The banking industry is just another in a long line of industries making the transition to the cloud, with AWS leading the way in terms of migration.
Traditionally banks have been reluctant to embrace such technologies, especially on security grounds.
However, banks are increasingly realising that cloud computing can help them respond more effectively to challenges by driving down costs, enabling innovation and creating the flexibility needed to respond to change.
According to David Richards writing for NetworkWorld in his article 'Banking on the Cloud', FINRA, one of the largest independent securities regulators in the United States, has now moved about 75 percent of its operations to the cloud. By doing so, it estimates it will save up to $20 million annually by using Amazon Web Services instead of a physical data center infrastructure.
David writes that "A major benefit of its move to the cloud has been speed. Some of the more complex queries FINRA runs on its data could take several hours in extreme cases, but they are now done in a few seconds, allowing the regulator to run surveillance patterns more quickly and do more data analysis."
This is hardly surprising - just last month AWS announced the availability of X1 instances for Amazon EC2 featuring 2 TB of memory and high-performing Intel processors to support large-scale in-memory databases, big data processing, and HPC.
By using AWS, businesses can scale up vast amounts of technology infrastructure on demand and pay only for what they use. Having such vast compute capacity available on demand is extremely important in the capital markets industry where milliseconds can mean millions in profit.
According to Richards, cloud computing means banks no longer have to invest heavily in dedicated hardware, software and manpower.
He quotes the example of the Commonwealth Bank of Australia, which said it used to take eight weeks and several thousand dollars to stand up a new server. Now it takes eight minutes and 25 cents to do the same thing in the cloud, making the bank much more responsive to changing customer demands.
Basically cloud improves flexibility and scalability, enabling banks and financial institutions to transform their business processes and grow organically in new sectors and geographies without incurring huge costs for establishing a physical presence.
Richards sums up:
"Ultimately the banks that take advantage of cloud computing are better positioned to respond to economic uncertainties, interconnected global financial systems and demanding customers. If they want to stay ahead, as the regulators have realised, the cloud is no longer a nice to have, but increasingly a necessity."