How banks are exploring cloud computing
Cloud computing is being seen as a solution for financial institutions to keep up with the demands of clients.
25 Nov 2016 | Darryl Yu
Pressure on the IT systems of financial institutions (FIs) is on the rise as financial transactions are increasingly executed electronically.
According to BBVA research, the US alone has more than US$122 billion non-cash transactions yearly and is predicted to grow significantly over the next several years.
The rapid move into electronic transactions has put FIs in a precarious situation attempting to fulfill the IT needs of their clients yet at the same time looking to keep operating costs low. One type of solution FIs have flirted with is cloud computing.
In general cloud computing involves data being stored in an external server that is accessed through the internet. At the moment most FIs are using the cloud for non-core uses such as human resources, e-mail, customer analytics etc.
Several banks have taken it a step further and have moved their internal processes onto the cloud. European banks such as Robeco Direct N.V. have moved their retail-banking platform to the cloud. In Asia, DBS announced this summer that it would work with Amazon Web Services (AWS) for its own cloud solution.  
The potential benefit of cloud for FIs is essentially speed and convenient access to important data. “We jumped on the cloud very early on in 2007. You can leave the data in the cloud and whenever you need it you can just take it,” explains Stephane Dubois founder and CEO of market data provider firm Xignite that uses cloud technology to get real-time financial information.
For Dubois it’s only a matter of time before most FIs look to forge additional partnerships with cloud providers. “Our vision is that market data will eventually be on the cloud. Exchanges will also run on the cloud too they won’t be able to keep doing what they are doing, so everything will be on the cloud all the data will be there,” he highlights. “The economics are so compelling so it’s happening. I can save huge amounts of money on the infrastructure.”
In spite of the impact cloud computing can offer FIs, financial regulators such as the MAS (Monetary Authority of Singapore) have urged banks to be mindful of the type of data they send to the cloud.
“Many years ago FIs weren’t sure if they should adopt cloud services they were doubts that cloud services are secure enough. There were doubts that cloud services were reliable,” reflects Chris Yao, deputy director, technology risk supervision at the MAS. “The MAS is not against cloud services this means that FIs are free to use cloud services. You need to be able to pick up your data from everyone else’s data and fence up your data.”
Yao suggests that one good way is to protect your data is to encrypt or tokenize it before it is sent to the cloud.  Adhering to the cloud demand Alibaba Cloud the cloud computing arm of the Alibaba Group reported that it would open four new data centres by the end of 2016. Perhaps soon we will start seeing Chinese banks opting to use the cloud similar to their peers elsewhere around the globe. 
Image courtesy of Gregor Cresnar.
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