While consumers have been quick to move to cloud-based services and technology, the financial industry, collectively, has been one of the slower adopters. Until now.
Pressured by mounting costs, increasing regulation and stringent e-discovery requirements, financial firms are quickly transitioning from in-house archiving and compliance solutions to hosted solutions, according to a study from Forrester Consulting and commissioned by Bloomberg Vault, a service that helps corporations meet compliance, regulatory and e-discovery requirements.
Notably, the large cloud players, such as Amazon EC2 and Google, are not the cloud providers who are gaining financial services market share. Instead, financial firms are turning to technology providers and partners they already know, such as Bloomberg (which is basically a cloud, or and ASP, or both, depending on your definition), NYSE Euronext (it's new data centers are secure and ready for hosting) and other vendors with established Street cred.
In fact, one of the chief complaints from CIOs across financial services is that large cloud vendors either do not care about the compliance and regulatory requirements financial institutions face, or they don't completely understand the depth of oversight regulators have. In the end, many firms turned away from generic cloud vendors and began to develop their own private clouds. And now, firms are turning to trusted, industry-specific cloud providers.
Clouds Are Rolling In Fast
The rapid uptake and interest in hosted cloud offerings mirrors cloud technology activity in other areas. For instance, the upcoming Capital Markets Cloud Symposium on May 17, already has over 250 financial services professional attendees registered and will be almost twice as large as similar one-day events Wall Street & Technology has hosted in previous years, including events focused on red-hot topics such as low-latency trading.
More than half of the Forrester survey's 187 financial services respondents expect to use hosted compliance solutions by 2012. Mounting costs associated with increased regulatory requirements is one of the major reasons firms are shifting to hosted, or cloud, solutions. More than 60 percent of the respondents, who have compliance and archiving responsibilities, say that their shift to cloud-based solutions is driven by the promise of lower total cost of ownership (TCO), faster deployments and easier management than on-site deployments, according the Forrester study.