The recent breach of Apple Inc.’s iCloud service, in which compromising photos of celebrities were pulled from iCloud and posted on the web, has reignited the debate concerning our growing dependence on the nebulous cloud for much of our computing power.
Apple reported that the leak was the result of “a very targeted attack on usernames, passwords and security questions,”; many have speculated that iCloud fell victim to a “brute force” attack in which software tries to guess users’ passwords, trying thousands of possibilities until it stumbles upon the right one.
Security and privacy concerns surrounding access to customer data, identity theft, hacking and terrorism are not new and have long been the counterpoint to the many benefits that cloud-based services offer.
From a business perspective, the advantages of moving more applications to the cloud include speed to market, low cost and easy integration across disparate systems within the organization. In the interest of better serving the connected customer, many financial services institutions and their information technology (IT) teams are growing more familiar with the cloud and either deploying or testing cloud-based services that span the full range of cloud delivery models, including infrastructure-as-a-service (a.k.a. IaaS), platform-as-a-service (a.k.a. PaaS) and software-as-a-service (SaaS).
Despite the necessary attention to security — related both to the cloud and private networks — the focus for financial services institutions should be on keeping abreast of advances in cloud-based services and the wave of startups that harness the cloud’s business capabilities. Asset managers and dealers, in particular, should be looking for ways to better leverage the cloud in the interest of supporting advisors and their clients.
That’s because clients are increasingly expecting to be able to interact with their advisors and their financial services firms from anywhere and at any time. For financial services institutions, their technical infrastructures have to accommodate the cloud by adapting to this customer expectation and offering multiple channels for such clients to interact with the firm through a consistent user experience; and being able to help the firm’s business to launch, test, refine and rapidly develop new business capabilities
Several recent reports have highlighted the importance of expanding firms’ electronic communication channels. The 18th annual World Wealth Report, a joint venture between CapGemini Financial Services and Royal Bank of Canada’s wealth-management division, suggested that “digital” has become the pressing mandate for meeting client expectations, reducing flight risks and increasing profitability in the wealth-management industry.
In fact, the report found that almost “two-thirds of the world’s high net-worth individuals expect to manage most or all of their wealth relationship digitally in five years and would consider leaving their current firm if an integrated channel experience is not provided.”
Furthermore, the rewards to firms who can act fast will be substantial, according to Boston Consulting Group’s 2014 annual global study of the U.S. wealth-management industry, which states that “early movers that best balance traditional, relationship-led wealth management with intuitive, simple-to-use digital products and services will gain an unparalleled competitive advantage over the next few years.”
Financial advisors seeking to accelerate their business and take advantage of innovation in cloud-based services should start by trying applications available to their firms. Popular domains include customer-relationship management (Salesforce.com), online communication services (Skype.com), online storage services (drive.google.com), note-taking and archiving (Evernote.com) and document management services (Dropbox.com). There are hundreds of others, so it’s important to keep abreast of new offerings.
The cloud presents tremendous opportunity for advisors seeking to better serve their clients. Used responsibly, these tools will strengthen relationships and ingratiate you with increasingly tech-savvy and demanding clients. Common sense says you shouldn’t tell a stranger your code for the house alarm, nor should you write the code on a sticky note next to the alarm key pad. Equally, you should protect your digital passwords and resist the temptation to save your passwords on some websites for convenience sake.
We will continue to hear about cloud-based systems being compromised as the cat and mouse game between companies and hackers goes on. But to ignore the advances made possible by this next stage in the Internet evolution is to close your eyes naively and wait for the clouds to dissipate.