The NYSE unveiled its highly anticipated specialty cloud platform for the financial markets earlier this month. The cloud is designed especially for the financial markets, implemented with strict compliance policies and heightened security. Is this an indication of a steady move towards the cloud for the financial industry?
Not quite. While the push for financial services firms to cut costs wherever possible can be a driving force behind cloud considerations, financial services firms are governed by countless regulations. These policies and compliance measures act as a barrier for financial firms. Prior to migration, they must ensure compliance with all regulations on the hosting providers’ ends or on their end if a private cloud is implemented.
According to Experian, James Turner, an analyst from Intelligent Business Research Services, suggests data encryption as a solution to the financial industry’s restricting guidelines. However, encryption would trigger a chain of new mandates: What type of encryption? How many bits of encryption? Who has access to the encryption key – will the hosting provider possess the encryption key for all users or would the provider act on a “zero-knowledge” policy?
The strengthened security provided by total data encryption is undoubtedly an enticing method to draw financial services firms to the cloud. Would it play a role with other highly regulated entities? InfoWorld reported that even Aneesh Chopra, President Obama’s first CTO, is exploring cloud computing solutions for the federal government. One can only wonder what his encryption preference will be.