For the last five years, we could only talk about the dark clouds over banking but it’s not all dark clouds. In fact, there’s some very bright and sunny ones. They’re called data clouds and banks are starting to use them more and more.
Initially, banks had huge suspicions about cloud computing, as illustrated by one of the first ever research surveys into the subject back in 2009. The report found that most banks did not intend or believe they would find relevance in using cloud computing, and only capital markets had an interest due to their rapidly changing technology needs.
Four years later, a great deal has changed: from an industry that could not define cloud computing in 2009, most executives now know what it is; and from an industry that distrusted any idea of losing control over their compute power, many banks are now wholesale reconstructing their operations around such themes.
Two banks in particular have been noteworthy in this space: BBVA and Commonwealth Bank of Australia (CBA).
BBVA made global headlines last year when they moved their 110,000 staffers across to Google Enterprise Apps. It was a big deal, Google’s biggest deal of this sort in fact, and getting everyone onto Google applications like email, calendar, docs, chat, video conferencing and other collaboration tools was aimed to “achieve a cultural change” and get “the whole company working together” across the 26 countries where BBVA is based, according to BBVA’s director of innovation, Carmen Herranz,
“The main goal is to promote innovation and making decisions and increase productivity. We are in a challenging market and need to make faster and more accurate decisions… and eliminate duplication.”
This view was reinforced by CBA.
According to an interview with CBA’s CIO Michael Harte in The Australian last year, the bank has saved “tens of millions of dollars … over one year” and that was just from placing “about 30 per cent (on Amazon) … there’s a whole lot more to go so not every bit of testing and development is in the cloud.”
By moving to cloud, CBA is spending three times less on IT infrastructure than they were beforehand, with the bank previously consuming “about 75 per cent of our IT budget on infrastructure, it is now down to 26 per cent.”
So these two banks demonstrate the cloud is delivering innovation and cost reduction in banking. It works and is trusted. Maybe that’s why the latest research shows that banks are now investing in cloud services, with a PricewaterhouseCoopers report issued in July showing that 71% of Financial Services executives believe they will invest more in cloud computing this year, up from just 18% who said the same in 2012 (although I also note in another PwC survey last Autumn that only 28% of financial institutions have a cloud security strategy in place).