In North America, banks manage only 12% of their tasks in the cloud, but that could double over the next two years, consulting firm Accenture said in a survey. Jamie Dimon, managing director of JPMorgan Chase, said the bank needs to embrace new technologies such as artificial intelligence and cloud technology “as quickly as possible.”
Wells Fargo plans to migrate to Microsoft-owned and Google-owned data centers over several years; Morgan Stanley also works with Microsoft. Bank of America has saved $ 2 billion a year in part by building its own cloud. Goldman said in November it would partner with Amazon Web Services to give customers access to mountains of financial data and analysis tools.
Cloud services allow banks to rent data storage and processing power from vendors such as Amazon, Google, or Microsoft, which have their own data centers located around the world. After migrating to the cloud, banks can access their data over the Internet and use the compute capacity of technology companies when needed, instead of running their own servers year round.
Seeing a great opportunity to sell cloud computing services on Wall Street, some tech giants have hired former bankers who can use their knowledge of the rules and constraints under which banks operate to present the industry.
Scott Mullins, AWS Business Development Manager for Financial Services, previously worked at JPMorgan and Nasdaq. Yolande Piazza, vice president of financial services at Google Cloud, is the former managing director of Citi FinTech, an innovation unit of Citigroup. Bill Borden at Microsoft and Howard Boville at IBM are Bank of America alumni.
Cloud providers “evolve at a much faster rate of development when you think of security, compliance and control structures,” compared to individual banks, said Borden, corporate vice president for services. global financials at Microsoft. The cloud, said Borden and the other executives, allows businesses to expand their IT processing capacity when they need it, which is much cheaper than using servers on their own premises.
But glitches do occur. A week after Goldman partnered with Amazon, an AWS outage interrupted webcasts of a conference hosted by the bank that brought together chief executives from America’s largest financial firms. The issue also caused problems for Amazon’s voice assistant Alexa, Disney’s streaming service, and Ticketmaster. AWS and its competitor, Microsoft Azure, have both suffered outages recently.
Banking regulators in the United States, including the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, have jointly stressed the need for lenders to manage risk and put in place back-up systems when ‘they outsource the technology to cloud providers. The European Banking Authority has warned companies against the risk of concentration or overdependence on a single tech company.
The Financial Industry Regulatory Authority, which oversees brokers – companies that engage in trading activities – has already moved all of its technology to the cloud. The group previously spent tens of millions of dollars a year to run its own servers, but now rents space on AWS servers for a fraction of that amount, said Steven J. Randich, chief information officer of the FINRA.