leverage the capabilities of the cloud to improve service delivery and protect sensitive information, says Jerome Dilouya, CEO of InterCloud.
The European Commission's Data Governance Act, targeted at overcoming barriers to the reuse of data, increasing trust in data sharing and improving data availability, has accelerated the pace of digitisation for the European economy. As a result, the 2030 vision for tech on the continent is now one of greater openness and collaboration.
This culture of increased cooperation will place added scrutiny on financial institutions, who are responsible for protecting large quantities of sensitive customer data. Research from IDC revealed that as of September 2022, 83% of banks are utilising public and private cloud platforms.
Banks and other financial institutions should continue to build on this momentum, leveraging the capabilities of multicloud environments to effectively meet new challenges and ensure that they carefully interconnect environments in a safe and coherent way.
Financial institutions face an ever-changing threat landscape in their pursuit of digital transformation, with the industry’s growth hinging on the success of this transition. Consumers and businesses alike now favour more remote and digital interactions, and the digital transformation of other sectors is driving the need for banks to modernise their customer service.
Common barriers to cloud adoption include the complexity of legacy systems, trust and skills gaps, regulatory uncertainty, and the fragmentation of compliance requirements. Banks also face technological challenges associated with infrastructure, applications, processes, data, and customer engagement, as they grapple with the ever-increasing amount of data they collect while simultaneously pivoting to counter cyber threats.
Some leaders at businesses in the banking, financial services and insurance industries have recognised these obstacles and are adopting an open, hybrid multicloud approach, which can help to balance innovation with security and compliance requirements.
Multicloud prompts questions about the security of existing data transport infrastructure, which are even more pertinent in the banking industry given the sensitivity of data. Even though banks created SWIFT – a secure, non-internet network for wire transfers – they have not yet had the same impulse to do this for personal data.
The way different systems connect to one another is therefore crucial: in a more connected economy, data will eventually need to flow freely from one point to another, and these flows must be fully secure.
To borrow an analogy from the banking sector, safes have not eliminated the need for armoured cars. The same applies to multicloud: security is paramount, so any vulnerabilities should be identified and remedied as a matter of urgency.
There is an element of risk when transitioning to cloud, but ignoring the importance of good planning and a willingness to change can quickly backfire.
While the cloud offers great promise, it also presents a danger for banks who could get caught-out by shifting to the cloud too hastily and without due preparation. An overzealous approach often exposes vulnerabilities, as sensitive data is transferred not only ‘to’ the cloud, but also ‘in’ and ‘across’ multiple cloud environments.
However, refusing to change based purely on potential challenges will lead to stagnation or worse, especially in light of research from the Bank of England last year, which revealed that cyberattacks are the biggest risk to the UK financial system. Financial institutions relying solely on Internet service providers (ISPs) relinquish all control over network availability, security, and confidentiality. If malicious third-party networks manage to intercept traffic or if the network suffers a denial-of-service attack, this poses a risk of losing the connection needed to allow certain applications to function properly.
The complex needs of financial services organisations mean they require an agile and dynamic approach to cloud adoption – all of which can be delivered with a multicloud environment. Financial institutions, therefore, should implement secure interconnection interfaces and be open to adapting this infrastructure to combat new businesses challenges.
It’s easy for financial institutions to discount the value of multicloud and opt for continuity over large-scale change. However, with cyberattacks a genuine threat to customer data, updating current systems could be the difference between protecting information and suffering a breach. Multicloud offers a way of diversifying the IT estate and reducing the problems of concentration risk.
In the current climate, where customer behaviours and expectations are continually evolving, flexibility and adaptability are key. Banks looking to accelerate their digital transformation will benefit from a multicloud environment, but only if they take steps to ensure they interconnect their environments in a smarter, more secure way.