15.2 Cloud Computing and Security
Despite the drawbacks of legacy systems, businesses within highly regulated industries such as banking and insurance are relatively slow adopters of cloud computing, responding by migrating selective operations such as risk calculations1, and contact center sales calls reviews.2 Data privacy and security concerns remain barriers to cloud adoption because a breach would violate data protection regulations.3
The market concentration of cloud computing carries a risk too. That’s because the sector is essentially dominated by just a few firms (the top 4 cloud service providers take up 65% of market share), and it is difficult to switch between them.4 If there is an outage or cyber attack on one, that could cause disruption to the financial institution in question. In order to mitigate the risks of cloud service provider5 concentration, some banks work with multiple providers even though adopting a multi-cloud strategy is a complex undertaking. Banking authorities recommend that financial institutions have adequate resources and expertise to secure, manage, and enforce security policies.6
That said, from a physical security perspective, cloud computing often brings improvements for its clients. A firm using a legacy, on-premises system is responsible for the physical security of its servers. For a small enterprise, 24/7 security could be prohibitively costly. A client using AWS, however, benefits from Amazon’s scale – its data will be stored in a protected location with multiple, redundant layers of physical security.
1 https://aws.amazon.com/solutions/case-studies/jpmorgan-chase/
2 https://cloud.google.com/customers/hsbc
3 https://www.bain.com/insights/countering-the-myths-that-hinder-cloud-adoption-in-financial-services/