Financial institutions still banking on cloud computing

For all the hype around cloud computing, it really is one of the most important technologies changing banking IT infrastructure today, according to a new Impact Report from Aite Group, Cloud Computing for Banks: Evolution or Revolution?

An Aite Group survey of 29 senior IT executives at financial institutions around the globe reveals that cloud computing holds the potential to redefine the relationship between corporate IT departments and financial institution business units at a time when cost optimization and regulatory compliance are immediate priorities.

Cloud-based services are being adopted for business reasons and technological factors, among them the move toward browser-based technology, cost optimization, increased complexity of data, and the impact of increased regulations and compliance on FIs.

Aite Group finds that private clouds are the leading deployment model chosen by surveyed FIs, with 50% "likely" or "highly likely" to use private clouds in the next 24 months. In contrast, public clouds are seen as best for non-critical systems, with few willing to deploy all of their retail or enterprise banking systems with personally identifiable information on a public cloud. Community clouds are viewed as best for non-critical systems, although 43% of surveyed bank IT executives view these as a viable option for their core systems.

Recommendations for FIs include choosing a vendor with market knowledge and an established footprint. For vendors, Aite Group suggests that they be ready to accommodate hybrid environments. The market won't be "one size fits all"—each FI will have specific requirements and systems that it will want to manage, and working with linked, interoperable clouds will be a key to success.

"Most financial institutions, especially the largest ones, are under extreme pressure from regulators to make immediate changes to their processes, risk management procedures, reporting capabilities, and levels of transparency," says David Albertazzi, senior analyst in Retail Banking at Aite Group. "Whether cloud computing is a true, innovative revolution or merely the next step in the space's technological evolution, many are turning to cloud computing providers to migrate to or integrate with legacy on-premises applications and new cloud-based applications to meet this immediate need."