Financial Services and Cloud Storage – Security, Myths and Driving Factors
Financial services are one of the top industries to profit from the cloud. This seems to have been established as a fact by now. However, the question which cloud services are beneficial for the industry seems to be a bit more controversial.
Find out in this discussion why we think that the cloud should be considered for flexible server capacity as well as storage solutions, and how the state of cloud security is in this industry.
Reasons for the Financial Industry to Adopt the Cloud
The three most common use cases of the cloud in financial services are rented server capacities for shorter time to market, faster and better risk analyses and outsourced data storage. There are prominent examples of financial institutions profiting immensely from moving some of their operations to the cloud.
Reason 1: Cutting Costs | The Commonwealth Bank of Australia
According to Business Cloud News the Commonwealth Bank of Australia stated that “through a partnership with Amazon Web Services, it reduced expenditure on maintenance and infrastructure from 75% of total outgoings to just 25%.”
Reason 2: Shortening Time to Market | Bankinter
Others turn to the cloud for a shortened time to market and more flexibility. The Spanish bank Bankinter, for example, “was able to reduce the time needed for risk analysis from 23 hours to less than one hour.”
Reason 3: Outsourcing Storage of Sensitive Data
Financial Services move their company data from in-house storage to cloud services to outsource server maintenance and security. This partly coincides with reason 1, since it will also help your business to cut costs.
Every financial firm has to store large amounts of sensitive data for their day to day business. When working with cloud storage, you do not have to worry about setting up and maintaining your own in-house data center. Additionally, when you move your data to the cloud and protect it with an additional encryption solution, your data will be safer in many ways. The cloud provider takes care of emergency plans and protects your data from fire, break-ins, or environmental disasters. The encryption solution will prevent data breaches and leaks.
Instead of being busy maintaining your IT structure, your team can become innovative and find new ways of making your business even more successful.
Privacy Fears and the Myth of the Unsecure Public Cloud
No matter if you store your data in-house or in the cloud: both need security measures.
Boxcryptor provides an encryption solution for most common cloud providers. A closer look at the industries of our customers shows that the financial industries is one of the top 5 industries using our cloud storage encryption. Nine percent of our wide range of business customers provided the information that they are in the banking, finance and insurance sector. They all trust in the safety of the public cloud in combination with a client-side encryption solution.
The topic of data storage in the cloud is surrounded by many misconceptions and prejudice. Everyone agrees that, for example, sensitive personal data should not be stored in a public cloud unprotected.
For many, the idea that the data stored in the cloud is not safe is a major sticking point.”
(Source: Business Cloud News).
However, that does not mean that the cloud has to be insecure. It depends on how the data is stored in the cloud. Your in-house data is just as secure as your security solution is good. You would not leave your office with the door open and all computers unprotected, right? Just as you would never do that, you should not use the cloud without additional protection.
Encryption and Cloud Security in the Financial Industry and a Big ‘But…’
We cannot stress the ‘secure’ part in the move to the cloud enough, because a large number of businesses apparently still work in the cloud without proper encryption and protection. According to a 2016 Ponemon/Thales study about encryption application, 39% of businesses across all industries store their data in plain text in cloud environments. The good news is that 44% use encryption at rest and 17% claim to use other methods to make the data at rest unreadable. Germany is a model student in this respect because 63% of German businesses encrypt data at rest in the cloud.
Businesses in the financial industry apparently are aware of the highly sensitive nature of their data:
[The] biggest users of encryption are companies in financial services, health care and pharmaceutical and technology and software industries. Because highly regulated financial and personal healthcare data is so sensitive in nature, it is logical they would be leading the way in using encryption.
71% of cloud users in the financial industries encrypt their data at rest.
Here it comes. But…
…35% of cloud users across all industries state that the data is encrypted by the cloud provider. Why is this a problem? The data is only encrypted at rest in most cases, not in transfer. The keys to decrypt the data are controlled by the cloud provider. Therefore, the provider could decrypt the data if they wanted to or have to. It is also possible and even likely that a plaintext version of your data exists at the provider.
44% of all businesses in the cloud implement the exemplary solution of encrypting the data before it is sent to the cloud. With a good encryption solution your data is protected in a way of which even the strict new European data regulation approves. Data privacy and leak prevention is guaranteed if the users act responsibly.
The shift to the cloud in the finance industry will continue in the next years, and is really gaining momentum with some big players in finance moving to the cloud, too. A good security strategy is crucial, though, to avoid data breaches. If you use any public cloud provider with encryption by Boxcryptor, your data is perfectly safe because it is encrypted before it is sent to the cloud. We are happy to help you with our expertise. Feel free to get in touch with us, or get more information about our offers for companies.
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Have a look at our user-friendly encryption solution for businesses
The Boxcryptor company package allows you to encrypt your business data, to profit from the flexibility of the cloud while staying secure. Have your data available wherever you need it, without ever compromizing security.