Which bank applications and functions lend themselves to being run in a cloud? While more than half (51 percent) of the respondents to the Bank Systems & Technology/InformationWeek Analytics cloud survey said they plan to run general business applications, such as CRM or ERP, in a cloud environment, a surprising 47 percent intend to run bank-specific applications, such as payments, on a cloud. About a third (31 percent) plan to run internal applications over an external cloud, and 29 percent plan to test applications on an external cloud.
According to ING Americas' Alan Boehme, SVP of IT strategy and enterprise architecture, high-performance applications that involve intense calculations that can run well in parallel (performing many calculations at the same time on different processors) are well suited for the cloud. Risk and performance simulations are good examples of compute-intensive programs that could take advantage of the cloud, "as long as you're not using highly confidential information," he notes. "The day will come when policies and regulations will catch up with technology to allow that, but we're not there now."
Laurent Lachal, senior analyst at Ovum, says investment banks seeking new ways of handling number crunching are the first to turn to the cloud. (In fact, one Wall Street CTO, Daniel Marques at Ballista Securities, floated the idea of leasing server resources to other companies after hours. "Once 4:30 rolls around, we don't need those machines," he said as part of a panel discussion on low-latency trading at a recent industry event. "There's a lot of redundant hardware sitting around, and there may be an opportunity there.")
Running networks over a cloud also makes sense, ING's Boehme says. "You get extra resiliency," he asserts. "The chances of a large cloud run by Amazon, Savvis or Rackspace going down are a lot less than your own data center."
Andrew Greenway, the senior executive who leads Accenture's cloud computing program, notes that 10 years ago, banks were reluctant to share network links and demanded that their telco providers set up one-to-one links for everything they use. "Over the past 10 years, the technology has gotten better, the costs have come way down for a shared network, and now banks use it regularly for pretty much all of their traffic," he says. "We'll see a similar take-up and journey around cloud computing."
David Boyle, a senior executive in Accenture's financial services group, says banks increasingly will use cloud services for e-mail and messaging environments. "We're seeing a huge market for Microsoft and Google for cloud-delivered services," he relates.
In the not-ready-for-cloud category, ING's Boehme points to transaction-heavy applications, because external cloud providers tend to charge for data inputs and outputs, he explains. Applications that require the bulk transfer of large amounts of data also are a poor fit because of the geographic distances between cloud providers and clients, he adds.
Certain types of data will never be appropriate to move to the cloud, Boehme stresses. One example is data that requires PCI inspection (i.e., payment card data). Others include personally identifiable information, such as a customer's Social Security number, and cross-border data. "Some external cloud providers back up their cloud from the U.S. into Europe or vice versa, and you can't move European Union data outside of the EU easily without having to jump through hoops," he says.
Asked what types of applications and functions they would never port to a cloud, 13 percent of the bankers in our cloud computing survey named non-archiving storage systems (primarily for shared file access, for example), making it the top answer.