Financial services firms are accelerating their digitalization. Cloud computing has become a significant enabler for this transformation, driving faster innovation, creating simpler customer experiences, and returning substantial cost savings.
However, the cloud presents new governance, security, and compliance challenges, which most firms are equipped to manage. Firms have two choices: hire an experienced company to build their cloud governance systems or do it in house. Making your own in-house entails significant risks and can take much longer than having a team develop one for you.
The alternative is to hire an experienced company to handle everything for you; this eliminates risk, and typically costs significantly less than having your team do it and study all of the requirements.
Cloud setups are becoming ubiquitous. The reasons to adopt cloud systems are compelling. According to some analysts, global banks are saving $15 billion from cloud adoption, cutting technology infrastructure costs by 23%.
Regulators are becoming large cloud users; FINRA states it has more than 30 petabytes of data in the cloud, “...enabling its regulatory staff to conduct business more efficiently and more effectively than ever.”
Even more important than potential cost savings is the acceleration of financial services transformation: the increase in speed, agility, and scalability, which enables greater customer bonding, rapid delivery of new products, and faster and more resilient responses to crises such as the Covid-19 pandemic.
These can be transformational for firms that adopt cloud solutions and can present major competitive disadvantages for those that don’t. However, financial services firms are not like other enterprises. They face a unique set of challenges posed by regulators, including the Financial Crimes Enforcement Network (FinCEN), Financial Industry Regulatory Authority (FINRA), and Office of the Comptroller of Currency (OCC), as well as non-regulatory agencies, including the National Institute of Standards and Technology (NIST), Cloud Security Alliance (CSA) and Center for Internet Security (CIS).
Governance, Security, and Compliance in the Cloud presents a new set of challenges, where traditional approaches to governance, security, and compliance don’t work well. IT assets can be created and destroyed in milliseconds. Usage is often unconstrained and even unmonitored. New cloud services are made available to developers constantly, while firms typically do not understand the associated risks and requirements for safely deploying them, nor the regulatory impact they may have.
Institutions are challenged to know what assets they have in the cloud, much less whether their usage is appropriate or who has the responsibility for ensuring they operate securely. The result is a seemingly incessant cadence of high profile cloud data breaches. According to one study, nearly 80% of companies experienced at least one cloud breach in the prior 18 months, while 43% report ten or more breaches.
The Chief Information Security Officers polled identified Security Misconfiguration (67%), Lack of visibility into Settings and Activities (64%), and Identity and Access Management (61%) as their top cloud security concerns.
This uncontrolled security exposure must stop. According to FFIEC, resulting attacks can impact an institution in many ways, including lost financial assets, stolen customer information, stolen intellectual property, business disruption, and damaged reputation.
Firms are responsible for cloud governance, security, and compliance In its joint statement, security in the cloud computing environment, the FFIEC highlights critical challenges facing institutions moving to the cloud.
Critically, the regulators squarely places responsibility for securing systems and data on the institution, not the cloud provider: “The financial institution retains overall responsibility for the safety and soundness of cloud services and the protection of sensitive customer information.”
The Joint Statement directs institutions to implement processes to identify, measure, monitor, and control the risk of cloud computing. It requires management to determine the appropriate level of governance for each type of system and information asset in the cloud and understand the impact on architecture and operational models.
Complying with this directive is challenging for almost every enterprise. Few institutions have extensive expertise in cloud technology, cloud security, or cloud governance. Whereas the knowledge, processes, and tools that protect the firm’s legacy IT was developed and honed over decades, the move to the cloud has been sudden and with little time to create broad institutional knowledge, competency, or comfort.
Yet management is being held responsible for managing risk in the cloud. As the Joint Statement says, “Failure to implement an effective risk management process for cloud computing commensurate with the level of risk and complexity of the financial institution’s operations residing in a cloud computing environment may be an unsafe or unsound practice and result in potential consumer harm by placing customer-sensitive information at risk.”
Companies like Office Automation Technologies provides financial institutions with a fully managed and custom solution to all of your cloud needs to ensure you meet all requirements set forth by FINRA, FinCEN, OCC, NIST, and CSA for cloud governance, security, and compliance.
We give you the necessary policies and controls, visibility into cloud usage, and automation of cloud compliance functions. Implementing a comprehensive policy set requires a rare combination of skills. Firms don’t have the luxury of waiting to acquire the resources and expertise required to become cloud security and compliance experts, nor the time required to create comprehensive policies and the tools needed to provide continuous visibility and control.
If you are looking at taking your financial services company to the cloud, give us a call and let our cloud experts talk about how we can help you achieve your goals and meet all requirements.