Financial services firms like banks and investment houses have historically been reluctant to accept newer technologies like cloud applications and managed servers for fear that such a move would put sensitive financial data in jeopardy and cause the firm to run afoul of regulations like the Sarbanes-Oxley Act and the Dodd–Frank Wall Street Reform and Consumer Protection Act. However, according to recent industry surveys, the concerns are finally being put to bed, as financial services firms come around to public, private and hybrid cloud deployments and all the benefits that come with this technology.
In particular, a March 2015 study from the Cloud Security Alliance found that of the approximately 100 industry leaders polled, 61 percent said their "cloud strategy was in the formative stages." The most commonly cited reasons for adopting the cloud include more control over auditing operations, more transparency and reduced provisioning time. Those surveyed also said they were turning to the cloud for a wide variety of processes, including for CRM (46 percent of participants said this was a cloud priority area for them), application development (45 percent), email (41 percent), backend services (20 percent) and virtual desks (14 percent).
"The results of this report are insightful into understanding how the financial services industry is progressing in terms of cloud adoption and how cloud providers can best serve their interests and needs," said CSA CEO Jim Reavis.
This recent study from the CSA is far from the only source of information detailing the rise of public, private and hybrid cloud deployments in the financial services space. Specifically, a February 2015 report from the TABB Group showed that 60 percent of capital markets firms will be investing more in the cloud over the next 12 months, with this group especially bullish on IaaS cloud deployments.
What are the best cloud migration options for financial firms?
While the studies show rising rates of acceptance from financial services companies regarding the cloud, these firms are still hesitant to accept the cloud in full force just yet. For example, the CSA survey found that 68 percent of those polled were worried about data governance with the cloud, and 75 percent still harbored data protection fears. Similarly, the TABB Group's results showed that around 65 percent remained concerned about how the cloud affects security, compliance and data control.
These results illustrate the remaining roadblocks remaining on the cloud migration journey for many financial services organizations today. The benefits of cloud applications and other solutions based on managed servers are readily apparent, but control and oversight worries remain.
To address these fears, these companies are likely best off with a private or hybrid cloud deployment. Indeed 39 to 47 percent of those surveyed by the CSA indicated a preference for these options. By making the private cloud all or part of their cloud deployment strategy, financial firms gain all of the key benefits of the cloud without having to worry about relinquishing too much control of data over to a third-party service. Compliance and flexibility can be married effectively within a private or hybrid cloud deployment.