Banks and credit unions rely heavily on technology to provide seamless and secure customer services. However, recent events such as the CrowdStrike-Microsoft outage serve as reminders of the vulnerabilities inherent in interconnected systems. Such disruptions can be profound for financial institutions, impacting everything from transaction processing to customer trust to regulatory penalties. Cloud-based software solutions, like an Integration Platform as a Service (iPaaS), offer robust safeguards against outages, ensuring operational continuity and safeguarding sensitive financial data. This blog expands on our recent articles about future-proofing your FI and how iPaaS cuts costs and helps FIs scale efficiently to delve into the specific advantages of cloud-based software in financial services.
The CrowdStrike-Microsoft outage: a wake-up call
The recent CrowdStrike-Microsoft outage, which affected numerous organizations globally, serves as a reminder of several critical points of vulnerability that can arise in this type of incident:
- Dependency on single points of failure: Many organizations found themselves crippled due to reliance on a single security provider.
- Extended Downtime: The outage led to prolonged periods of unavailability, causing significant operational and financial losses.
- Data Security Concerns: Interruptions in security services can expose institutions to increased risks of data breaches and cyberattacks.
- Manual configuration – Many on-prem environments depend on the manual configuration of servers, also known as “ClickOps, which requires experts to be available and to reconfigure each machine in the case of an outage.
Operational interruptions can erode customer trust and result in regulatory fines for financial institutions (FIs), making it imperative to adopt solutions that mitigate these risks and enhance overall operational resilience.
How cloud software best practices shield against operational downtime
Cloud-based software solutions offer a comprehensive approach to managing financial services, integrating systems, and safeguarding operations. By leveraging cloud-based infrastructure, these platforms provide several advantages that protect FIs from the fallout of disruptions like the recent CrowdStrike-Microsoft incident.
Leveraging built-in sustainability with cloud platforms
Modern cloud-based solutions harness the power of leading cloud platforms. Fintech Hub, our Integration Platform as a Service, is hosted on AWS to ensure that our FI customers can operate smoothly despite external disruptions. Here are a few of the operational benefits of cloud software:
Geographical redundancy:
- Failover mechanisms: Hosting clusters in different regions or availability zones with built-in failover mechanisms minimizes the risk of broad system outages. This redundancy ensures continuous operation even if one region or availability zone experiences issues, thereby maintaining the availability of critical financial services.
- Disaster recovery: In the rare event of a region or availability zone outage, an FI can leverage another geographical location or availability zone to restore services quickly, ensuring minimal impact on its operations.
Virtualization:
- Hardware isolation: All servers on AWS are virtual, but hardware failures can still impact services. In the event of a hardware failure, the virtual instance may experience an outage and need to be restored on a new host node. AWS’s cloud architecture is designed to minimize downtime by facilitating this restoration process, but it doesn’t fully isolate services from hardware issues.
- Scalability: Virtualization allows FIs to seamlessly scale their resources based on demand, ensuring they can handle peak loads without performance degradation.
Compliance and security:
- Industry standards: Leading financial cloud technologies are compliant with rigorous standards such as SOC 2 Type 2, ISO 27001, FAPI, FDX, and PCI, ensuring alignment with requirements for security, availability, processing integrity, confidentiality, and privacy.
- Constant vigilance: Regular vulnerability patching and security updates ensure the platform remains secure against emerging threats, protecting sensitive financial data from breaches.
Infrastructure-as-code:
- Automated deployments: The best practice in cloud environments is to fully automate deployment through detailed scripts that are version-controlled, ensuring a repeatable redeployment.
Endpoint protection: on-premise vs. cloud-based software
The distinction between on-premise and cloud-based endpoint protection is crucial for safeguarding sensitive financial data and ensuring seamless operations. FIs must understand these differences to make informed decisions about their IT infrastructure.
On-premise endpoint protection: the challenges and risks of multiple points of failure
Endpoint protection must be deeply integrated into the hardware and operating system for on-premise systems to be effective, introducing several challenges:
- Hardware-level protection: Endpoint security must protect the underlying hardware by monitoring and securing all physical components. This level adds a layer of complexity because hardware-level protection requires specialized knowledge and tools.
- Kernel-level drivers: Effective endpoint protection necessitates kernel-level drivers in Windows systems. These drivers operate at the operating system’s core, intercepting and handling requests to prevent malicious activities. However, errors in these drivers can cause significant system instability or crashes, making recovery challenging and time-consuming.
- Maintenance and updates: Endpoint protection requires regular updates and patches to stay ahead of emerging threats. This task is often resource-intensive and can lead to periods of vulnerability if updates are not applied promptly.
The combination of these factors creates multiple points of failure. Any misconfiguration or failure in hardware or kernel-level drivers can lead to catastrophic system failures, which are difficult to recover from and can result in significant downtime and financial loss.
Cloud-based endpoint protection: a paradigm shift
In contrast, cloud-based endpoint protection offers a more robust and reliable solution by leveraging the inherent advantages of cloud infrastructure:
- Virtualization and isolation: Cloud environments utilize virtualization to abstract services from the underlying hardware. However, if a physical server (the host) is compromised, there could be a potential risk that the virtual machines running on it could also be accessed or compromised. Many virtualization platforms include native tools that allow direct connection to virtual machines or access to their disks, which can pose a security vulnerability if the host is breached.
- Centralized security management: Cloud providers implement centralized security protocols and continuous monitoring across their infrastructure, ensuring that the latest security measures protect their environment. However, it’s important to note that the customer, not the cloud provider, is responsible for updating and patching virtual machines.
- Scalability and redundancy: Cloud platforms provide the tools and capabilities for scalability and redundancy, but customers must design their infrastructure to take full advantage of these features. If configured correctly, the system can quickly switch to another instance, availability zone, or region when one part of the infrastructure is jeopardized. This approach helps minimize downtime and ensures continuous service availability, but it requires the customer to design and set up the service intentionally.
- No physical access requirement: Cloud environments enable quicker problem resolution by allowing updates and fixes to be applied remotely, similar to on-prem servers using virtualization platforms like VMware or Hyper-V. This reduces the risks associated with insider attacks and hardware tampering and ensures that IT personnel can quickly address issues without the delays associated with urgent, on-site interventions.
Benefits of cloud-based software as a service: security, efficiency, and resiliency
An iPaaS provides FIs with enhanced security, operational efficiency, and resilience. While cloud environments do not necessarily reduce the complexities or risks associated with virtualization—since many organizations already utilize similar technologies on-prem—they do offer scalability and robust disaster recovery options. Continuous monitoring and adherence to industry standards such as SOC 2 Type 2 and ISO 27001 help to protect FIs against emerging threats while maintaining compliance with stringent security requirements.
Additionally, iPaaS offers significant operational benefits, such as reduced maintenance needs and the ability to scale resources seamlessly based on demand. The cloud infrastructure supports more cost-effective and efficient switching between services, allowing FIs to adapt quickly without incurring high costs. Geographical redundancy and built-in failover mechanisms ensure continuous service availability, even during regional outages, while the elimination of physical access risks further enhances security. IPaaS provides a robust, reliable, and efficient foundation for FIs to safeguard sensitive data and maintain uninterrupted operations.
The CrowdStrike-Microsoft outage underscored the importance of robust, cloud-based integration solutions. An iPaaS insulates FIs from the effects of such outages and provides a future-proof foundation for growth and innovation. Start a conversation with our team today to learn more about how your FI can leverage the capabilities of cloud platforms like Fintech Hub to ensure operational continuity, enhance security, and build a resilient infrastructure.
Learn more about building a resilient FI in these blogs:
The Resilient FI: How Prepared is Your Bank or Credit Union for the Next Big Crisis or Rapid Growth?
