Some Financial Institutions Still Struggle with Migrating to the Cloud
With all the benefits of the increased computing power available in the cloud, it may seem surprising that some banks remain skeptical. According to a recent New York Times article, “Executives have been hesitant because banks are tightly regulated by governments and any sudden changes involving consumer deposits or privacy aren’t possible.”
The article goes on to say that many banks are concerned that cloud computing might make them more vulnerable to cyberattacks. “And some firms are held back by old computer systems that are difficult to revamp
However, as the Times article points out, “cloud services enable banks to rent data storage and processing power from providers including Amazon, Google or Microsoft, which have their own data centers dotted around the globe. After moving to the cloud, banks can access their data on the internet and use the tech companies’ computing capacity when needed, instead of running their own servers year-round.”
READ MORE: Learn how banks can decide which storage solution is right for their data.
How Cloud Computing Can Help Banks Reduce Risk
According to the McKinsey analysis, risk management is one of the biggest areas of opportunity for cloud computing. For banking, security features can apply to both financial risks (such as credit, market and liquidity) and nonfinancial risks (cybersecurity, fraud and financial crime).
“At a time when risk management leaders are being asked to process greater amounts of data in shorter amounts of time — often amid budget and staff constraints — cloud computing could unlock considerable benefits,” the article says. Cloud computing can also help by reducing the time it takes for risk teams to react to potential security breaches while avoiding major capital expenditures.
LEARN MORE: Find out how cloud security posture management can help banks protect their data.
How Cloud-Based Tools Can Prevent Financial Crime
Running solutions in the cloud can provide the kind of data processing power and speed that many on-premises systems simply can’t offer. This makes models more accurate and precise, and it helps analysts quickly make data-based decisions on their effectiveness.
McKinsey cites the example of one bank that uses cloud computing services to look for money laundering and other criminal activity in a new way: “By mapping networks of connections between people and companies, the bank’s Global Social Network Analytics platform lets risk management teams find suspicious transactions that previously were identifiable only by humans.” Cloud services can also help detect data breaches and find the criminals responsible.
Several cloud service providers already offer solutions specifically designed for financial institutions to detect and prevent fraudulent activity. The tools, available from Microsoft, IBM and others, offer the power to process data at speeds that can protect both the banks and their customers more quickly, reliably and at less expense than legacy security systems.