The banking and financial sectors are under waking pressure to bring innovation in their overall technological architecture. All banks want to increase their operational efficiencies while reducing costs. Even bank customers look for personalized and targeted digital banking. However, with the rise of digital banking and online transaction techniques, the chances of monetary theft and data breaches also surpassed. So, the rising security issues in banks made these organizations vigilant towards better safety.
Therefore, banks & financial institutions must bring innovation through the latest technologies. However, they cannot compromise the security while upgrading the digital ecosystem in banks. Hence, cloud technology is an ideal solution that fits the need. According to some research reports, by 2021 to 2026, cloud security in the banking sector will grow at a significant compound annual growth rate (CAGR) of 33.1 percent.
This figure shows that modern banks are embracing cloud technology. It will bring innovation without compromising the security aspect of the overall system. In this article, we will dive into some essential insights about how cybersecurity drives banks & financial sectors to leverage the cloud.
What is cloud technology?
Cloud technology (or cloud computing technology) is the delivery of various computing services over the internet. Various computing services like servers, software, storage, networking, security, databases, analytics, & intelligence come within it. It offers rapid innovation and runs on the pay-as-you-go model. Because of this model, the cost of these services also gets reduced significantly.
What is cloud security?
Cloud Security is a term that comprises a wide range of technologies, applications, policies, and tools. They work in tandem to protect cloud data and the associated networks from cyber threats. Cloud security is a multidisciplinary vertical that consists of computer security, information security & network security. Cloud security is paramount because of the way its resources remain scattered. Cloud data is often stored offsite, sometimes across multiple locations. Using the internet, users can access these data across networks remotely.
Cloud Technology In Banking
Cloud technology can be a game changer for banks. The technology has confirmed its potential as a pivotal driving force to transform various industries. So, the financial and banking sector will be no different. According to PwC’s report, of 2023, 73 percent of corporate executives said their companies have adopted cloud technology in most or all of their daily operations.
Also, the report highlights that cloud-powered companies do not face barriers to achieving transformation and bringing innovation. Thus, the banking sectors are also heading in the same direction to achieve innovation through the cloud.
How is cybersecurity driving banks to leverage the cloud?
With the ever-evolving threat landscape, banks have recognized the necessity for scalability, agility, and advanced security capabilities. The cloud delivers numerous benefits, which make cloud technology an ideal option for banks. Banks can find all solutions under one technology. Three well-known security measures that financial institutions look for are:
Infrastructure security:
Banks often require high-end cybersecurity in their infrastructure. Various infrastructure security measures like Intrusion Detection Systems (IDS), Intrusion Prevention Systems (IPS), firewalls, end-point detection solutions, AI/ML-based malware signature detection solutions, etc., play a significant role.
Operational security:
Banks often require high-end cybersecurity in their infrastructure. Various infrastructure security measures like Intrusion Detection Systems (IDS), Intrusion Prevention Systems (IPS), firewalls, end-point detection solutions, AI/ML-based malware signature detection solutions, etc., play a significant role.
Application security:
Banks often use different applications for their internal use. Securing these applications and their associated data is paramount for users and the banks’ reputation. Robust encryption algorithms, vulnerability testing, and code reviews are some security measures that come under application security.
Cloud computing and its security offer all these forms of security measures. Hence, the cloud is ideal for banks.
Why banks should leverage cloud technology?
Plenty of reasons exist that compel banks to shift from legacy technologies to the cloud. Here is a list of some notable reasons that shows how cloud technology can benefit banks.
1. Advanced cybersecurity measures:
All top cloud service providers (CSPs) invest a hefty amount in security research and vulnerability analysis in their cloud systems. Also, they spend on implementing advanced security features like signature analysis through AI/ML models, advanced firewall and packet analyzers, IAM, etc. Other than all these, they utilize anti-DDoS tools, robust post-quantum crypto algorithms, and dedicated hardware modules.
2. Cost-effective solution:
Another reason why banks are switching to cloud technology is cost. As discussed, the cloud follows a pay-as-you-go model, which lowers the overall cost. Also, banks do not have to own hardware or infrastructure to run security solutions or apps. Furthermore, leveraging cloud services reduces unnecessary overhead costs of maintaining & updating security aspects. Thus, they can allocate more budgets to setting and configuring advanced security tools.
3. Scalability:
Numerous banks merge or expand their branches across multiple cities and countries. Thus, banks need technologies to dynamically scale up as they grow. That is where cloud technology comes in as a holistic solution. Cloud environments and services associated with the cloud, like security, apps, storage, etc., can easily be scaled to meet increased requirements. This scalability feature also accommodates security measures with the growing data and traffic without degrading the performance.
4. Regulatory compliance:
Since we are heading towards a data-driven world, data privacy and regulations towards data safety have become paramount. Cloud providers also apprehend the stringent regulations & compliance that financial institutions must follow. That is where the cloud offers, manages & updates various security compliance that adhere to global financial guidelines. Many European and other banks strictly follow the General Data Protection Regulation (GDPR) for customers’ data privacy. Other compliance like Anti Money Laundering (AML), provides regulations and safety measures against online banking, crypto, and payment services.
5. Fraud detection:
Cloud helps banks to detect and prevent fraud more effectively. Cloud-based fraud detection can analyze large amounts of data from a variety of sources, including transaction history, customer profiles, and device data, to identify suspicious activity. This can help in identifying a pattern of unusual transactions on a customer’s account, or it might be able to detect that a customer is trying to log in to their account from a suspicious location.
6. Claim management:
Cloud-based claim management solutions can help banks to improve the efficiency and accuracy of their claim processing. These solutions can automate many of the tasks involved in the claim process, such as gathering information, verifying documents, and making payments.
7. Risk management:
Cloud-based risk management solutions can help banks to assess and manage their risk exposure more effectively. These solutions can analyze a variety of data, including financial data, market data, and operational data, to identify and quantify risks. This can also helps in developing and implementing mitigation strategies to reduce these risks.
8. Customer relationship management (CRM):
Cloud-based CRM systems can help banks to improve their customer interactions and relationships. These systems provides a single view of each customer, including their account information, transaction history, and contact information. This information helps to provide the customer with better service and to make more relevant product recommendations.
9. Mobile banking:
Cloud-based platforms can help banks to develop and deploy mobile banking apps more quickly and efficiently. These platforms can provide banks with the infrastructure and tools that they need to build and manage their mobile banking apps. For example, a cloud-based mobile banking platform might provide banks with a pre-built user interface and a set of APIs that they can use to connect their mobile banking apps to their back-end systems.
Conclusion
Cloud computing has become the new frontier with multiple services under one umbrella. It delivers holistic services with scalability, robust security, cost-effective features, and complaints – making it a perfect technology for banks and financial institutions. With the growing maturity of cloud technology & cloud security, more banks will extensively use cloud for both cybersecurity & operational purposes.
Here at VE3, we help in optimizing cloud infrastructure for the unique needs of businesses to positions them as a valuable partner in the industry’s transition to the cloud. Leveraging our expertise in cybersecurity and cloud engineering, we offer tailored cloud solutions designed to enhance cybersecurity measures and operational efficiency. To know more please contact us today!
