Why De Novo Banks Should Choose the Cloud

De novo banks have enough to be concerned about as they struggle to get established: raising capital, selecting a core system and products, getting enough personnel in place—and keeping everything afloat until they begin to thrive. Opting for the Cloud is one of the most prudent decisions a de novo bank can make.

Ease and Speed

A key benefit of employing the Cloud is the ease and speed of implementation, which is especially advantageous for a de novo with a tight timeline to get up and running. The Cloud also affords a de novo the ability to choose technology solutions based on its unique specifications. Rather than trying to estimate and make provisions for future growth, the bank can select cloud services according to its current requirements and as the de novo grows or reduces its operation over years, it can make the necessary adjustments to fit. In a real-world scenario, if a bank needs the capacity to process more loans, a cloud provider can instantly ramp up to meet that demand.

Cloud services also provide de novos with the cost-saving flexibility to forgo extensive infrastructure investments upfront and help avoid the expense of maintaining and replacing outdated hardware over time. Working with a major cloud provider means de novos will always be using the latest and best technology. This supports more predictable technology costs, especially when working in tandem with a managed cloud provider that can minimize the need for retaining a larger IT staff.

Disaster Recovery

Financial institutions—no matter how new they are—must have a strategy in place for restoring their IT infrastructure, data, and systems following adverse events, such as natural disasters, infrastructure failures, technology failures, the unavailability of staff, or cyber attacks, according to the Federal Financial Institutions Examination Council (FFIEC) IT Handbook’s Business Continuity Management booklet.

When a de novo chooses the Cloud to support its banking system, it simplifies many of the typical aspects of disaster recovery (DR). Cloud-based DR allows institutions to replicate the data in their main offices and transmit it to a safe location that staff can access during a catastrophic event. Having continuous replication means there’s minimal lag time when switching from live to DR mode. Plus, the Cloud makes it easier for IT staff to go live, run tests, and complete tests more thoroughly. Ultimately, cloud services can help de novos go beyond merely addressing disaster recovery, to instituting steps for disaster avoidance.

Here are some other compelling reasons for de novos to embrace the Cloud:

• Security: A de novo bank has access to more security resources with the Cloud, making it easier to incorporate the best practices that regulators expect. Major cloud providers like Microsoft, Google, and Amazon maintain an army of security experts; they simply can offer more robust security than small de novos can build on their own.
• Compliance: Leading cloud vendors are well versed in regulatory compliance issues, and de novos that use managed cloud providers receive a comprehensive solution that can further enhance compliance and vendor management.
• Flexibility: With cloud services, de novos not only gain the advantage of being able to manage their IT infrastructure from anywhere, but they also gain the capability to easily turn on/off cloud services allowing them to quickly explore new ideas or diagnose problems within their environment.

The simple truth is that a de novo bank could never build an IT infrastructure on par with what it can accomplish through the Cloud. And working with a managed cloud service provider like Safe Systems can make using the Cloud even easier, leaving bankers free to focus on banking.