March 30, 2021

Three considerations for credit unions migrating to the cloud

The ibi Team

Topic:   Data

In 2015, American Banker called for the finance industry’s core processes to move to the cloud. Six years have passed, and some traditional banks and credit unions are still lagging behind. Digital upstarts such as Chime have sprung up in response to the demand for cloud convenience from the millennial population, putting competitive pressure on traditional institutions. Today, even the most stoic financial institutions are moving at least some of their processes into the ether.

What are some of the issues credit unions must consider when migrating to the cloud? Some of the considerations that are top of mind involve security, compliance, and what to expect in the initial stages of migration.

Cloud security is a serious consideration for credit unions

Security is one of the biggest concerns that credit union data managers may face. While the average U.S. business contends with bad actors (entities or individuals with intent to breach or hack secured systems) about four million times a year, financial service providers experience this problem over one billion times per year.

Security issues will always be of concern for credit unions because they handle a huge volume of personally identifiable information (PII) and other sensitive data about their members. Credit union administrators, their members, and the National Credit Union Administration (NCUA) all take financial data security seriously, which is why these institutions have developed a healthy degree of caution and concern regarding the cloud.

The problem is that credit unions often have fewer financial and technical resources to call upon than their large bank counterparts, making IT upgrades a more difficult proposition.

Typing on a laptop
Cybersecurity remains a hurdle for credit union IT teams.

 

Ironically, physical and digital security in the cloud is inherently stronger. It’s also less expensive to maintain than on-premise hardware and software applications. Data storage is more secure in cloud provider facilities, and security updates are applied in real-time under these models. Encryption of data at rest and while in transit is the standard, not the anomaly, and credit unions have the additional security of adding third-party authentication to their processes. Leveraging data in the cloud is also a strong option for crisis management and disaster recovery protocols that allow data to be secured at a remote site during a physical disruption.

Compliance in the cloud

Cloud vendors are designed with compliance in mind. These vendors regularly achieve compliance with a host of regulations from every industry, including finance. Additionally, compliance is streamlined as new regulations arrive.

While it’s true that regulators focus on cloud environments, the latest Federal Financial Institutions Examination Council (FFIEC) rules provide excellent guidelines for organizations moving into the cloud. These rules suggest that credit unions should create strong access control systems and incident response protocols for any cloud architecture. They also recommend implementing virtual machines in the cloud to supplement disaster recovery.

For example, as credit unions consider cloud adoption, they will appreciate the seamless enablement of two-way certificate requirements and Secure Socket Layer (SSL) and Transport Layer Security (TSL) certificates to meet compliance rules. Establishing a strong governance structure that includes monitoring cloud contracts will help ensure these organizations remain compliant throughout the lifecycle of their cloud adoption.

Today, financial institutions – including credit unions – are adopting cloud models for their convenience, flexibility, and cost savings. While credit unions migrating to the cloud may face challenges, there is a decades-old track record for cloud security and compliance with which IT leaders in these institutions can feel comfortable.

How to plan for the initial move to the cloud

Some credit unions delay migration to the cloud because of horror stories about cloud migrations gone awry or because they fear they do not have the time or resources to handle a cloud migration successfully.

It is true that the first 100 days of your cloud migration are critical to its ultimate success, but you can lay a solid foundation for your migration project by understanding the challenges that come with migration and developing best practices to ensure your migration goes well.

Ibi, a TIBCO company, works with credit unions and other financial institutions every day to smooth the journey to the cloud and ensure that our clients’ data is secure, compliant, and readily accessible for analysis when needed.

To learn more about how to move to the cloud successfully with ibi, download our ebook Moving data to the cloud: Your first 100 days.

About the author:
Jon M. Deutsch is Senior Director of Financial Services at ibi, a TIBCO company.  Jon leads the effort to develop market-leading enterprise data and analytics solutions for global financial services, with a focus on Credit Unions.