More banks are making the switch from traditional on-premise data storage systems to cloud computing and storage. Part of the reason why cloud computing in banking is becoming so popular is because cloud-based systems are more secure than ever.
However, some financial administrators are still wary of cloud computing. They worry about data breaches, poor encryption and compliance issues.
While these security risks are important, the reality is that cloud computing in banking is quite safe—especially if you hire experienced security experts to help you make the transition.
The Main Security Challenges of Cloud Computing in Banking
Although modern cloud computing in banking is very safe, there are still a few security challenges that financial institutions have to address. These include:
- Data breaches due to outdated software. In the banking industry, data privacy is paramount. However, if there are vulnerabilities in your security system and if you don’t patch them quickly, sensitive data may be at risk.
- Unsecured logins. Banks must require secure logins for every user, including strong passwords, two-factor authentication and sometimes even physical security keys. If there are vulnerabilities in this system, unauthorized users may have access to sensitive data.
- Lack of proper encryption. Data security experts can help banks create reliable encryption schemes. However, these encryption schemes must be thoroughly tested and vetted prior to use in order to be effective.
- Uncertain data recovery protocols. If a loss of data occurs, banking institutions need to know whether the cloud computing provider can restore the data or not. If they can restore it, then the institution must ensure that the cloud computing provider is using proper data security protocols to keep this backup data safe.
- Human error. Simple human error, such as clicking on a malicious email link containing malware, can cause data breaches. Intentional internal leaks are also possible, although these are rare (occurring in fewer than 5 percent of all data breach cases). These internal breaches also impact traditional on-premise banking systems, so they’re not unique to cloud computing in banking.
- Compliance concerns. Banking institutions have to follow federal and state regulations. For this reason, they usually vet cloud computing providers thoroughly to ensure that they are also aware of these laws.
Of all of these security challenges, internal data breaches and human error are the most common. IBM’s X-Force Research team found that 58 percent of all data breaches in the financial sector were the direct result of employee actions. In other words, employees would either inadvertently install malware or give unauthorized users access to the system.
This type of internal data security breach can happen whether or not banks use cloud computing. Human error is a universal problem. In fact, a bank may even be more vulnerable to breaches if its security systems haven’t been updated in a while. Making the transition to cloud computing forces financial providers to look more carefully at their security protocols and close any existing security loopholes.
In this sense, it’s a myth that cloud computing is inherently less secure than traditional banking systems. The security of your system depends on the type of service you invest in and who you trust with your data.
Dispelling Common Security Myths
When it comes to cloud computing in banking, there’s a disproportionate sense of the risks involved. Cloud computing is safer than you might think, especially when you take the necessary steps to ensure that your financial institution is protected.
The problem is that there are many myths about cloud security. To decide whether cloud computing is the right choice for your business, you need to take an honest look at the potential security risks and debunk any persistent myths and misinformation.
Myth #1: Every cloud computing system is equally secure (and equally vulnerable).
While it’s true that no system is 100 percent breach-proof, some systems are certainly much more secure than others. Amazon Web Services (AWS) is arguably the most secure cloud computing system in the world. They have a massive team of experts working 24/7 to close potential security loopholes. When you hire a cloud computing firm that uses AWS, your system will likely be much more secure than if you use software made by a smaller, private IT operation.
Myth #2: Cloud computing providers don’t understand compliance requirements.
When you hire an experienced cloud computing firm, compliance is always considered. Large firms may have compliance experts on staff or will conduct research into current compliance laws in your state. Many firms also use existing security software and systems, like AWS, that make an effort to stay up to date with regulatory compliance standards.
Myth #3: Cloud computing is riskier than traditional on-premise banking.
Security is a moving target. The security measures that you use today will almost never remain secure in the next few years. That’s because hackers are constantly looking for ways to gain access to sensitive data. Cloud computing can be even more secure than traditional banking because providers update their systems frequently based on the latest security best practices. These firms provide software patches, new encryption techniques, improved login protocols and real-time identification of unauthorized users and suspicious activity. All of these techniques make your security system harder to breach.
Privacy and security are essential in the financial sector, so it’s important not to downplay any potential vulnerabilities or risks. However, it’s also important to look at these risks pragmatically. There are many steps you can take to improve security while taking advantage of modern technologies like cloud computing.
How to Bolster Cloud Computing Security
The best way to ensure that your system is secure when you make the transition to cloud computing is to hire a provider that takes any and all security risks seriously. The best cloud computing firms will use data management software that is frequently updated and maintained by a trustworthy provider such as AWS.
They will also offer customized user authentication options and portals. Each employee will only have access to the data they need to perform their tasks. Some providers also make use of security algorithms that detect suspicious activity, such as logins from new locations or devices. The system can respond to these issues in real time, putting a stop to potential breaches immediately.
Financial institutions can test their security systems with help from white hat hackers—security experts who look for vulnerabilities in a bank’s system. These white hat hackers can even be hired before your cloud computing system is live to help you refine it before you allow your employees and customers to access any data.
By taking all of the necessary steps to protect your customer’s data, you can make use of cloud computing technology and experience all of its potential benefits.
If you have more questions about cloud computing in the banking industry, contact Tek Leaders today. Our team can help you create a new business strategy around cloud computing, helping you make this transition smoothly and securely. Or, if you want to learn more about cloud security, you can reach us by email directly.
Devender (Dev) Aerrabolu