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Financial sector adopting poor ‘cloud practice’

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A large number of businesses in the financial services sector are putting their IT systems and data at risk by failing to adopt good cloud computing practices, according to research from NCC Group.

NCC Group surveyed chief investment officers from financial services companies with over 1,000 employees, and found that less than half of those surveyed carry out third party audits of prospective cloud providers prior to engagement, and over 60 per cent do not have any contractual protection in place if their cloud provider fails.
 
Cloud adoption in the sector is gaining momentum, with a massive 80 per cent of respondents planning to adopt further cloud services in the next 12 months.
 
Daniel Liptrott, managing director of NCC Group's escrow division, says: “Financial services firms are increasingly turning to the cloud due to the benefits of cost and flexibility, but many are not taking the proper precautions. 
 
“Stepping into the cloud isn’t an inherently dangerous proposition as long as the risks are taken into account. However, businesses that don’t carry out independent audits before procurement or don’t have proper contingency measures in place are setting themselves up for disaster.”
 
The research also revealed that SaaS provider failure and data security are among the biggest barriers to cloud adoption.
 
Liptrott adds: “Keeping data secure and accessible is paramount when moving to a cloud model. However, the risk of supplier failure also needs to be taken into account. If a cloud provider gets into difficulties, the risk for the customer is that they are unable to continue to access the software and their data. Organisations within the financial services sector must ensure they have a comprehensive backup plan to mitigate this risk.” 

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