Financial Institutions & Security in the Cloud

Financial institutions are not strangers to cloud computing adoption. One of the earlier cloud uses in banks and financial institutions were for SaaS deployments, which allowed for more social media components to banking.

However, now FI’s face the issue of security due to the increased number of data leaks. As a result, cloud within IT strategies and architecture for FIs will increase the risk of a security breach among servers and networks unless there is an adoption of a multiyear cloud strategy to keep data protected – as was outlined by John Gubala of CapCo and Milo B. Sprague of Silicon Valley Bank in Wall Street and Technology.

A recent article in Bank Systems & Technology by Rodney Nelsestuen, a senior research director covering financial services and research for the TowerGroup, outlines  what he believes are the “3 Steps to Securing the Cloud’s Future,” which discuss the long term steps banks need to take to have a secure cloud architecture for a successful future in the cloud:

1) Network issues need to be resolved by having “an open and transparent industry dialogue about tomorrow’s physical network business model…and foster marketplace competition.” Marketplace competition and an open dialogue will aim to create a secure network that will reinforce all of the data that resides within the cloud.

2) Financial institutions must have a standardized cloud by working with groups such as the Cloud Security Alliance and the IEEE.

3) Mandated best practices in cloud risk management will reduce the risk of financial crime. As security breaches do become more prevalent and more money is being spent online than ever (Gartner predicts that cloud services revenue is forecasted to reach $148.8 billion in 2014– up from $68.3 in 2010), systematic structure will help to create a plan of action in case of any data leakage.

The plan of action aims to reduce the risk of cloud architecture, and financial institutions will reap the benefits of the cloud than has been experienced in the past.  By following the steps as defined by Nelsestuen, financial institution IT infrastructures can take steps to ensure security in the cloud and continue to find more uses of this relatively new technology.

Is your financial institution taking steps towards the cloud? Do you think regulation is the next logical choice for all banks to adopt the cloud for their IT architectures? Let us know in the comments section below, or Tweet @bankingdotcom.

Have You Set Up Your Social Strategy Yet?

The Banking.com Staff regularly discusses with our readers the use of Web 2.0 tools such as social media to increase customer engagement and retention. Christophe Langlois of Visible Banking agrees that a concrete Twitter strategy is a great way to build on customer retention, relationship management and overall customer satisfaction with your financial institution.

Christophe speaks specifically about using Twitter and social media platforms in a recent video to ensure that banks and credit unions are properly servicing their customers and members through quick and reliable customer service.  In an age of virtual banking, any customer with a complaint makes a larger splash online due to the transparent and public nature of social media.

Social platforms are an important theater in which FI’s can turn an angry customer into a brand ambassador. Some prime examples of how FI’s are using social platforms to better serve their customers include: Bank of America, American Express, BNP Paribas Bank, Wells Fargo and Webank, amongst others. Since Twitter is transparent and public, FI’s can help sway public perception for the better by responding and reaching out to customers to solve their problems.

You can watch the full video at Visible Banking.

Have you designed a twitter or social media strategy for your financial institution? Is social media helping with customer engagement and retention? Tweet @bankingdotcom or let us know in the comments below.

Poll: What one technological feature do your customers ask for the most?

Banking.com wants to know what you think!

This week’s question?

What one technological feature do your customers ask for the most?

 

 

Have a question you want to know the answer to? Tweet @bankingdotcom or let us know in the comments below.

What We’re Reading

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

  • Bullish Signs on Credit Card Growth

American Banker

Consumer credit card growth, which has been on the decline for about three years, could be showing signs of life again, according to data from Equifax Inc. The Atlanta credit bureau said new bank-card account originations increased 35% during the 12 months that ended March 2011, and credit lines also expanded incrementally, although the company did not say by how much. Equifax did not release the total number of new consumer credit card accounts issuers opened. The increase in new card accounts is “a sign card lending competition is heating up,” Equifax said in a July 1 press release.

Read more

  • Amex Taking Prepaid Push to Colleges

American Banker

American Express Co. is expanding its prepaid payments business through a partnership with CardSmith LLC, which develops and manages campus ID card programs for colleges. Amex will provide a reloadable prepaid account option on students’ ID cards, which can be used for buying on-campus meals, checking library books and other functions. With the prepaid account, students will be able to use the cards to pay for purchases at any merchant that accepts Amex. “The cards will have multiple loading options, including financial aid disbursement,” an Amex spokeswoman wrote in an email on Thursday.

Read more

  • The banks’ billion-dollar idea

CNN Money

Banks have found a new revenue stream — and this time, it doesn’t involve hitting you up with a new fee. Many of the nation’s leading banks are using information about their customers’ shopping habits — how much they spend, where they shop, what they buy — to make money.  Based on that data, retailers are offering targeted discounts via the banks through text messages, email and online bank statements. The banks don’t actually hand over your data to retailers. Instead, retailers describe what type of customer they’d like to target and the bank then sends the deal to customers who fit the profile.

Read more

  • Alerts, electronic notifications and paperless: getting to the wired consumer

Javelin Strategy & Research Blog

Wells Fargo ATMs allow customers to eschew the paper receipt in favor of an electronic equivalent, which is a great paperless strategy. In this year’s NACHA PayitGreen research study, we discovered that two surprising segments represent a paperless opportunity: Gen Y (young adults) and early adopters of technology. Working without the research data, my intuition would have caused me to view more tradition-bound segments as the best target for elimination of paper, yet it turns out that early adopters use one proverbial foot to step into new technology while failing to move the other foot out of the paperless realm.

Read more

  • Safer mobile transactions

Network World

IdentityX, from Reston, Va.’s Daon, claims that using your smartphone, it can enable you to securely establish your identity through a combination of encryption, PIN entry, location-based technology, and biometrics such as voice, face and palm image matching. The company further claims that IdentityX is a fully mobile, private and cost-effective solution that allows you to set the level of security for each type of transaction — thereby tuning the balance of convenience and security. Is it any good? Well, Daon was recently named the winner in the Cyber Security & Authentication category for the American Technology Awards, which bestows the only “Best Of” awards that recognize all technology products and services for the technology industry.

Read more

  • As Plastic Reigns, the Treasury Slows Its Printing Presses

New York Times

The number of dollar bills rolling off the great government presses here and in Fort Worth fell to a modern low last year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time in that period, the Treasury Department did not print any $10 bills. The meaning seems clear. The future is here. Cash is in decline.

Read more

  • Mobile Payments To Triple To $670B By 2015; Digital Goods Will Represent 40% Of Transactions

TechCrunch

Juniper Research is releasing a new study today that reports that the transaction value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670 billion by 2015, up from $240 billion this year. The top 3 regions for mobile payments (East Asia and China, Western Europe and North America) will represent 75% of the global mobile payment gross transaction value by 2015. Digital goods payments will account for nearly 40% of the market in 2015.

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  • Finance startup Yodlee hits 34M users, looks to a “FinApps” future

VentureBeat

Yodlee, a company that powers personal financial management (PFM) solutions for major banks and finance portals, now has 34 million registered users worldwide, it told VentureBeat. And it doesn’t look like Yodlee’s growth is going to slow down anytime soon, especially with the “FinApps,” or financial apps it launched last year, which give third-party developers the power to develop apps that can securely access financial data. The 12-year-old company has been a leading force for online financial services for some time. It’s the PFM of choice for eight of the top 10 financial institutions, including Fidelity and Bank of America.

Read more

Social Media Statistics: By-the-Numbers, July 2011

Below are interesting statistics on social media usage. Feel free to share your favorite social media statistics in the comments section.

  • 38,000,000 people in the US age 13 – 80 said their purchasing decisions are influenced by social media, a 14% increase in the past six months (Source: Knowledge Networks)
  • 1,000,000 people view customer service related tweets every week, with 80% of them being critical or negative in nature (Source: TOA Technologies)
  • 132.5 million people in the US will use Facebook this year; by 2013 the number will increase to 152.1 million (Source: eMarketer)
  • 59% of Internet users use at least one social networking service, compared to 34 percent who did in 2008 (Source: Pew Internet)
  • 176,000,000 US Internet users watched online video content in May 2011, an average of 15.9 hours per viewer(Source: comScore)
  • 81 minutes was the average daily use of mobile apps in June 2011, compared to 74 minutes for the Web (Source: Flurry)
  • 750,000,000 monthly active users for social networking giant Facebook, up from 500 million active monthly users last year (Source: TechCrunch)
  • 12% of US adults had an e-book reader as of May 2011, up from 6% in November 2010 (Source: Pew Internet)

Believe there is a science to social media? Here is an interesting infographic on the science of social timing.