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Purveyors of certain cloud services, such as cloud-based lending, face continual rejection from bankers worried about security. But some say a data storage specialist could be every bit as secure as a financial institution if not more so.
January 29 -
U.S. Bancorp recently began offering paperless account opening after seeing good results from electronically signed and documented lending. Yet a large segment of the industry still hesitates to use this technology, for legal, technical and cultural reasons.
November 26
Like many banks, Frandsen Financial has grown by acquisition and has felt the pain of IT integration along the way.
The Arden Hills, Minn., bank has grown to $1.5 billion in assets in the last 10 years.
"Each acquisition comes with its own challenges from the legacy data side," said Steve Molander, the bank's director of IT.
Along the way it has picked up nine imaging systems from acquired banks, each with a sealed-off archive of checks, monthly account statements, coupons, deposit tickets and other documents that the bank needed to be able to retain and present on demand when asked by lawyers or regulators.
"The images can be read, the challenge is finding the image. It's the indexing that's the issue," Molander said. Each legacy system had a different method of indexing and searching for files that was incompatible with the others. Bringing the disparate indexes together without losing the ability to search was a major challenge.
And document images are important at times. For instance, the bank recently received a subpoena from divorce lawyer who need a customer's statements from five years ago to determine a spouse's net worth, and it needed to retrieve and present statements from that account quickly.
Two major incidents brought this problem to a head.
In one, an administrator at an acquired institution left without sharing the passwords to the imaging system.
"This person left the company he wasn't fired, it was just a case where he left and everyone forgot that one of his roles was to maintain the database," Molander said. "When it came time to bring the archive into our system, we had no passwords. We had nothing to get into it." The bank had to hire a security consultant to break into the legacy core system and the imaging system.
"That raised a flag of, 'We just can't let this happen again,' " Molander said.
After that, Frandsen Financial added a due diligence item to its acquisition checklist: look at the legacy system immediately, determine whether it's actively maintained, and start figuring out how to import it.
"We will not leave a legacy system at a bank we've acquired," Molander said. "We will immediately bring it into the centralized database so that we in IT can maintain that data."
In second incident, lightning struck (literally).
"It was a bad storm, all the equipment was protected by a surge suppressor, but this was a direct enough strike to the point where it took out a server," Molander said. Frandsen Financial was facing spending $15,000 for a new server to host the legacy imaging system.
Instead, the bank brought in ILS's OmniView server (for $18,000). ILS imported the raw files and indexes from all the legacy core and imaging systems into a common database and provided a search tool that combs through all the documents, for a unified, searchable vault. (Each data import has cost about $6,000.) By avoiding the cost of replacing the damaged server and of maintaining the nine legacy systems, Molander said, this project reaped a return on investment in about three months.
It also relieved a headache.
"My philosophy is, I don't want to focus on machinery and systems. I want to focus on information and how people use the information," Molander said. "When I had six different legacy imaging systems, I spent too much time worrying about those systems rather than the data itself. Now I've got data that's accessible, usable and easy to administer and maintain."
