Cloud

Report: Big banks to move 30% of workloads to public cloud within three years

Banks have been slow to embrace public cloud, but that is changing, a Deutsche Bank report reveals.

Image: iStockphoto/BsWei

The public cloud skeptics have had their day. That day is over.

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As if it weren't enough that public cloud is completely crushing private cloud (a fancy name for "your datacenter") in terms of growth and revenue, even the public cloud laggards are now climbing aboard. That's right, according to a new Deutsche Bank note, as reported by The Wall Street Journal, big banks are now projecting to grow from as little as 0% public cloud adoption today, to 30% within the next three years.

Why? Because banks have to compete, too, and public cloud is key to business agility.

Goodbye, excuses!

According to Deutsche Bank's report, public cloud adoption is "very small" among big banks. Though banks have been among the first to capitalize on open source, big data, and other seemingly speculative investments, they've been reluctant to allow their data beyond their protected data centers.

SEE Public cloud crushing private cloud in growth and revenue (TechRepublic)

They're not alone, of course. We can all cite the reasons companies have shied away from moving their applications to the cloud. Security, governance, performance, blah blah blah. It's not that they're not important considerations. They are. It's just that none of them is actually true or, at least, not as true as CIOs would like to believe.

However pervasive and persistent these myths about cloud, they've been falling away in the face of competition. Companies, including banks, don't operate in a vacuum, and need the flexibility to build out infrastructure to suit their changing application requirements. As the Journal reports, "pressure to cut infrastructure costs and increase flexibility, paired with more security and compliance services from the cloud vendors, has boosted banks' willingness to explore the technology."

This jibes with something AWS product strategy chief Matt Wood explained to me last year. Discussing the importance of elastic infrastructure for big data projects, Wood said:

Those that go out and buy expensive infrastructure find that the problem scope and domain shift really quickly. By the time they get around to answering the original question, the business has moved on. You need an environment that is flexible and allows you to quickly respond to changing big data requirements. Your resource mix is continually evolving—if you buy infrastructure, it's almost immediately irrelevant to your business because it's frozen in time. It's solving a problem you may not have or care about any more.

And so, as mentioned, Deutsche Bank projects that some banks will move from zero public cloud adoption today to 30% of their workloads within three years. That's amazing.

Cloud denial in denial

Of course, not everyone is willing to jump into public cloud today, so many companies are dabbling in "hybrid cloud," a way of blending public cloud with private data centers to allegedly get the best of both worlds. This, however, is just a transitory state, as Wood told me in a recent interview.

"Large enterprises have existing investments in infrastructure and they generally want to take advantage of those investments," Wood said.

Fair enough. These same companies look to hybrid cloud environments, then, as "a stepping stone toward a full-fledged cloud native approach and 100%...AWS adoption."

SEE Survey: Is the hybrid cloud living up to its potential? (TechRepublic)

I suspect we'll see plenty of hybrid cloud within that 30% number. But, I also believe we'll see some banks move well beyond 30% in the near future, following FINRA (Financial Industry Regulatory Authority) which processes 90% of its data on AWS. These banks will start with test and development workloads as they increase their comfort with public cloud, just as the rest of the industry has done before them.

But eventually they, too, will run on public clouds. The reasons to hold back are too specious and the reasons for plunging in are too enticing. We live in a public cloud world.

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About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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