Credit unions aren’t usually accused of being on the bleeding edge of technology. But with cloud computing, credit unions were early adopters. In the spirit of cooperation and because cloud computing makes technology affordable, credit unions were doing cloud before cloud was cool.

Think service bureau architecture for core processing. Service bureau is cloud computing and credit unions have been doing it for years. In order to compete with banks and larger financial institutions, credit unions often band together to deploy modern core processing systems and share the infrastructure across multiple credit unions. This creates scale economies that make it much less expensive to own and operate the latest credit union processing platform. As the rest of the world catches up with credit unions (!), other mundane services such as document management, email, and more are moving to the cloud. But what is the impact (technically speaking) on the credit union?

Here are 4 things to consider with cloud computing for credit unions:

1. Vendor Due Diligence & Management – As with all vendor relationships, proper vetting and due diligence must be completed before selecting a cloud vendor. Follow your standard vendor due diligence procedures but make sure to vet for additional cloud-based risk factors. This is very critical and the level of criticality depends on the type of data and services to be moved to the cloud. Ask an IT or legal expert for help if you are unsure.

2. Information Security & Controls – Applications and platforms traditionally run on servers that physically live at the credit union. As we move those servers and contained information from the back office to the cloud, the credit union must consider how information is securitized and transported. A network security expert with the CISSP certification is best equipped to analyze information security. According to an NCUA report found here, credit unions should evaluate the service provider controls and management of the data to determine whether those controls match the credit union’s policies, as well as any laws and regulations. In a multi-tenancy environment, data encryption is important. Encryption key management policies and procedures should be comprehensive and well-defined.

3. Network Performance and Bandwidth – Network performance becomes a huge factor, especially as document imaging is moved to the cloud, bandwidth must keep up. Gone are the days when a T1 will suffice, credit unions must consider sophisticated fiber build-outs and more.

4. Business Continuity – Since critical systems and platforms moved to the cloud require internet connectivity for access, the credit union becomes very dependent on quality and reliable internet and private connections. This needs to be considered given the credit union’s tolerance for risk and risk exposure. Redundant connections can be procured to minimize downtime. Additionally, the cloud services provider must provide proof of plans and resources to ensure ability to recover and resume operations if an unexpected disruption occurs.

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