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The Cloud and Financial Services: 3 Issues that Really Aren’t


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While the answer to the question “What is the Cloud?” may still be debated, you’d be hard pressed to find an organization within the Financial Services world that doesn’t have at least some presence in the Cloud today. In fact, there are many organizations that would state they have a “Cloud-first strategy.” What does that mean, exactly?

Why Financial Services Firms are Going to the Cloud

Various organizations move to the Cloud for various reasons. For some, reducing costs drives the decision behind Cloud adoption, and for others, it’s all about increasing business agility with flexible compute availability. Still, for larger institutions, the primary focus is split between cost reduction, being market-ready faster, and bettering the financial balance that exists between IT operations costs and helping the core business run smoothly. For some smaller organizations, the Cloud allows for the ability to take advantage of services available with companies like Microsoft that they likely would not be capable of building or running alone. For many of these companies, there are tremendous challenges associated with serving the increasing expectations of consumers and regulators while also battling with decreased resources and ever tighter margins.

For many organizations, a move to the Cloud shifts the responsibility of proving compliance to regulators (like FINNRA or ESMA) to the Cloud provider. In taking advantage of PaaS (Platform-as-a-Service) for example, many firms have shifted the risks of hosting customer data and the requirement for proving compliance into Microsoft’s court and have, therefore, made it “their problem” to adhere to appropriate controls and audit.

Cloud providers, along with their managed services partners, truly provide the opportunity to enable Financial Services organizations to achieve more with lower cost and less lead-time, while also reducing the significant costs an in-house IT department brings. In addition, all are now benefiting from the sole focus of Cloud providers’ partnerships, which is to protect their customers’ assets in their hosted Clouds.

However, many firms worry about other issues when it comes to going to the cloud. However, they are often not really issues at all. Here are 3 examples:

Non-Issue #1: Where is My Data?

One of the greatest obstacles faced by Financial Services organizations is also one of the most challenging to solve: where exactly is the data? What laws are applicable to data that is stored in the Cloud where it is hosted in one country, but available for use in another country? For many organizations, the opinion is that data stored within the Cloud is not secure—a major wall that they are not quite willing to cross.

Fortunately, Financial Services is currently benefiting from the path that Retail and Distribution sectors have made when it comes to the Cloud. Over the past decade, Retail has had to deal with the very real shift from brick-and-mortar storefronts to purely digital channels. They have also had to cope with putting their customer data right out in the Cloud, because that is where their customers were! Distribution had to find ways to operate through the entire sales cycle to satisfy end customers who were ordering, paying for, shipping, and returning items—all online. Add to that, they had to handle thousands of payment transactions happening every second on the public internet. Data residency was at the very center of everything they did due to tax, shipping, and order fulfillment requirements.

Microsoft Azure lets you maintain ownership of your data. Your data on Azure belongs to you, therefore you have control over where you choose to have it stored and how it gets securely accessed and deleted which is a key differentiator with Microsoft’s Azure Public Cloud platform. Many key SaaS (Software-as-a-Service) products available from Microsoft allow you to configure your setup of the service and then define where data for that service will “live”. Through the appropriate choices and configurations, you can ensure that your data remains in the region of your choosing. You can define where data is stored and from where it gets accessed, however you cannot control how that data is replicated within the backbone of Azure.

With PaaS (Platform-as-a-Service) and with IaaS (Infrastructure-as-a-Service), you can clearly define where your data gets stored by means of Azure Storage and Storage Accounts. You can choose from configurations like Locally Redundant Storage (LRS), in which Azure maintains three distinct copies of your data all in a single data center within a single region (thereby protecting your data from normal hardware failures but not from that of a single data center). You could also choose a configuration like Zone Redundant Storage (ZRS), wherein Azure maintains three copies of your data in two or three facilities, existing within a single region or over two regions. Or, you could opt for Geo-Redundant Storage (GRS). This option maintains six copies of your data, three times within a primary region and three times within a secondary region that is hundreds of miles from your primary region. The point being, you define where your data gets stored in Azure which helps reduce your concerns about the location of your data.

Non-Issue #2: What If I need Local Data Storage?

With sovereignty and data residency concerns all over the world, many organizations are still wanting to store their data locally. If the very idea of having your data beyond your control and housed in someone else’s data center is your concern, Microsoft Azure’s redefined concept of the Hybrid Cloud will likely lessen, if not entirely eliminate, these data residency concerns.

A Hybrid Cloud is, quite simply, a computing environment that combines a Public Cloud and a Private Cloud thereby allowing the sharing of data and applications between them effortlessly. Hybrid Cloud provides an organization the ability to scale its on-premises infrastructure up so that the Public Cloud can handle any overflow without giving third party data centers the access to their full data. Organizations can harness the power of the Public Cloud for the basic and non-sensitive tasks while still keeping critical and sensitive data on the premises.

Non-Issue #3: What About Certification and Compliance Requirements?

Following the 2008 global financial crisis, many of the most stringent rules regarding asset ownership and coverage have made financial services organizations cautious about moving data to the Cloud.

Whatever the concerns have been, be they regulations or certain commercial or financial terms, Microsoft is making great strides and helping bridge the gaps with major industries and organizations. Microsoft Azure is one of the most compliant and comprehensively certified Public Clouds that exist, with an extensive list of offerings that continues to grow.

In addition, Microsoft has also developed its Microsoft Trust Center. This is a center dedicated to supporting customers that are leveraging the Public Cloud from Microsoft. The Microsoft Trust Center provides resources for information on how Microsoft sustains control over its list of offerings, how it interacts with your data and your assets, and it provides materials for legal entities that are seeking to better understand ownership and liability. For more detailed information, read the Microsoft Trust Center for Financial Services page.

What Does This All Mean to Your Firm?

The advantage provided between the Public Cloud and on-premises solutions is evident in terms of cost, in terms of driving innovation on hosting, and also in terms of financial stability. The Hybrid Cloud provides a solid solution that is designed to make transitioning to the Cloud easier for Financial Services organizations, providing a sense of control over what is stored and accessed where, and at a pace that feels comfortable.

Easily take advantage of innovative solutions for less sensitive data-needs within the Public Cloud, while keeping key systems and more sensitive data on premises, AND operate the solutions seamlessly together. Organizations can operate securely and maintain compliance in their highly regulated fields, while trusting that Microsoft is operating within the same focus.

Either in the beginning of your transformation or once you are already running in the Cloud, making the move to the Cloud means that you require a strong partner that can help you get there. A thorough understanding of all of your choices around data residency, as well as knowledge of your requirements around data retention and back-up strategies can often be a balancing act between cost and requirement. Let the Cloud experts of AKA help you through our Cloud Strategy Roadmap offering. We can assist you in better refining your Cloud Strategy and establishing a plan that makes sense for you.

Considering a more comprehensive design and the possibility of implementing a Hybrid Cloud? Then you need to know the right design and the right solution that will keep your sensitive data secure while still being able to take complete advantage of the elastic compute to drive innovation in the Cloud. AKA’s Cloud Foundational Services offering will assist you with your Azure Hybrid Cloud set-up, making the right decisions, and within weeks will have you reaping the benefits of native Cloud capabilities.

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