The cloud gives banks wings
Cloud computing has become a key feature of the modern business environment. It allows enterprises to use the internet to access hardware, software or services as and when they need them, without having to own any infrastructure of their own.
Businesses are therefore able to substantially reduce their costs, as they are using the resources of the cloud service provider. They are also able to scale operations faster and more easily, as they just acquire more capacity on the cloud as they need it.
Banks have however been relatively slow when it comes to the use of the cloud. Andrew Reeves, Temenos Cloud MD, says this is because the industry has particular challenges that need to be addressed.
“Banking is very risk averse and has its own unique set of pressures and constraints in terms of the regulatory environment and how data must be handled and controlled,” says Reeves.
Financial sector regulators have been concerned about banks using online storage services for customer data due to perceived security risks. As there are only three companies that dominate cloud provision – Microsoft, Amazon and Google – regulators have also been worried about the implications of concentrating so much information in the hands of a few organisations.
However, Reeves believes that this is changing. Regulators are starting to acknowledge the benefits available to banks through the cloud.
“The large scale providers are engag- ing with the regulatory bodies and while I think there has been some initial resistance, a lot of work has been done to educate regulatory bodies about what using the cloud actually means,” he says.
“I think the regulators themselves have realised that there are benefits to utilising these more modern infrastructure environments where banks can leverage the massive investments. They are seeing that the technology can provide a very secure environment, which is better than the banks could achieve themselves.
“Banks are starting to get more guidance on the outsourcing of material services. Essentially, this is about how they can leverage cloud providers to allow them to be banks and focus on what they need to do rather than having to run large IT setups.”
By turning to the cloud, banks with microfinance programmes get more of their capital invested in helping the businesses and the individuals they are trying to support, instead of investing it in buildings and infrastructure. Furthermore, cloud banking can help any bank optimise the delivery of their services to clients.
Reeves believes that these trends will play out in South Africa too. Microsoft’s recent announcement that it will be investing in data centres in South Africa shows that providers see the potential of this market.
“We think this is a very positive step because the large providers don’t tend to make these kinds of investments lightly,” says Reeves. “There must be an addressable market for them to put facilities in new geographies.”
Banks are starting to get more guidance in the outsourcing of material services