There are many concerns for privacy and security when it comes to the use of cloud computing the in financial services industry.
Although there is little regulation regarding financial services institutions’ (FSIs) use of cloud computing, there are many conversations taking place among various independent and regulatory bodies concerning the increased security risks involved with FSIs’ use of public clouds.
In the United States, the financial services industry is overseen by several government agencies and councils, including FINRA, FFIEC, and the OCC. However, these regulatory bodies have yet to issue a set of hard and fast rules concerning cloud computing in financial services.
Most of the official statements and literature regarding this topic comes to us in the form of “guidelines” rather than official policy or laws, which means it is incumbent upon FSIs to ensure that their data, and more importantly, their customers’ data, is safe and secure.
The good news for consumers and FSIs is that there are many advanced security measures that can strengthen cloud security in the financial industry and protect sensitive data from falling into the wrong hands.
Why Do Financial Institutions Choose Cloud Computing?
Cloud computing has skyrocketed in the last few years, and many businesses are taking advantage of the cost-effective scalability cloud computing offers. Gartner, a leading tech consulting firm, estimates that 85% of businesses in the US will adopt the use of cloud computing by the year 2025. And the financial sector is no exception to this.
FSIs collect and process massive amounts of data to carry out their business functions, and cloud computing services offer an unparalleled solution for streamlining FSI business operations.
In addition to the growing use of cloud computing in financial services, FINRA is now also partnered with AWS (Amazon Web Services). FINRA chose AWS as their primary cloud computing solution to manage the massive amounts of data that they collect and analyze every day. In a speech given by Saman Michael Far, the Senior Vice President of Technology at FINRA, he stated that through the use of cloud computing to improve FINRA’s operations, the federal government is projecting a cost reduction of $10 million to $20 million annually.
It’s clear to see that in terms of savings alone, migrating essential systems to the cloud is a game changer, and that’s not even considering the additional resources and computing power provided by cloud computing solutions.
What Are the Security Risks Associated with Cloud Computing?
When you use cloud computing services, there will be some inherent risks involved. Here are a few examples of these potential liabilities.
Although cloud computing service providers usually have extremely stringent security measures in place, there are some factors that can potentially allow malicious actors to access a business’s cloud data. These can include weak authentication, unsecured APIs, and poorly configured security settings.
Another potential risk of cloud computing in financial services is lost data. Data can be lost as a the result of faulty hardware, software issues, or user error. However, most large cloud computing providers will have redundant systems and regular system checks in place to prevent these kinds of occurrences.
When financial services institutions (FSIs) utilize cloud computing for their daily operations, they often share server resources with other clients. Also, some of the applications that run on these servers, such as virtual machines, could potentially expose FSI data to other users who are trying to exploit weaknesses in the server’s systems.
It’s important to note that there are many other security risks we haven’t mentioned here. However, this list serves to highlight a few examples of the security risks involved with using cloud computing in financial services.
What Can Financial Institutions Do to Protect Their Cloud Data?
There will always be certain risks associated with conducting any form of business online, whether on the cloud or otherwise. No matter where financial institutions choose to store and manage their data, malicious actors may be trying to access their systems and gain control of their information.
However, there are many security measures that financial institutions can put into practice in order to stop these attacks from being successful. Many financial institutions turn to managed IT services providers to plan and implement security practices that will keep their data safe.
While it is impossible to completely stop attacks from occurring, there are advanced cybersecurity measures capable of detecting and stopping the propagation of attacks within your system.
Managed IT service providers will design a customized approach to continuously monitor and manage your data both in the cloud and within your internal network to ensure that your operations continue to run smoothly and securely.
A managed IT service provider will incorporate advanced machine learning technology to analyze all of your system’s activities to establish a baseline for healthy network and cloud environment behaviors. With an established baseline, your managed IT service provider can immediately detect deviations from normal patterns and deploy a predetermined response based on the severity of the security incident.
Furthermore, your managed IT service provider will already have the necessary infrastructure to store all of your data on their highly-secured servers. This ensures that access will only be given to those who have been cleared to handle your information.
And one of the best aspects of working with a managed IT service provider is the money that your business will save! When you work with outsourced IT services, your data security and system infrastructure will be managed at a significantly lower cost compared to establishing an in-house IT security department.
Secure Your Cloud Environment with Buzz Cybersecurity
Buzz Cybersecurity offers advanced cloud cybersecurity services for businesses across Orange County, California. We believe in taking a personalized approach to cybersecurity, and we strive to understand our clients’ goals to better meet their needs.
If you are the owner or decision-maker of a financial institution in need of cloud security services, feel free to give us a call! We’re happy to set up a meeting and show you why our clients love working with us!