Escrow is vital for banks choosing cloud computing, says provider

Financial services firms are using cloud computing with increasing frequency but often forget to protect the software they invest in, a software security firm has said. It said its escrow services were as vital for remote as for traditional computing.

Software as a Service (SaaS), a form of cloud computing, is increasingly commonly used, especially in the financial sector, according to NCC Group, which provides software escrow services. But companies need to think about escrow as much as they would for traditional software, it said.

Software escrow is the placing of the software's source code with a trusted third party. The supplier and customer agree that the code will be released in identified circumstances, such as the supplier no longer being able to support the product.

Escrow is designed to ensure that customers are not left with unusable products if a company goes bust or fails in its promises to support and update a product.

"Uptake of SaaS in the financial sector has been rapid and widespread, with businesses attracted by the model’s cost and time saving benefits," said an NCC statement. "However, confusion over contractual obligations or intentional contract omissions from the provider to avoid heightened responsibility can expose companies to business continuity problems, which could seriously impact business-critical functions."

NCC's escrow director, Jon Leigh, said that users of SaaS could be in serious trouble if they do not have a usable and changeable copy of the software they used stored with an intermediary. He said that a supplier's collapse could leave those companies in an even worse state than those which use more traditional software.