Banks Rising to the Cloud
Listen to this article
Many Swiss retail banks want to move part of their IT to the cloud but certain practicalities are holding them back.
After big banks have discovered the benefits of using the data cloud, smaller and medium-sized retail banks are starting to get to grips with cloud computing, according to a study by Lucerne University of Applied Sciences and Arts.
The study listed several reasons in favor of managing part of the IT infrastructure and customer data via a cloud service. Although banks predominantly are focussed on saving costs, a switch to the cloud is becoming unavoidable because software is increasingly only available as a service on the cloud and the introduction of new business models is equally reliant on cloud infrastructure.
Banks see the greatest risk in having the data stored abroad, as it the case with the majority of providers. However, the authors of the study found that banks always found ways to protect data confidentiality by means of technical, organizational and, in some cases, contractual measures.
With many products only being offered in a subscription model (Software as a Service, SaaS), banks primarily want to use cloud computing at their workplace. Important areas of use behind this are named as efficiently developing software in a public cloud and operating SaaS products at the customer interface.
The retail banks surveyed expect to have moved over 60 percent of their workload to a cloud in the next three years. About one-fifth is expected to run in a public cloud, one-quarter in a private cloud and the rest in a community cloud.
IT managers are skeptical when it comes to the practicality of shifting to the new infrastructure. For many it is not clear whether operating their core banking system on the cloud by 2024 is technically feasible and economically viable.
According to a 2021 estimate by the Boston Consulting Group (BCG), banks worldwide operate around 15 percent of their workload in a public cloud. In the future, UBS intends to run one third of its workload in the public cloud, one third in the private cloud and the remaining third traditionally on the mainframe.