Cloud Banking Infrastructure: Satisfying Customers and Cutting Costs With Careful Choices
Cloud banking can help institutions meet the challenges of scaling customer demand for mobile banking while cutting costs along the way. But it takes careful consideration and a dedication to vetting the providers that supply these solutions before organizations can reach that point.
Consider the power of 1 billion mobile banking users, all of them accessing banks from smartphones and tablets by the end of 2016; that’s the projected scenario, according to BizReport’s recent look at Juniper Research findings. Cloud banking can serve those customers.
The first step is to build a bank’s cloud architecture in the right way. Here are three models, as well as the regulatory and security elements that emerge alongside the advantages of cloud migration for financial institutions.
Public, Private, Hybrid: Choosing the Right Cloud Banking Architecture
Cloud banking can create advantages over legacy server models, but banking leadership must first understand the differences between public, private and hybrid cloud architecture.
- Public cloud options for banks are mostly confined to the realm of app development and testing — in other words, activities that don’t put customer data at risk. The cost-cutting effect comes in the form of banks using lower-priced cloud server access rather than acquiring new on-site hardware for development teams. Other public cloud implementations, according to American Banker, can include customer relationship management, employee productivity tools and human resources applications.
- Banks with deep pockets, as ComputerWeekly reported, often turn to a private cloud architecture, which is accessible directly by the bank’s staff and customers via apps and websites. As with public options, private cloud banking can reduce costs associated with scaling on-site servers to keep up with consumer demand and technological advancements. Private cloud models, however, also come with the in-house responsibility of maintenance and security oversight.
- Banks are also turning to the hybrid cloud, an architecture that puts a significant portion of the back-end cloud management responsibilities in the hands of a trusted third-party vendor. In addition to mitigating the costs of server scale, the hybrid approach also comes with the advantage of freeing up in-house IT resources.
Regulatory Implications in the Cloud Banking Space
Choosing cloud solutions like those in the preceding section also means paying close attention to the regulatory realities that intersect with financial data. But alongside the new avenues and methods of compliance to which IT must attend, there are regulatory tools cloud banking can provide.
For example, cloud banking solutions allow classified financial information to be stored in a centralized and scalable location. It’s a growing trend: According to a recent EY report, since 2012 there has been an 11 percent increase in the number of banks that have migrated to a central data warehouse platform to support financial regulatory reports.
Within this change lies the potential for highly searchable and deliverable data — a plus when it comes to compliance.
Cloud Banking and Security
While cybercriminals will be present as long as there is a server running and information to hack, recent thinking concerning cloud banking runs somewhat counter to some of the established common wisdom regarding data in the cloud.
Among private and hybrid cloud solutions in particular, some iterations may prove more secure than on-site server housing. Another American Banker article cited one banking professional as noting the private/hybrid cloud provider has a singular focus and a budget likely to exceed the more divided attention of in-house banking IT.
The key consideration, as always, is that of due diligence on the part of banking and IT leadership. Choosing a cloud banking architecture is as much about vetting the cloud provider as it is achieving cost cuts and customer satisfaction.
Able to comply with regulatory requirements and keep data secure at the same time, the future of mobile banking via the cloud is expanding. As it does, customers stand to benefit and the price tag for servers stands to become less expensive than the in-house options of the past.