Amid the excitement generated by technologies such as quantum computing, virtual reality, artificial intelligence and distributed ledger (DLT), cloud computing can be often overlooked.
Banks now recognising the benefits of cloud computing technology
Yet at the recent Sibos event, it was evident that financial institutions are now serious about embracing cloud – including the public cloud – to reduce costs and improve resiliency and security.
During the opening keynote address, Royal Bank of Canada’s President and Chief Executive Officer, David McKay, reminded delegates that it had been ten years since the term cloud computing had first entered our consciousness.
The past decade had been one of the most disruptive and creative periods for the financial industry, he said. Cloud book-ended the Sibos plenaries as closing speaker, Microsoft CEO Satya Nadella, said while he was excited about the new ways to compute – quantum computing being one extreme – “a lot” was happening in cloud. He urged delegates not to think of cloud as “one homogenous thing” but something that comes in many forms, including graphical processing units (GPUs), CPUs, facility port adapters (FPAs) and new silicon.
Jonathan Charley, General Manager FSI EMEA North at SAP, says while industries such as gaming and retail have embraced public cloud, financial institutions have been much slower to do so. “This has been driven by a misconception on the part of banks that the public cloud is not secure.”
Moreover, banks have also until very recently been keen to retain ownership of their own IT. But there are significant benefits of a cloud approach. Costs can be reduced, and institutions can move from a capital-intensive ownership model to a ‘pay as you go’ model, paying only for the computing power they use when they use it.
Many banks are paying for IT infrastructure capacity that they need for peak processing, which may occur for only a handful of days in a year. The large-scale public cloud providers not only can invest far more in security than individual banks, but also must because their reputations are dependent upon them being secure.
SWIFT was also extolling the virtues of cloud during Sibos. Its global payments initiative (gpi) features a cloud-based tracker, which provides real-time information on a cross-border payment’s progress from initiation to confirmation.
The tracker uses a unique reference number to link all messages required to effect an end-to-end transfer, regardless of the number of correspondent banks involved in a transaction.
Luc Meurant, who heads SWIFT’s financial crime compliance division, said: “SWIFT pioneered the use of highly secure cloud technology to deliver hosted compliance solutions. Technology is a great enabler of the collaborative, information-sharing, cost-efficient, utility-based approaches that banks are increasingly favouring as their compliance strategies mature.”
One of the compelling features of cloud technology is its ability to reduce cost bases, and many industry observers believe this is a driving factor in banks’ increasing adoption of such platforms.
By accessing solutions on the cloud, banks no longer have to operate their own data centres, maintain hardware and software or engage in costly and time-consuming IT updates. Software and hardware costs are reduced, and firms can take advantage of new functionality immediately it becomes available.
Cloud also delivers on banks’ requirements to improve scalability and develop on-demand products and services. As little as three years ago cloud would be “immediately dismissed” as an option by banks.
Now even tier one banks are discussing and moving to cloud deployments that include public, private and hybrid. Not-for-profit FinTech industry body Banking Industry Architecture Network (BIAN), chose Sibos to launch its new framework, which it says will enable banks to move to the cloud and “finally embrace cloud-based solutions that will enable them to operate a leaner tech model”.
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