We are living in a highly commoditized business world, which revolves around transactions and banking. Organizations, irrespective of their size and nature of business, primarily have two major objectives, viz. achieving financial efficiencies and attaining better market share.

The evolution of cloud technology has redefined the competitive boundaries. The model has streamlined their internal processes as well as trimmed-down their operating costs. However, this integrated platform has at the same time raised serious questions pertaining to the risks connected with security concerns and regulatory issues. 

This blog attempts to evaluate the risks associated with the cloud hosting against the plethora of benefits offered to the banking and financial industry

At present, the primary issues encountered by some of the large banks are under-utilization of resources and high IT operating costs. The adoption of a customized cloud deployment model can allay these problems as the banks can flexibly scale up/down operations without the hassle of incurring additional capital investments which are commonly associated with expansion of business activities. This is owing to the fact that cloud computing supports pay as you go operational model that provides businesses the convenience to only pay for the services availed instead of regularly making huge capital investments.

This is particularly important for small-scaled institutions that lack sufficient capital to make upfront outlays on the core banking/financial solutions. By using pay per use service model, these institutions can simply subscribe to the cloud solutions per branch and hence convert their fixed costs into variable expenses.

Nevertheless, it is important to first address the compliance and security concerns connected to the cloud. Since banks are regarded as a sensitive and important industry with reference to the aforesaid issues, the financial service industry can effectively address this issue by deploying shared or hybrid cloud infrastructure delivering elasticity, variable costs, on-demand availability, and scalability together with addressing issues like safety, compliance, and other performance related concerns of the banking institutions. 

Data and applications are critical for the sustainability of bank as it requires a compatible cloud environment meeting its information sensitivity requirements. A comprehensive hybrid cloud approach in this regard can provide better control over the compliance and security challenges.