The key differences between cloud and on-premise

The key differences between cloud and on-premise

It is no surprise that cloud-based core banking has grown in popularity as much as it has, as its allure and promise offer newfound flexibility for banks — from saving time and money to improving agility and scalability. The primary key differences are:

Infrastructure
In an on-premise environment, resources are deployed in-house and within your bank’s IT infrastructure. You are responsible for maintaining the solution and all its related processes. In the cloud, resources are hosted on the premises of a service provider. However, you are able to access those resources and use them at any given time. There are no capital expenses and data can be backed up regularly. It allows you to connect with customers, partners, and other businesses with minimal effort.

Cost
When you deploy software on premise, you are responsible for the ongoing costs of the server hardware, power consumption, and space. When you use a cloud-based model, you only need to pay a fixed fee to the SaaS provider. It offers you the ability to reduce system maintenance costs, which lowers legacy technology worries. This allows you to spend budgets on innovation, customer satisfaction and growing the business.

Security
As a bank, you must have a certain level of security and privacy. Security concerns remain the number one barrier to a cloud-based solution, which an on-premises environment provides. However, in a cloud environment, high levels of security are ensured, and others can’t access the data as most cloud providers ensure proper isolation of data per client. It is hard to let control go to another party when it comes to security, but cloud providers have huge teams that dedicatedly work on security and that is something that a bank can never match themselves.
• A very high level of automation, which results in the cloud solution provider being able to maintain a zero touch environment without human interaction.
• Multi Factor Authentication to perform administrative tasks.
• Privileged Identity Management to make changes that require elevation of permissions and manager approval.
• Encryption at rest and in transport using the most secure encryption protocols.

Compliance
Banks are subject to regulations and it is imperative that banks remain compliant and know where their data is at all times. When opting for cloud-based banking, you must ensure that your provider is up to date and compliant with all of the different regulatory mandates in the banking industry. When they are, it saves you a lot of work compared to an on-premise environment where you have to stay updated with regulatory changes yourself.

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