Looks like the Cloud will pay big dividends
Financial services firms are often caught in a balancing act between embracing new technologies that will temporarily “disrupt” services and becoming bogged down in legacy IT systems that negatively impact existing services and slow the development and implementation of new ones. As cloud computing continues to gain momentum and adoption, financial firms find themselves again standing at the crossroads of a significantly changing technology landscape.
According to the report published earlier this week by the Centre for Economics and Business Research (CEBR), a UK think tank, cloud computing will “allow financial services business to break free from the shackles of old legacy IT,” generating some 175 billion euros a year throughout the European community and creating a stand-up-and-notice 200,000+ jobs over the next four years in the U.K. alone. Whether euros or dollars, in the words of past U.S. Senator Everett Dirksen, “A billion here, a billion there – pretty soon you’re talking about real money.”
Wow! Take note you government leaders looking for ways to stimulate your economies: embrace the cloud!
Cloud computing is changing the way companies consume and pay for IT. Under the cloud model, IT applications and services are provided by a third-party over the internet or through an internal network that offers cloud services (often called hybrid, or local, cloud computing). By utilizing server space, IT services and computer apps via the Cloud, banking and other financial firms can eliminate or drastically change their IT infrastructure and expense model.
Alan Goldstein, Chief Information Officer for BNY Mellon Asset Management, says cloud computing allows banks to increase business agility by deploying IT resources quickly. “From an institutional standpoint, the benefits of cloud computing are concrete. You’re able to more rapidly deploy infrastructure and applications and to scale-up horizontally.”
Bottom line: financial firms can respond to business demands more quickly and reduce the time it takes to get a new service or product to market.
Not everyone agrees with Goldstein and the financial services industry as a whole – never known as early adopters of new technologies – has been slower than other industries to embrace the Cloud. Echoing industry concerns over the maturity and readiness of cloud computing to support financial entities, Michael Fahy, global head of IT infrastructure at investment bank Nomura, says, “The (cloud) model is not yet sufficiently developed to operate on a scale we want to operate on and there are still questions around data security.”
But the benefits of the Cloud are becoming tough to ignore. In addition to the flexibility and rapid scalability of cloud computing, businesses will also benefit cost savings and the way they spend their budgets. With cloud computing, businesses will no longer need large capital expenditures (CapEx) to buy or develop costly proprietary IT systems and applications. Instead, they can move to a more fluid OpEx spending model, consuming tech services via cloud computing on a pay-as-you-go basis.
The CEBR report concludes that, as financial service firms adopt the Cloud, they will see cost savings, increased productivity, and job creation. The CEBR report also predicts that 60-80% of all EMEA-based businesses in the banking, financial and business services sector will adopt some form of cloud computing by 2015, a significant increase over current cloud computing usage in the sector.