Financial Service Industries and the Cloud: Incremental Steps Leading to Big Gains
The financial services industry has presented a bit of a conundrum for those watching the rapid adoption of cloud services by large enterprises. Given its massive scale, data retention requirements, and computational needs, the financial services sector seems like an ideal candidate for wholesale adoption of cloud platform products.
Yet, it is also one of the most heavily regulated industries globally, which can certainly dampen the prospects of achieving a fully cloud-enabled sector. So what do we know about the financial sector’s cloud adoption?
Initial steps
Despite what some media headlines would lead one to believe, banks and other financial services firms are using the cloud—and they are doing so securely, and in compliance with the many rules and regulations that govern their activities.
The incorporation of cloud services has been a planned and deliberate one. Fortune carried a piece in early 2016 that detailed how some banks slowly began to transition. One example of initial adoption was to use the additional transaction capacity available to handle high-volume spikes in activity, such as managing credit card transactions on Black Friday—the day after Thanksgiving that is the generally recognized start of the holiday shopping season.
Flexibility, capacity, and speed
One of the most notable benefits for the banking and finance sector when using cloud services is the flexibility it provides. Servers that provide additional processing capacity can be up and running in a day, rather than the months needed to deploy a traditional new server in an enterprise. The capacity to handle large batches of transactions quickly introduces efficiencies into finance that are allowing the industry to evolve rapidly, and make the case for migrating anything from customer service applications to daily transactions to the cloud.
Regulatory compliance
Security and regulatory compliance have long been cited as concerns preventing a more wholesale movement of financial services to the cloud, but these concerns appear to be more perceived than concrete problems. Companies around the globe have successfully migrated to cloud applications while maintaining the strict regulatory guidance set out for them—indeed, in the U.S., the Financial Industry Regulatory Authority (FINRA) has itself moved applications to the cloud. There can hardly be a more substantive example of the safety of using cloud services than having earned the trust of a regulator.
Public image and trust
Ultimately, one of the biggest hurdles the industry will have to overcome is neither a regulatory nor a security issue, but the challenge of public perception. Banks are intensely aware of the need to maintain an image to the public that is solid, trustworthy, and conventional—experimenting with systems can make people uneasy. The Fortune piece linked above alluded to this sentiment by noting that even though many banks have already successfully deployed cloud applications, they don’t often speak about it.
