Banks Are Finally, Cautiously Adopting The Cloud

Banks and financial services firms are often held up as examples of businesses which won't readily embrace cloud services — regulatory requirements and a general sense of caution mean they prefer to maintain their own IT systems. While there hasn't been a wholesale embrace of cloud by banks yet, it's now rare for them not to have some form of cloud computing as part of the mix.

Bank vault picture from Shutterstock

That point was underscored by Paul Brauer, general manager business development Cisco collaboration and managed data networks at Telstra, during last week's Cisco APJC Collaboration Connection 2014 event.

Customers want to shift risks to their service providers. We're seeing that with a lot of large enterprise customers, cloud is the solution. Cost predictability and lifecycle management are vital. We work with three of the four major Australian banks; one is already on cloud for some stuff and two are considering. They don't want to spend money on infrastructure but they want to know that the money they spend will allow innovation in the future.

One common argument used by banks and other financial institutions is that regulations require them to keep their data on shore. As we've noted before, that's not necessarily the case — the basic core requirement is that banks know exactly where data is stored and what regulations might apply to it.

Those requirements thus eliminate some software-as-a-service offerings like Google Apps for Business or, which don't specify which data centres are used to deliver the service. However, they leave the door open for companies which offer infrastructure-as-a-service from data centres in a specific location. AWS and Rackspace already offer Australian data centres, and Microsoft's Azure has promised Australian centres by the end of the year.

Local data centres eliminate those concerns, and promises by major cloud vendors that they'll be erring on the side of the customer when it comes to requests from offshore governments also help. Yet the most evident pattern in cloud uptake to date is similar to non-financial institutions: cloud is used to solve specific problems but not as an underlying architecture.

National Australia Bank (NAB) provides a typical example. The bank is using AWS for its own online banking services and wants to extend to use it for disaster recovery as well. It has also used cloud services from Oracle to help fix up its internal documentation. Nonetheless, its core systems are still internal.

ING Direct earlier this year launched what it described as the first complete internal private cloud for an Australian bank. That's a bigger move than most of its rivals, but still means the bank needs to maintain internal resources to keep those systems moving. We're still a long way away from a local bank relying totally on external cloud services, but the shift has begun.


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