Why Cloud Computing Matters to Small Banks
The pandemic has highlighted how critical the cloud can be amid disruption, given its ability to adapt to a workforce that is no longer guaranteed to be working out of the same building.
The benefits of the cloud come down to flexibility and scalability for many organizations. Public cloud tools driven by external hosting and management can empower organizations to remain agile as their needs change.
For banks, of course, things are a little more complicated with the enhanced need for security and regulatory compliance. But there are more security tools than ever at their disposal, such as hardware tokens and multifactor authentication. These solutions can help fortify the walls around sensitive data.
Security can also play a role in which cloud option banks and credit unions explore. Organizations wary of the public cloud for compliance and security reasons might prefer a hybrid cloud approach, in which some of the resources remain privately managed onsite but others are handled publicly, offering a stable balance of security and scale.
A study from IBM’s Institute for Business Value found that half of surveyed banking executives thought they could lower their cost of IT ownership with the hybrid cloud. The study also found that the most successful banks were both more likely to implement hybrid cloud strategies and more likely to benefit from their implementation.
Knowing Where Small Banks and Big Banks Differ on the Cloud
Small banks have traditionally struggled to modernize their tech, and the complication of vendor relationships has traditionally left them reliant on a handful of large vendors to manage many of their operations. While that dynamic is changing as technology evolves, it remains the legacy of IT in small banking.
For this reason, a recent trend in cloud computing, multicloud, may not necessarily be for them. Multicloud environments, considered an alternative to hybrid cloud offerings, may offer more vendor flexibility. But given the nature of smaller banks, having multiple vendors could be a deterrent from a management standpoint. It’s important to understand your business and what it can support.
But there remains a lot of upside for small banks and credit unions if they can find the right infrastructure partner. Even tentative steps toward the cloud, such as moving to accessible productivity suites like Office 365, can prove huge boons at this time.