Financial firms, amongst many others, are now looking for ways to stretch their existing data centers and are turning to the cloud. They often need more computing and storage capacity than their own facilities can provide, especially during peak high-demand times.
With the importance of this from a strategy and security standpoint, bank boards need to provide proper oversight on this issue.
What is Cloud Computing?
Think of the cloud of a collection of computers where services and storage are delivered dynamically, as a service, rather than as a product.
Challenges With Financial Services IT Delivery
Data centers are a considerable investment to build and operate. Banking in the cloud lets banks extend their data center and current infrastructure when needed, while also providing additional data storage and computing capabilities offsite.
The Trend to Hybrid Clouds
Today’s banks are in various stages of their cloud journey. Some have built their own private cloud hosting, defined as a single-tenant environment where the hardware, storage and network are dedicated to a single client or company. Others utilize third parties to augment their own in-house application development efforts – a sort of hybrid approach.
The Cloud’s Differentiated Services
Financial institutions can build secure hybrid clouds that only allow certain credentials to access bank data.
Board Oversight
Given that banks are increasingly turning to cloud computing, it makes sense for the board to know whether (and how) the institution is using cloud computing and provide proper risk management oversight.
Questions the board should ask include:
- Is our bank currently using cloud computing services?
- Do we intend to?
- Do we have a private “cloud” or do we use third parties?
- What security do we employ?
- What kind of data is housed there?
- How do our regulators view the use of cloud computing?
- What are the advantages and disadvantages of the various types of cloud computing?
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