Although a public cloud service provider can offer banks and other financial firms scalability and flexibility benefits, enterprise-class cloud computing is a better option for these institutions since public hosted solutions are not equipped to handle the computing needs of a highly regulated industry like banking, according to Patrick Maes, the chief technology officer of the banking group ANZ.
ZDNet reported that Maes spoke about the cloud at a recent conference in Australia. There, he noted that while smaller businesses may think a public cloud service provider can provide them with an ideal solution, no bank can afford to think this way. Because of the many security and compliance regulations that these institutions need to follow, only a dedicated enterprise cloud solution is capable of meeting a bank’s many needs.
“Most of the big cloud providers don’t have yet the contextual maturity to guarantee service levels, penalties, and liabilities and importantly what happens with the data at the end of contact,” he said, according to ZDNet. “But this can be overcome and we have been looking at some of the models you can apply to work in the cloud computing environment.”
This concern is perhaps best exemplified by the many international compliance demands larger financial corporations face, Maes noted. After all, the rules and laws in place regarding data security and access can vary significantly based on location, with the United States sometimes having different regulations than locations such as the European Union. Although this is still a legal grey area, typically banks can determine which sets of rules to follow based on the location the data is stored. Enterprise-class cloud computing easily enables organizations to ascertain which legal body has jurisdiction over the data, but this is far more difficult to determine with public cloud solutions.
“If you operate in 32 countries across Asia and the Pacific, there are some very stringent regulations about locality and ownership of the data,” Maes said at the conference. He added, “The difference is not so much in the way you set up the infrastructure, it’s about knowing exactly where the data is at a certain given moment in time. In Singapore, you can’t use Salesforce because the data will sit in the U.S.”
Key ways for banks to leverage enterprise-class cloud computing
Although hosted solutions can complicate legal and compliance issues for banks, the technology holds great promise for financial institutions looking to boost consumer trust and increase profit margins, cloud computing expert Joe McKendrick wrote in Forbes.
For example, one of the major issues banks face now is a loss of customer trust stemming from the most recent financial market meltdown. Enterprise-class cloud computing can help address this concern by making it easier for consumers to access and oversee their accounts. This will make them more willing to further leverage the institution’s services, leading to future growth. McKendrick also noted that banks can utilize the enterprise cloud to protect mission-critical data, to facilitate the sharing of information across internal departments and to share tips and tricks with other firms.
Thanks to these many potential benefits, more banks than ever before are interested in the cloud. According to a survey conducted by Bank Systems & Technology, 73 percent of respondents thought cloud computing could help their organization better meet customer demands and more effectively scale internal networks.