In the current economic situation, it is inevitable for all businesses to streamline their processes, improve efficiency and ensure customer satisfaction, while at the same time keeping costs under control. Given the current situation of the finance industry, achieving these are all the more critical. Moreover, there is increasing pressure of regulatory compliance acts and laws such as Sarbanes-Oxley (SOX), FRCP, SEC, IRS, Graham-Leach-Bliley, the Patriot Act, etc. Cloud applications and cloud services come to the rescue of finance firms such as insurance, banking, accountancy, brokerage etc. in this scenario.
Cloud application development provide technological solutions that allow finance firms to smoothly communicate within and outside their firms, handle data and workflow effectively, ensure exceptional customer service, meet regulatory challenges and above all keep costs in control. While cloud services come as a godsend to finance verticals, there are certain risks to it too. Let us examine the challenges and solutions faced while adopting cloud services in the finance industry.
Regulatory laws are very strict when it comes to the finance industry. Some of the important regulatory laws they must comply to are SOX, Gramm-Leach-Bliley Act and SEC. According to SOX Act’s section 404, companies must assess their data and processes regularly, manage them effectively and control risks. They must also secure financial data and ensure it is safe against theft or corruption. SEC section 17a-3 and 17a-4 specify data retention for brokers and dealers. Federal agencies have also issued guidelines for outsourcing functions and services to software or cloud services provider. However the legal landscape is similar for any technological solution and cloud solution.
The traditional IT services, as opposed to cloud application development, have different delivery models. Though cloud applications have more utility value, they pose certain security, operational and MIS control issues. Cloud app integration proves to be a solution here. This solution helps integrate traditional and cloud applications, so you can have best of both worlds. Though financial institutions can easily have a big IT infrastructure, latest operating systems, applications and high-end servers, they must tread carefully due to security and other operational challenges.
Some of the common cloud challenges including privacy, data protection/integrity, and TSP negotiation issues that seemed to be looming on financial institutions are easily resolved these days. The cloud technology is updated and developed constantly, which has made it easier for financial firms to achieve their goals.
Here are some of the tips to meet the challenges specific to financial institutions:
Security: The security risks of cloud application development are no different from traditional server-based software system. However, you must understand the security risks properly before venturing ahead.
Backup: It is very important for finance firms to have independent backup data storage to protect them against data loss.
Flexibility: Finance firms must get flexibility and corporate leverage in their types of services, business continuity and liability protection.