The adoption of cloud computing is finally becoming more prevalent among financial institutions after nearly a ten-year period of uncertainty about giving their data to external parties.
Seventy-one percent of bank directors interviewed, claimed that they plan to capitalize more on cloud computing. According to PricewaterhouseCoopers, the number of bankers investing in cloud computing is for times larger than a year earlier. According to Julien Courbe, PwC's financial services technology leader, the main reason for this change is that merchants of cloud services have made their offerings to banks more secure and reliable.
"This makes stakeholders more comfortable," Courbe says. "A lot of clients are starting to consider and invest in the offerings of many large technology companies to move apps and data to the public cloud. It's a significant shift. Most investments banks have made to date have been in the private cloud," in which the bank retains a larger degree of control and management. "Now we're seeing banks invest in public cloud solutions."
According to Courbe, the cloud providers made significant investments in their identity and access management. The companies started to encrypt the data in storage and transit, in order to improve the security. Also, The midtier banks are going straight to public clouds, instead of private.
The research firm Gartner estimated that in 2013 the public cloud services market would grow 18.5% to total $131 billion worldwide, up from $111 billion in 2012. Infrastructure-as-a-service, including cloud computing, storage and print services, was the fastest-growing segment of the market, according to the research company.
Amazon (AMZN), Google (GOOG), Microsoft (MSFT) and Rackspace (RAX) are the major cloud providers that reported strong growth in cloud use.
In April, Amazon broadcasted that more than 2 trillion objects were stored with the Amazon S3 service and that the service was getting more than 1.1 million requests per second.
"It took us six years to grow to one trillion stored objects, and less than a year to double that number," the company said on its blog. In July, the Netherlands' banking regulator agreed Amazon Web Services for use by commercial institutes. All stages of data storage and organization on the AWS cloud, as well as the use of technology provided by third-party vendors that run on top of AWS, are included in the approval.
Microsoft reported in April that its Windows Azure software and related programs exceeded $1 billion in annual sales for the first time. According to Google, more than 5 million business use Google Apps for business.
"This is a movement that will continue to accelerate," Courbe says. In about 15 years, there will only be about five or six data centers in the world, he predicts.
The application testing and growth is the first use case for cloud computing in banks. Thorough testing of applications requires significant computing resources. However, it only takes just three to six months, so investing in equipment to test on does not make sense.
In the next stage of cloud adoption for banks, they are starting to use human resources, accounting and operations apps in public clouds. The Standard Bank of South Africa said it was planning to move human resources applications to the cloud, as a test before putting primary banking services there.