Fast, efficient and secure banking in the cloud

As the financial sector is fully committed to a transformation to cloud solutions they are making sure to cover any security risks.

The financial sector too is fully committed to a transformation to cloud solutions. Why? TINA: There Is No Alternative. A cloud-based back office, however, does not have to entail additional security risks. Quite the contrary: our experts explain.

Why are financial service providers focusing on a transformation to the cloud?

‘In recent decades, financial players have invested a lot in IT systems. Replacing them all at once takes time. But ultimately, the financial sector has no choice but to follow the market’, explains Julien Verschuere. ‘There is no alternative. Of course, you must be very careful. The data available to financial institutions are especially sensitive. Thus, these institutions tend to be risk averse and cautious when stepping into unknown technology adventures. The neobanks, on the other hand, carry no technological legacy and have tremendous scalability potential.’

‘Banks have traditionally invested heavily in keeping their infrastructure up-to-date and protecting their IT’, adds Tim Vaes. ‘If they go to the cloud, they can outsource those tasks to the cloud provider, which handles them in an automated and scalable way. The bank’s security staff can thus focus more on preventing specific cyber-attacks aimed at the financial sector. And that means banks can focus more on their core business.’

Is the cloud a matter for the CIO or the CEO?

‘For both’, replies Verschuere. ‘The cloud improves internal operational processes and the customer experience, which is what every CEO wants. It’s up to the CIO to chart the course. He must convert the entire connected infrastructure to cloud systems provided by external providers. This not only affects the infrastructure, but also the developers. It is a special opportunity for the CIO to modernise the entire team. At the same time, of course, he must keep an eye on costs and rationalise. And that’s where the CFO comes in, in addition to the risk officer and the rest of management.’

How do customers experience their bank or insurer operating in the cloud?

‘They get answers to their questions much more quickly because automation makes real-time processes possible’, explains Verschuere by way of example. ‘Consider taking out a mortgage loan. Now you still have to make an appointment, go to the office, then consult with the head office and provide feedback to the customer… Thanks to the availability of data via the cloud, banks can work much more quickly. Especially young people appreciate that.’

‘Moreover, banks are increasingly offering non-banking services. Their ecosystem is much larger because you can easily connect these services with, for example the bus company to buy tickets, or with your telecom operator to enjoy extra services.’

‘There is also a benefit in terms of safety’, adds Vaes. ‘More and more cyber-attacks are highly targeted and send a lot of traffic to one specific app. If you are working with a global cloud provider, they can track such attacks by region and prevent them from spreading further. In a traditional context this is not possible on such a scale. Companies must educate their end users a bit and explain that cloud applications do not endanger their data: quite the contrary.’

‘When I see how great the use of cloud services such as Netflix, Facebook or Google is, I note that objection on the part of customers is not so great’, Verschuere responds. Moreover, banks are very careful when it comes to protecting customer data. This is reinforced by the strict data protection legislative framework in Europe. Financial institutions absolutely want to meet the strictest requirements in this domain.’

Is the cloud also synonymous with security?

‘In the area of fraud management, several new players have emerged that offer their solutions only through cloud providers’, continues Vaes. ‘In the call centre, for example, you can predict certain risks based on voice timbre. That goes beyond what an individual bank can develop. Cloud management therefore offers real advantages here.’

‘You know what the big threat is? Finding people with the right skills’, says Verschuere. ‘Managing this new technology requires specific competencies, which is a challenge for traditionally trained IT professionals. Which is why change management is so important in institutions.’

‘Absolutely’, confirms Vaes. ‘The cloud makes it more efficient and safer to build new applications. Providers can deal with cyber-attacks much more quickly. But that doesn’t mean that the cloud is always safe ‘out of the box’. What companies build on top of the cloud services remains their responsibility. This mainly concerns configuration of the cloud application, which must be secure, especially when it comes to data security and access rights.’

‘And there is another security risk specific to the financial sector: concentration risk. Suppose all Belgian banks were to use the same cloud provider and a major incident takes place. This could have an impact on the entire financial sector of our country. It is therefore important to spread your infrastructure over different regions. Fortunately, the probability of this occurring is small, and the regulator is keeping a close eye on this.’

Average Belgians

‘We’re not frontrunners in Belgium, but we’re not trailing behind either’, says Verschuere. ‘The Nordic countries, the Netherlands and the United Kingdom are in general further ahead. Belgian subsidiaries of large foreign groups usually follow their parent company. If they have their headquarters here, they are often a bit more progressive. In any case, European players attach great importance to data security. They are wary of too much Americanisation since most providers come from the United States.’

Tim Vaes: ‘U.S. law allows the government to release providers’ information. We are very apprehensive about that in Europe and hence the Schrems II legislation. The focus is more on the protection of data than on the underlying systems.’