As banks and fintechs move towards modern IT solutions, it is becoming increasingly difficult for them to decide on the best technology that meets current needs and prepares solutions for future growth. Navigating this decision depends heavily upon one’s ability to assess risks, compliance requirements, data security threats and more – all while finding a cost-efficient way of maximizing efficiency across the organization. Banks and FinTech companies today are facing the ‘cloud conundrum’, as they find cloud solutions to be increasingly unsustainable and are looking towards alternatives such as on-premise software solutions that might benefit them more.
Key Challenges with Cloud Computing for Banks and Fintechs
Banks and Fintech companies are facing a few big challenges when dealing with cloud computing. The first hurdle is around security and compliance risks. While it's true that 82% of banks use the cloud for better protection, more than half (52%) of their top people still see it as a risk. There needs to be more support from regulators to clear out this fear.
There’s also worry about data security. People often think that physical data centers might be safer than private clouds but the real issue lies in who has access to the data and how they handle it. High-profile breaches have shown that control matters more than location.
Another roadblock is compliance at the early development stage of cloud solutions - which means banks must plan well right from get-go to avoid complications later on. Cost is another concern, especially for small fintechs who may struggle to afford implementing necessary measures or face hefty fines if standards aren't met.
Different products mean different rules adding yet another layer to an already complex situation. And if a fintech handles blockchain technologies or needs to stay one step ahead of fraudsters, they've got an even tougher job ensuring everything meets regulations.
Cybersecurity and Data Breach Challenges in Cloud Computing
The first struggle which often plagues banks and FinTech companies is misconfigured cloud storage. In layman's terms, that's when the settings of a company's online storage aren't properly set up. This small mistake can lead to big trouble like unwanted access and data breaches.
Another weak point in cloud technology lies in insecure Identity and Access Management (IAM). To put it plainly, this problem appears when someone who isn't supposed to have access does. It follows the same plot as before - unauthorized access leading to potential data leaks.
Banks also grapple with what's called the shared responsibility model while operating in the digital cloudscape. Simplified, it means both the provider offering their platform (like Google or AWS) bears some responsibility alongside their customer using those services for maintaining appropriate security levels.
Using these models sometimes leaves gaps in the cybersecurity, which often stems from misunderstanding key areas of security each partner has to manage.
Lastly, every organization fears a data breach—and rightly so—it costs lots! A recent study by IBM reveals recovery from such mishaps can demand an average toll of $4.8 million from affected companies.
Exploring Security Threats That Hinder Cloud Adoption
Banks and FinTech businesses must grapple with many issues when they consider cloud computing. The same data from the IBM Report shows that compromised credentials are usually the first problem faced by these organizations. Interestingly, cloud misconfiguration took third place as a breach source. This accounted for about 15% of all breaches.
Several threats exist within the 'cloud-sphere'. Hackers can hijack accounts used for managing cloud services leading them directly to procure unauthorized control over the infrastructure. Cloud Service Providers or CSPs provide several application programming interfaces (APIs) and customers' interface inadequacies might lead to exploitation by hackers.
There are also insider attacks; instances where authorized members intentionally tamper with digital assets or even cause havoc within systems.
Finally, data breach can also occur due to accidental deletion acts and natural calamities including random fires or earthquakes. Therefore, robust security protocols become crucial if you want to take advantage of safe usage and maintenance within your chosen cloud platforms.
Advantages of Using Self-Hosted On-Premise Software
When we talk about banking solutions, two types usually stand out. One is cloud-based and the other one is on-premise software. On-premise means that instead of using an online system, you have a physical server within your premises to store all software and data.
Now, when comparing this to a cloud service provider like Google Cloud or Amazon AWS, some benefits pop up for on-premises solutions. This kind of setup offers control over your software without relying on internet speed or connectivity. Appinventiv highlights that local servers may have better reliability than their cloud counterparts in certain situations due to resource redundancy they provide.
What's more, when it comes down to server failure - which happens occasionally - having a backup in physical form can facilitate quick recovery with minimal downtime. In the case of most cloud servers – if there’s hardware damage or power outage causing a shutdown – it takes considerable time until another server steps in. This suggests that continuous accessibility is often delivered more seamlessly by an on-premise solution.
Choosing a self-hosted on-premise software brings multiple other advantages. One of these is that a company can have full control over its data. By running the software behind the firm's firewall, crucial data stays secluded from unapproved access.
Besides, such an approach offers secure compliance. As per data, 83% of cloud security breaches are caused by issues with access rights which outline the necessity for a more robust data security system provided by on-premise solutions.
Deskpro reports reveal how this type of software allows businesses to adapt their systems according to specific needs leading towards greater productivity and efficiency. Although initial costs might seem high due to IT department expenses for installation and maintenance of hardware and software, keeping in view the long-term aspects as compared to recurring fees associated with third-party services, firms may reach profits faster than expected, making it an economically sound choice ultimately.
How On-Premise Software Elevates Data Security and Privacy
With on-premise software you get full control. It lets businesses tailor their system to match their needs exactly. Plus, it keeps all your precious information within office walls under tight security. No other third-party services can have access to these details.
These systems are also quite resourceful in adjusting protections according to company requirements. A survey by Cynet reveals that 21% of leaders prefer this approach for its superior safeguarding abilities against cyber crimes.
And when it comes down to legal matters, an on-site solution acquires an upper hand again. Companies dealing with sensitive data need solid privacy assurance as per regulations, whether they belong to the finance industry or provide healthcare services.
A study by Sailpoint supports this notion as well, highlighting that 45% of firms using Infrastructure as a service had security problems and some even faced breaches! That’s where robust measures of on-premise software help secure critical data effectively.
On-Premise Software's Prowess in Reliability and Performance
A recent study by Ponemon Institute also provides us with some insights on the advantages of on-premise software. It shows that 60% of IT and security leaders do not trust their ability to secure access to cloud environments. Now, this is where on-premise software takes center stage. On-premise solutions give your organization absolute control over infrastructure, hardware, and software platforms. This means you can tweak settings precisely according to your unique industry needs. This results in better performance all around. A benefit hard to overlook when evaluating business options.
A recent LogicMonitor survey reveals that about 66% of these experts put performance at the top of their list when considering cloud computing issues. Turns out, then, that onsite systems might hold a great advantage here. These locally hosted platforms offer lower latency which aids in quicker data processing.
This is achieved because software and hardware systems are close together physically. This short feedback loop gives rise to increased speed. Also worth noting is their independence from internet connectivity and other external stakeholders for access to software. Firms can lean into this freedom as it ensures round-the-clock availability of crucial applications without worrying about downtime due to network hiccups.
Moreover, nothing beats tailored solutions fitting specific needs like a glove and on premise software provides just that benefit - customization. Be it a major enterprise with intricate IT demands or niche sectors bearing unique needs – locally hosted systems provide flexibility beyond bounds.
Conclusion
Evaluating existing business requirements in order to make decisions about whether an on-premise or cloud solution would be most beneficial for banks and FinTechs is indeed a complex task. Companies must carefully consider all the advantages before deciding upon which route offers the most benefit from both a monetary perspective but also taking into account any other associated costs, i.e compliance.
In summary not only do organizations need to look at their existing infrastructure when making such decisions, but they should also have an expectation of where their technology requirements might evolve over time. This will help them consider which option may offer potential opportunities for greater scalability and improved performance in future as well.