Banks invite risk by locking in a single cloud vendor
As financial services firms speed up cloud adoption, they sometimes lock in a single cloud vendor for crucial operations. In doing so, they risk compromising their resilience and could fall afoul of regulators.
Traditionally, the financial services sector has been in no hurry to migrate workflows to the cloud, either out of data privacy concerns regarding customer data or out of the burden of having to maintain legacy infrastructure assets and applications.
However, in the aftermath of the global pandemic, several key factors have put pressure on banks to offer customers more convenient, cloud-based, digital services. Global spending by retail banks alone on cloud computing services was $39 billion in 2022 and is projected to be $83 billion by 2026.
This rapid shift may prompt some financial institutions to seek cost-efficient ways to manage the migration, for example by mistakenly locking in a single cloud vendor for crucial operations such as payment systems. But such a move can invite new unforeseen risks, and industry regulators are casting a keen eye on how these operations are managed and monitored.
Consider these examples:
- The Bank of England’s Prudential Regulation Authority seeks to gather more data from public cloud providers to assess how resilient their services are and encourages firms to reduce risk by avoiding vendor lock-in.
- The Financial Industry Regulatory Authority (FINRA) recently offered guidance suggesting that firms may also consider the risks associated with vendor lock-in and the potential that cloud service providers might be unable to reliably provide services.
- The European Banking Authority issued recommendations on monitoring cloud services to ensure that there is no single point of failure.
Multicloud, with intelligent monitoring, makes better business sense
To balance price, performance, and agility – and lower the associated risks of having a single cloud solution, it makes sense to spread out key operations in a multi-cloud environment. It also lessens the chance of encountering a catastrophic single point of failure.
But even with these benefits, systems running in a multi-cloud environment often rely on disparate monitoring tools and multiple vendors, potentially reintroducing the risks they sought to avoid - and inviting decreased operational resiliency.
Intelligent monitoring tools fill these gaps in multi-cloud environments by providing full-service visibility. They take a proactive approach toward contextualizing everything in one single platform, from legacy systems to cutting-edge new technologies. They add speed, efficiency, and accuracy to transaction monitoring in banks and other financial firms - while lessening the incidence of security failures and other risks.
In a world where seconds, not minutes, can result in enormous amounts of lost revenue, true real-time intelligent monitoring and alerting can reduce the impact of service outages. This allows banks and other financial organizations to minimize mean time to detection (MTTD) and resolution (MTTR) for business-critical applications, whether on-premises or in any multi-cloud environment.