Many banks today are finding the cloud to be very appealing for their business objectives. Cloud services offer many benefits for banks, including reduced IT ownership costs, system standardization, centralization of information, the simplification of IT management and the built-in ability to stay up to date with technology updates and vendor software releases. In order for cloud services to be implemented successfully, financial institutions need to consider and understand the different types of cloud environments that are available.
Today, cloud computing can be implemented in three different ways: public clouds, private clouds and hybrid clouds. Each approach requires different levels of security and management based upon the applications involved and the nature of the data, government regulations and compliance issues at stake. Let’s take a closer look at the different options available for cloud services.
A public cloud is a multi-tenant technology platform that any organization with a credit card, including banks, manufacturers and retailers, can sign up for and consume the needed technology resources. The purest definition of a public cloud, for example, would be a service like Amazon Web Services or Microsoft Azure. Community banks that select this option for cloud services can easily put any application they choose into the cloud. Many financial institutions choose this option because it is inexpensive to set up and to use the service. All hardware, maintenance and communication costs are covered by the provider, allowing banks to utilize a pay-per-usage model where the only costs incurred are based on the IT capacity that is used.
While public clouds are the lowest direct expense option for IT assets, they do pose some limitations. This model uses custom configuration, security, and SLA specificity that can be hard to implement, which poses challenges for financial institutions due to the regulations governing data security and compliance.
Private clouds deliver similar advantages to public clouds, but with additional layers of security and required regulations for financial institutions. Unlike public clouds, which deliver services to multiple organizations using a multi-tenant technology platform, private clouds have been modified by providers to offer unique features and controls designed for the specific needs of vertical markets such as financial institutions. The hardware, data storage, and networking are customized to ensure higher levels of security and eliminate compliance and data privacy issues.
The goal of a private cloud is to gain the benefits of cloud architecture without giving up the control financial institutions have in maintaining their own data center. However, there is a price for this. It is going to be more expensive and harder to implement a private cloud service than a public cloud approach for the average small-to-medium sized community bank.
In a hybrid cloud environment, banks can choose to have some legacy applications and supporting IT assets remain on premise and some applications move to a cloud provider, while supporting communication between the two technology platforms.
Using a hybrid approach enables banks to migrate select IT assets to the cloud while still maintaining the internal assets required to manage certain legacy applications that are not yet ready to move to the cloud. By allowing workloads to move between the on premise and cloud computing platforms, banks have access to greater flexibility and more data deployment options as needs and costs change.
The Ideal Environment for Banks
Each bank has a unique corporate strategy that will guide how they move to the cloud, what type of cloud solution is best for their environment and what specific technology assets should be moved to the cloud. While the idea behind moving to the cloud is to eliminate servers, internal infrastructure, and applications that must be physically hosted inside your bank, as well as the associated work required to manage each one, there should be a process to determine the appropriate cloud solution for your institution.
Evaluating the various cloud options can be daunting for community banks. Working with a financial industry IT network service provider, such as Safe Systems, can help you with the decision process as well as the design and move to the cloud while ensuring the solution and applications are compliant and meet regulatory expectations. We work with each institution to create a plan, based on their goals and strategies, to determine what can and should be moved to the cloud. Ultimately, moving IT assets to the cloud enables your bank and IT executives to focus on the key capabilities that support your bank’s unique strategy and lets bankers go back to being bankers!