Banks and Clouds

I was reading an article earlier and it struck a thought. What are the major debates for Banks and whether they use “The Cloud”?

Here’s the article. http://goo.gl/R9tGWy It’s not a tech article, more an overview.

For me, the biggest debate within the banks will be whether they use it for anything other than peripheral services and apps. The flexibility is great, but the perception risks, and potentially the real risks associated with security and data protection will weigh VERY heavily on the IT managers and the business managers of any major bank.

The next question for the banks, and the one the market will watch, will be which Cloud vendor the banks finally use. There’s no obvious answer to this one. Bank procurement is a slow, steady process that tries to look at the long long term for issues like this. Is AMAZON the right vendor for a bank for something that might be a 20-year relationship? They might move onto the next big thing. Unlikely, but a question to be asked. I’m inclined to bet on the IBMs and Oracles and SAPs in this market, but Amazon have proven everyone wrong in this space already so it’s probably a bad bet.

For every other vendor the question will be “How do we catch Amazon?”. I expect several are taking aim!

But — more important than all these is the why. Why? Why would banks move onto the public cloud?

Yes, the flexibility is great, but you can get that from your own private hosted cloud. Inside your firewall, reporting to your IT security guys, with your data and your customer data under your control.

Banking is, ultimately, about vaults and keys. That’s really what a bank is. It’s SECURE. And having a key that no-one else has to a door that no-one else can go through seems pretty important. On that basis, private cloud infrastructure seems to me much more likely than use of any public cloud infrastructure. And there, I’d bet on IBM and EMC and SAP over Amazon.

Plus the costs — in the end — can’t be that much lower than you can manage with your own large data center if Amazon or any cloud vendor is to make decent profits. And that’s if they can even be lower at all. Maybe there’s some advantage at REALLY large scale, but any major bank is already operating at pretty big scale. And one error, one mistake could blow a decade of costs savings.

Maybe I’m looking at it wrong, but I’d bet on private hosted clouds. It provides flexibility, scaleability, security, control, and even if it’s a bit pricier it won’t be THAT big a deal. But loss of control or a data leakage is a really big deal. Particularly for a bank.

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