Why Are Banks Still So Unprepared For The Cloud?

The financial sector faces roadblocks similar to other regulated industries – security concerns, outdated, extensive infrastructure, lack of trained staff, and the cost of adaptation. Ultimately, however, the thing stopping many banks and firms from making this much-needed shift is their attitude. Far too many decision-makers don’t appreciate the value of the cloud or the necessity of moving to the digital realm. And now, they’re stuck with a house-of-cards infrastructure setup that seems nearly impossible to update. “Banks have a mistaken view of technology,” explained Chris Skinner of the Financial Services Club to Computer Weekly’s Karl Flinders. “In the last century, they all held the view of ‘if it ain’t broken, don’t touch it.’ So they had all these core processing systems for deposit accounts and payments that, once built, were never touched again. They were just maintained.” In the past, continued Skinner, this worked. It was an approach that made sense. Building these systems was a significant undertaking, both from a budgeting and labor perspective.  Unfortunately, that also meant that, once constructed, systems became firmly entrenched – so much so that banks simply built additional hardware atop them in lieu of replacing them. “Over the years, the systems were cemented in place by new developments around them,” continued Skinner. “By the time the Internet came around, the cement was so thick that Internet banking was just added, making the cement more like granite rock. That’s the problem: breaking apart the granite foundation of the banks’ technology and replacing it, without any impact on performance or processing.” According to Flinders, that’s not even the worst of it. As it stands now, way too many banks still view IT as complex, expensive, and – perhaps most worrying of all – something they don’t really need to concern themselves with. They still view it as a commodity service. As an aside, that’s probably part of the reason they’re still having so much trouble with security. It probably doesn’t help that many in the financial industry still view the cloud with some degree of suspicion. Though cloud computing isn’t any less secure than a traditional server, many decision makers are nervous about the security risks it potentially represents. As such, even those organizations that are adopting the cloud do so with caution. “Financial services firms are eager to see increased transparency and better auditing controls from their cloud providers, even more so than better data encryption,” reads a report by the Cloud Security Alliance. This isn’t entirely surprising, mind you. Businesses working in finance have a set of strict regulatory guidelines they need to adhere to – and failure to do so could potentially be catastrophic.