While the financial services industry has been the trailing indicator of cloud uptake, it has also been a reluctant user for some time. Companies in many industries have followed similar paths, starting slowly with development and testing, moving on to human resources and accounting applications, building experience and comfort, but have done so with much more expediency.
After years of recovery from the global economic and financial crises and a singular focus on cost control, it appears that a breakout may be in the offing. By 2016, more than 60 percent of banks worldwide will process a majority of their transactions in the cloud, according to research firm Gartner. Another research organization, Ovum, echoes this, saying that cloud use by financial services firms is accelerating.
Regulatory and compliance requirements continue to trouble many. Guidance from the governing bodies about using cloud services has been absent, as has progress on industry standards, leaving many financial services firms uncertain. The cloud industry, however, has been hard at work designing better solutions for financial services and architecting their clouds for improved security and availability. Forrester Research, Inc. vp and principal analyst James Staten categorically states that if security in the cloud has held you back, you’re running out of excuses.
Peak 10 has seen a spike in interest in and inquiries about cloud services from both community-based and large banks, as well as other financial institutions. We already have such clients among our customer base. After all, as far as security and regulatory compliance are concerned, few cloud services providers (CSPs) can measure up to our credentials.
Small-scale banks will find cloud technology particularly beneficial, assuming their security concerns are met. They are not always able to make an upfront investment on core banking solutions and the staff and infrastructure to support them, which can limit their competitiveness.
That premise is supported by a survey done last year by PriceWaterhouseCooper. When asked what the three most important reasons for choosing an external private cloud service provider for their IT infrastructure were, financial executives responded:
- Access to superior technical skills to satisfy new requirements
- Faster delivery of IT solutions for business requirements
- Reduce total cost of IT department
If the last few years have proven one thing with regards to cloud computing, it is this: it is unstoppable and making advancements in services and capabilities at a pace never seen before. It would be a mistake to assume these advancements are or will be uniform. The cloud landscape has become very complex. The long-term result may be that multiple CSPs will comprise a total cloud solution for a given enterprise or institution.
However, security and compliance concerns should be, if not put to rest, then not be a deterrent to moving financial services applications (including critical ones) to the cloud. Some CSPs have been hard at work for years creating and proving the solutions for financial firms. The capabilities are in place today, and will continue to improve and strengthen with time. The question is how much longer will customers wait for their financial services firms to get on board?