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Calling retail banks: boarding on your flight to the cloud has now commenced

Alex Kwiatkowski | Oct. 21, 2010
Retail banks are only interested in private clouds for on-demand services

"You wait ages for a bus, and then several come along at once." Judging by what we've seen and heard in the last two weeks, the same adage also applies to cloud computing and its use by retail banks. While technology vendors have long talked a good game about the benefits of life in the clouds, actual examples involving retail banks were until recently conspicuous in their absence. (Note: investment banks are further ahead on the journey.) However, announcements from ANZ, Barclays, Westpac, and an unnamed European competitor indicate that IT decision-makers are at last willing to make use of on-demand services, albeit for non-critical applications and processes only.

Retail banks are using cloud computing to achieve different objectives

We have been discussing the idea of running software applications then gaining access to them via a web browser for over 10 years, stretching back to the days when the application service provision (ASP) model was all the rage in both the IT and telecoms industries as the fabled next big thing. After a decade in which a veritable cornucopia of new industry jargon has been coined we offer on-demand, grid computing, utility computing, x as a service, and cloud computing as evidence in the latter part of 2010 retail banks have begun to publicly demonstrate a willingness to use the cloud for certain parts of their IT infrastructure and associated operational processes. One example is Barclays and its use of a cloud-based environment to hold transactional data generated by contactless payments. ANZ, Westpac, and the anonymous European bank have also turned to the cloud for the ongoing development and performance testing of software, respectively working with iTKO (and its LISA suite), the VCE consortium (comprising VMware, Cisco, and EMC), and IBM to do so.

It doesn't take a genius to figure out why. Banks are assiduously focused on reducing running costs and increasing efficiencies in all areas: shifting suitable activities into the cloud helps achieve these objectives. The numbers speak for themselves. IBM's customer has seen a 63% reduction in a specific application testing cycle (11 days down to three), while providing software and services software in a utility service resulted in an estimated saving of 60 man-days. In an era where the aggregation of marginal gains is essential, such double-digit improvements are obviously significant. Although ANZ and Westpac are not yet in a position to share any results metrics, both anticipate a reduction in risk, cycle times, and costs (capex and maintenance), while simultaneously delivering faster provisioning of new processing capacity. As it currently stands, we see no reason to believe that ANZ and Westpac will fail to realize these prospective benefits.


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