top of page

Redefining Banking Security: The Role of Colocation Data Centers in Protecting Financial Assets

Updated: May 3

Securing Your Financial Assets: The Crucial Role of Colocation Data Centers

When you think of your bank, what comes to mind?

  • Is it the peace of mind knowing that your financial assets are secure?

  • The convenience and and speed of its services, or the long lines in front of the teller?

  • Or maybe it's the trust and reliability that your bank instills in managing your money - and your data.

Platocom specializes in colocation and data center audits, which includes cyber security.

Colocation data centers are crucial for safeguarding the security and integrity of financial assets and data.

With the increasing volume of sensitive information being shared across sprawling financial networks, the need for robust data protection measures has never been greater. Data and money are which is the lifeblood of financial institutions, must be protected at all costs.

As stewards of critical financial data, it is imperative for financial institutions to prioritize both security and accessibility.

Enter colocation data centers – specialized facilities designed to host IT infrastructure for multiple tenants, including financial organizations.

The Evolution of Banking Security

Historically, banking security relied on physical measures, but with the rise of digital banking, the focus shifted to protecting data from cyber threats. Today, banks must safeguard vast amounts of sensitive information stored in digital systems. (Our blog next week will address rural banks vs metropolitan banks and how they differ in terms of cyber security)

Understanding Colocation

Colocation in a data center

Data Centers Colocation data centers are purpose-built facilities that provide secure and reliable environments for housing IT infrastructure. Unlike traditional data centers owned and operated by individual organizations, colocation facilities offer shared infrastructure and resources, allowing tenants to benefit from cost efficiencies and scalability.

Financial institutions are increasingly turning to colocation data centers to leverage specialized expertise, advanced security measures, and a infrastructure without the burden of building and managing their own facilities.

The Role of Colocation Data Centers in Banking

Financial institutions leverage colocation to benefit from advanced security measures and expert management without the burden of building their own facilities.

Colocation data centers offer a secure and reliable environment for housing the IT infrastructure of financial institutions. By colocating their servers, storage systems, and networking equipment in these specialized facilities, banks can benefit from advanced security measures, redundant infrastructure, and expert management without the burden of building and maintaining their own data centers. This allows banks to focus on their core banking activities while entrusting the security and reliability of their IT infrastructure to colocation providers. (While this is true, many banks are building their own data centers. Why? We will cover that in a blog next month)

Importance of Compliance in Colocation Data Centers

What do we mean by compliance? Basically, it's "obeying the rules." Compliance is paramount for protecting sensitive data and upholding regulatory requirements. Colocation data centers prioritize compliance to ensure organizations meet regulatory obligations effectively.

A state of the art colocation facility complies with industry regulations and standards relevant to your business, such as SOC 2, HIPAA, or GDPR, to protect your data and maintain regulatory compliance (see our list below for what to ask for when you meet with a representative for a colocation facility).

Achieving and maintaining compliance can be a daunting task, especially for organizations with limited resources and expertise (we will address this in our next blog #ruralbanking). Which is why so many financial institutions choose colocation.

 By partnering with colocation data centers that prioritize compliance, financial institutions can benefit from shared responsibility and leverage the provider's expertise and infrastructure to meet regulatory obligations effectively.

Leveraging Colocation for Compliance

Colocation data centers offer a range of features and capabilities that support compliance objectives for financial institutions. These include robust physical security measures, such as:

  • biometric access controls

  • video surveillance

  • 24/7 monitoring, to protect against unauthorized access and mitigate security risks.

Additionally, colocation providers implement comprehensive security protocols, including:

  • firewalls

  • intrusion detection systems, and

  • data encryption, to safeguard data from external threats.

Furthermore, colocation facilities undergo regular audits and assessments to maintain compliance certifications, providing assurance to tenants and regulatory authorities alike.

Pro-tip from Platocom: What to Look for, and Ask, When Seeking a Colocation Facility

When selecting a colocation provider, financial institutions (or anyone else) should prioritize compliance as a key criterion. Establishing clear communication channels is essential for effectively addressing security challenges.

Questions to ask when talking to a colocation representative for a facility :

  1. Security Measures: What security measures does the facility have?

    1. Biometric access control,

    2. surveillance cameras and

    3. security personnel?

  2. Reliability: Ask to see the facility's uptime record and redundancy measures, including power backup systems, to ensure your IT infrastructure remains available and operational even in the event of outages.

  3. Scalability: Does the provider offer scalable solutions to accommodate your growing needs, whether you're expanding your operations or adding new services?

  4. Connectivity Options: Assess the facility's connectivity options, including carrier-neutral connectivity, diverse network providers, and low-latency connections to ensure optimal performance and reliability.

  5. Compliance: Ensure the colocation facility complies with industry regulations and standards relevant to your business, such as SOC 2, HIPAA, or GDPR, to protect your data and maintain regulatory compliance.

  6. Support Services: Be thorough when fact checking the provider's support services, including technical support, remote hands, and service level agreements (SLAs), to ensure prompt assistance and resolution of any issues.

  7. Cost-Effectiveness: Consider the overall cost of colocation services, including setup fees, monthly charges, and additional costs for bandwidth or extra services, to ensure it aligns with your budget and provides value for money. (Link to our blog where we raise awareness about the costs associated with unused circuits in data centers here).

  8. Reputation and Reviews: Research the provider's reputation and read reviews from other customers to gauge their reliability, customer service, and overall satisfaction levels.

Collaborating closely with the colocation provider and establishing clear communication channels is crucial for ensuring ongoing compliance and addressing any emerging security or regulatory challenges.

Financial institutions should implement robust internal controls and processes to complement the security measures offered by the colocation facility, thereby creating a comprehensive compliance framework.

Platocom specializes in providing compliant solutions and offers expert guidance. Don't hesitate to contact one of our skilled team members for advice or assistance.

Embracing the Future of Banking Security

Financial institutions must adapt to emerging threats and technologies to stay ahead of cyber risks. Banks can bolster their cybersecurity stance and safeguard critical banking systems and data by tapping into the expertise and infrastructure of colocation data centers. This enables them to ensure the confidentiality, integrity, and availability of their sensitive information

By leveraging the security expertise and infrastructure of colocation data centers, banks can enhance their cybersecurity posture, mitigate risks, and ensure the confidentiality, integrity, and availability of critical banking systems and data.


Banking security is no longer confined to physical measures but extends to the digital realm where data protection is paramount. Colocation data centers offer a secure and compliant environment for financial institutions to host their IT infrastructure and safeguard customer data. By embracing colocation, banks can enhance their cybersecurity posture, comply with regulatory requirements, and build trust with customers, ultimately redefining the future of banking security in the digital age.

Link to Platocom's other blogs here.

19 views0 comments

Recent Posts

See All


Commenting has been turned off.
bottom of page