What Does the Push to Public Cloud Mean for Financial Services?
The distinction between public and private cloud is one that CFOs will need to come to grips with as the sector becomes increasingly digitalised.
Simon Pamplin, technical director at Silver Peak, explores what public cloud is and what its implications are for financial services firms.
Adoption of cloud by financial institutions has risen dramatically over the past five to ten years. Yet this has largely been private cloud rather than the more flexible and scalable public cloud.
In January, however, European financial institutions formed the European Cloud User Coalition (ECUC) to drive public cloud adoption and ensure consistency and enforcement of security standards of cloud’s use. Allied Irish Bank, BAWAG Group, Belfius Bank, Commerzbank, Deutsche Börse, EFG Bank, Erste Group Bank, Euroclear, ING, KBC Bank, Swedbank and UniCredit have all signed up to the ECUC and are participating in the initiative.
This widespread push displays the desire for public cloud in the finance industry, and there are persuasive arguments for the transition from private to public. Although the desire is clearly there for greater use of public cloud, there are key factors that will determine the speed and success of this transition.
Public versus private: an industry ready to shift
The difference between public and private cloud is that, as the name suggests, private cloud is managed internally by an organisation – all the dedicated infrastructure, including the data centre, is managed by a single, owning organisation. Conversely, public cloud is offered to multiple companies by a public cloud provider that runs and maintains the supporting shared infrastructure.
That the finance industry has been cautious in its uptake of public cloud highlights the essential need for top security for banks and other financial service organisations. The industry in particular is subject to strict compliance legislation across Europe, and organisations may choose private clouds as a means to ensure they are indeed complying.
Adoption of cloud by financial institutions has risen dramatically over the past five to ten years.
Another issue is that of vendor lock-in, as companies may worry of their complex cloud infrastructures being guaranteed by a single cloud provider – this reliance can hurt market competition, as it prevents companies easily switching between vendors.
It is these concerns that the ECUC seeks to address by defining and communicating what requirements have to be met in Europe for public cloud to become a feasible option for financial organisations. There are, after all, some clear benefits.
The first and foremost benefit of transitioning to public cloud is cost. Supporting cloud infrastructure is an expensive and labour-intensive process – smaller, newer organisations in the industry may find the possibility of private cloud beyond their resources, especially given the stringent cybersecurity standards that the financial world requires.
Adding to this, public cloud providers do offer a top rate service uniquely tailored for organisations – they are excellent at what they do, and a multitenancy business model allows them to allocate resources in a distilled and highly efficient manner. By delegating cloud to an expert third party, finance organisations free themselves from the operational headaches of enterprise IT administration.
The network must facilitate financial public cloud use
A key criterion for the use of public cloud is that when implemented, financial organisations can be sure their data is safe. However, the secure use of public cloud services lies in infrastructure and vitally the wide-area network (WAN).
Before the public cloud transformation in the industry can advance, organisations must transform their networking infrastructure. In essence, traditional WAN architectures have been obsoleted by the cloud, and private cloud security can only be guaranteed through advanced WAN solutions, such as an SD-WAN.
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The drive towards public cloud will enable the financial industry to enjoy its full benefits – greater accessibility, lower cost, and increased market competition. However, first, coordination with European public cloud providers and transformation of the organisational network must be accomplished to assure success.
