Cloud Computing And Banks – Will They Ever Become Pals?

Cloud computing has simplified the modus operandi of many businesses by allowing users to access IT services via the Internet. In cloud computing, instead of installing hardware and software on each machine in an office, the program is stored in the cloud making it accessible to everyone for editing and using. The best feature is that administrators can upload anything on the cloud ranging from an email program, word program to an advanced, industry specific program. With such wonderful attributes, does cloud computing incorporate anything to allure banking institutions to adopt it. If we analyze cloud computing little more closely, we will observe that it has many features that could help a bank or a financial institution in improving its overall performance. Here is what cloud computing means for a bank.

Reduced technology cost – Cloud computing reduces bank's expenses on a technology to a significant level by enabling shared service delivery with quick acquisition and reduced investment for hardware and software upgrading. The cloud concept uses a variable pricing model that allows companies to pay only for the availed services. Bigger banks have to pay an annual fee (usually very high) for maintenance of the hardware and the software. Moreover, they have to appoint a team of IT experts to manage the system, which is again a very costly affair. Smaller banks struggle to make technological advancement because they are always under financial crisis. However, if banks rely on cloud computing, they can be more efficient in their work, employee collaboration will be friendlier and they will access hardware and software according to their preference. Cloud computing will also abolish the need of an IT team in every branch, as an expert sitting in one branch can take of the entire setup.

In the US, many banks are still suspicious about cloud computing, owing to the loopholes in its security system and some banks are testing it proactively to judge its efficiency and potential. When we talk in reference to banking institutions, security is the first thing that emerges in our minds. Cloud computing has always been under the scanner on the topic of security and the banking sector is still unsure about whether it is capable of providing the kind of security required by them. There is no doubt that security is a major issue with cloud computing which makes it incongruous to be used by banking institutions. However, if banks develop a smart cloud strategy, the security factor could be erased largely. Banks should address the following before jumping in the pool of cloud computing

1. Which applications and business functions should be allowed to be executed via cloud computing?

2. They can use a secure hybrid model to make database stay in the bank premises and integrate with the applications placed in the cloud.

3. Requirements must be created for each line of business and every business activity that would be performed using the cloud.

Different cloud computing models are available in the market and every model has different specifications to meet different security demands arising at banks.

We have experienced the impact of cloud computing in financial sector already as it has changed the way, consumer research and buy products. Few cloud computing services even allow consumers to manage their personal finances via the cloud. In the future, we could see banking sector relying completely on cloud computing and reinvent their services. The reason is simple. Generally, people love, how cloud concept has made their life easier and if banks do not provide the service requested by them, no surprise that they will switch to the bank that offers better services.