As economic conditions continue to improve, more and more financial institutions are considering new technology strategies that will streamline operations, improve efficiencies, and enable them to update products and services in order to remain competitive.
In a recent KPMG Community Banking Outlook Survey, 46 percent of respondents indicated plans to increase IT spending in 2014. According to the survey, the projects with the highest priorities included mobile banking and payments, leveraging data, social media and online banking. However, only 13 percent of the banks surveyed indicated that they had high data and analytics literacy.
Is cloud computing right for your bank or credit union?
While the concept of cloud technology – such as web-based email systems – has become widely accepted as a form of communication, internet cloud computing options are gaining attention as an efficient, cost-effective way to store and manage information on a subscription-based or pay-per-use internet service. According to the KPMG survey, nearly 30 percent of bankers said they have begun using cloud computing at some level.
Proper management of the relationship is essential for avoiding potential risks that can adversely affect earnings, service standards, operations and compliance. On-going monitoring of contract terms can also ensure that proper controls and contingency plans are in place, giving you confidence that you are getting the best service at the best price, and that your vendors can accommodate any operational changes the bank or credit union might experience in the future.
By storing data in one location, operational costs can be lowered and retrieval of information is simplified and accessible to multiple devices, such as PCs, tablets and smartphones. However, since data stored “in the cloud” is housed on the internet, proper controls must be in place to protect the security of information for your bank or credit union and account holders. Taking advantage of cloud computing options – without fully understanding the process involved – can lead to compliance and security issues, and additional risk of operational disruptions following a natural or man-made disaster.
Adequate attention to system security is a must
From a regulatory perspective, the same due diligence expectations apply to cloud computing contracts as they would with any other IT outsourcing activities that deal with account holder information. Management must be sure that technology vendors provide security throughout the network and account holder portals to ensure data privacy, data and system security, business continuity and contingency planning. In addition to disrupting your business, security breaches can damage your reputation and wreak havoc on account holders’ financial situations when private information is compromised or stolen.
How do you know if you are getting what you need?
As technology becomes a more and more integral part of how financial institutions operate, IT expenses can account for as much as 70 percent of total spending, depending on the scope of services implemented. And as virtual systems continue to evolve, cloud computing is expected to become more and more viable as a business solution for financial institutions.
If your bank or credit union does not have fully qualified IT personnel or the internal capabilities to maintain such advanced technology systems, a technology partner can be a vital resource to help make sure you are getting the services that fit your operational and service needs.