Why Specialized MSPs are an Absolute Must for Financial Institutions
By Tim McFarland, Vice President of Managed IT Services, Marcum Technology
Navigating the complex and ever-shifting digital landscape is a daunting task for all businesses today. However, Financial institutions face even more challenges, particularly in the areas of cybersecurity and regulatory compliance.
For smaller to mid-sized banks and credit unions, outsourcing IT needs to a managed service provider (MSP) is typically the most cost-effective option. But not all MSPs offer the same services and therefore advantages.
This discussion will delineate the key differences between traditional and specialized MSPs, the benefits of leveraging third-party support, and some best practices for choosing the right partner.
HOW MSPS SERVE FINANCIAL INSTITUTIONS
MSPs support small to mid-sized financial Institutions in a number of ways. Specifically, they make IT operations more efficient, reliable, and scalable. In the case of financial institutions, managed service providers also help address cybersecurity challenges and meet regulatory requirements.
Financial Institutions are subject to robust regulatory requirements to maintain a strong Information Security Program. This includes, updating policies, vendor due diligence, maintaining a technology risk assessment, as well as new technology risk assessments, amongst other requirements.
An MSP allows a financial institution to outsource these critical tasks while simultaneously freeing up their internal staff to focus on more strategic projects.
SPECIALIZED VS. NON-SPECIALIZED MSPS
While most managed service providers offer the same core functions, MSPs that work within heavily regulated industries can provide focused expertise in managing sophisticated IT infrastructure and maintaining high system availability, while also ensuring maximum data security and ongoing compliance with stringent regulations. All of these things are essential components of successful financial operations.
A specialized MSP understands the complex regulations that apply to the financial industry, such as those from the FDIC, OCC, and state regulatory agencies. They also provide expertise in areas such as risk assessments, disaster recovery, and regulatory benchmarks, including annual pen tests and control reviews. This can help institutions develop and maintain a strong and comprehensive compliance process.
Specialized MSPs can also assist financial institutions in the ethical use of advanced technologies such as AI, machine learning, and automation. This includes helping them access and analyze data quickly, staying ahead of emerging technologies, while also utilizing the wealth of data they have for growth and cross-selling opportunities.
BENEFITS OF SPECIALIZED MSPS
The right managed service provider can become a strategic ally, providing financial institutions with a variety of high-value benefits, including the following:
DEEP-ROOTED INDUSTRY EXPERTISE
MSPs specializing in the financial sector possess in-depth knowledge and understanding of industry-specific regulations, compliance standards, and security best practices. This includes specific knowledge of core providers and a tailored approach to ensure that IT solutions align with regulatory requirements and protect sensitive customer data.
ENHANCED SECURITY
Data breaches in the financial sector are extremely costly. The top eight breaches in the past five years impacted 558 million customers. A specialized MSP can provide advanced security measures, including threat detection, incident response, and vulnerability management. Further, they can help financial institutions configure and utilize their existing tools, such as the Microsoft 365 stack, for enhanced security.
IMPROVED OPERATIONS AND BUSINESS OUTCOMES
Using a managed service provider that specializes in financial institutions maximizes uptime, optimizes redundancy, and ensures quick recovery times in the event of a disruption. Specialized MSPs can also assist with implementing the right-fit CRM solutions and customer analytics tools, providing quick access to data and automation. All of this leads to enhanced customer experience and major competitive advantages.
COST-EFFECTIVE
Outsourcing IT functions to an MSP can often be more cost-effective than building and maintaining an in-house IT team. A specialized MSP can help reduce overall IT expenditure by planning for future expenses, improving product licensing negotiations, determining better resource allocation, and leveraging economies of scale.
SCALABILITY AND FLEXIBILITY
Whether it’s expanding operations, implementing new technologies, or handling peak workloads, MSPs can provide flexible IT solutions that can adapt rapidly to changing business needs. With a specialized MSP, financial institutions can scale up or down quickly while maintaining accurate and stable budgeting. This allows the institution to know their costs each month and adjust as needed for growth or downsizing.
FOCUS ON CORE BUSINESS
By partnering with an MSP, financial institutions can free up their internal resources to focus on core business activities, such as customer service, product development, and risk management. Many workers in financial institutions wear multiple hats and may not have the specialized knowledge needed for certain tasks. An MSP can bridge this gap.
GROWTH AND INNOVATION
Aligning IT strategic plans with the overall goals of a financial institution is essential, particularly in the context of growth and acquisition. Industry-specific MSPs can help financial institutions avoid under-sizing their infrastructures by accounting for potential future acquisitions when planning IT upgrades.
BEST PRACTICES FOR CHOOSING A SPECIALIZED MSP
Partnering with a qualified MSP can help the financial service industry streamline operations, fortify security, and ensure compliance – all while maximizing efficiency and facilitating growth.
Financial institutions should use the following criteria when selecting a partner:
- Proactive approach to cybersecurity
- Certifications (e.g. CISSP)
- Extensive experience with regulated industries
- In-depth knowledge of all aspects of compliance
- Expertise in specific financial technology
- Emphasis on virtual services and cloud environments
- Understanding of ancillary products
- Proven track record of success
The specialized MSP services provided through Marcum Technology have helped many financial institutions achieve and maintain regulatory compliance, as evidenced by their CAMELS ratings. With over 35 years of industry-specific experience and a highly skilled team of former bankers and IT compliance experts, we have become the provider of choice to countless community banks, credit unions, and other small to mid-sized financial organizations.
To learn more about the advantages of managed IT services and how Marcum Technology’s specialized MSP services could benefit your institution, book a free consultation.