My Pet Dog can live on a Cloud, but my Bank cannot – discuss

It may sound like one of those tricky university exam questions, but it is an attempt to highlight the issues that financial services have in using the latest technology trend of Cloud Computing. With industry commentators calling 2011 the year of the Cloud this approach to computing is taking over many aspects of our technology life, but it appears that banking is not currently making full use of these techniques.

For example, whilst I may be happy to store some pictures of my pet dog on a cloud service that I have never heard of before, neither I, nor any regulator, would expect my bank to use the same service to store my bank statements. It is not just because of security concerns. It is possible to build tighter security into Cloud systems, and indeed banks have already had to tackle similar issues with their Internet Banking offerings. No rather one of the key advantages of Cloud is ability of a third party to offer the service and this is one of the key issues for banks. These emerging third parties are often start-up technology companies who do not have the track record that banks (and their regulators) require. Some third party Cloud offerings do exist and have banks using them (e.g. MPI partner firms Cogent for commission management, and Kurtosys for client reporting), but these are still relatively niche. What is required, I believe, is a set of third party providers for wider financial Cloud services, who have a sufficiently market wide presence and profile, plus a dependable track record and an ability to offer not just a niche but a wider mix of services for banks.