Independent Banker - November 2017 - 65

nomenclature used to explain cloudbased
solutions, they have become
prevalent in today's financial services
marketplace, offering community
banks a new option for supporting
customers' lending needs.
Cloud-based lending
Cloud-based environments create
efficiencies for financial institutions,
lessening infrastructure needs,
decreasing costs and increasing effectiveness.
In addition, cloud-based
platforms enhance the flexibility of
the customer interface. In lending,
that can be a critical component
of whether a customer comes to
a community bank or chooses
another provider.
" In general, the delivery of the
experience matters, " says John
Waupsh, chief innovation officer at
Kasasa, a financial technology and
marketing services company. " Today
the competitive set has increased
such a dramatic degree, and consumer
expectation increases [with it].
We've had a decade-plus of wonderful
experiences outside of banking,
and in the last five years, there's been
an explosion of [financial services]
competitors who are offering a nice
way to do something. They have been
conditioning your consumers [as to]
the way businesses should operate. "
This change in consumer expectations
can put banks at a disadvantage
when it comes to lending. Cloudbased
infrastructure can support
banks in getting up to speed quickly.
In fact, a November 2016 PwC report
predicted, " All financial services firms
will evaluate a move to a public cloud
infrastructure as a 'when, not if' part
of IT strategy. "
Moving to the cloud in a lending
environment expedites the loan
process and allows it to move online
in a more frictionless manner than
the traditional paper-driven process.
Using the cloud for the back-end
infrastructure enables more robust
functionality on the front end.
" You are automating process, and
everyone has a better experience,
including your customer relations
and operations staff, " says Terry
Renoux, group president of lending
solutions at financial service provider
ProfitStars. " I think that's key. You
don't do cloud-based lending to
change the dynamic of what you're
doing, but you do install cloud-based
product lending to make your process
more effective and efficient and meet
borrower expectations. "
In addition to a better customer
experience, cloud-based lending has
a bottom-line impact for financial
institutions. From decreased
infrastructure costs to increased
reach, it extends the potential for
community bank loans.
" A financial institution of around
$40 billion reported [that] cloudbased,
online activities have allowed
it to grow at a rate of 15 percent each
" All we're doing
is the thing we've
always done: building
processes and
procedures around our
customers' needs. "
-JOHN WAUPSH, KASASA
year for the past three years, without
adding staff, " Renoux reports.
These revenue benefits grow
when banks consider the potential
for customer acquisitions. Quicker
Securing the intangible
Despite the resounding benefits of moving to a cloud-based lending
infrastructure, there are inherent security risks due to the relinquishing of
control around sensitive data.
So how do community banks ensure their cloud-based information
remains secure?
The FFIEC recommends that financial institutions working in cloud
computing consider " vendor management, information security, audits,
legal and regulatory compliance and business continuity planning " as
" key elements of sound risk-management
and risk-mitigation controls for
cloud computing. "
In addition, community banks that make
the move to cloud-based environments
must confirm their solution providers offer:
» strong encryption of data, both data at
rest and in transit
» robust firewalls with consistent updates
» anti-virus software for local computers
» operating system patches
» physical security around the
servers themselves
» user management and audits to ensure limited access to systems.
" It all boils down to encryption, " says Terry Renoux of ProfitStars. " It's so
important that you are dealing with a provider that has adequate controls,
physical security, user management, audits and the proper disaster-recovery
capabilities at the very top of the house. "
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Independent Banker - November 2017

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