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Fintech

Is the public cloud the answer to banks’ data problems?

Bank software developers are desperate to outsource their data storage to the likes of Amazon and Google, but top management – and regulators, especially in Europe – are understandably wary.

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As they migrate to cloud-based data systems, banks could reach another level of abstraction from most of us. Money has already become less tangible, as cash and bank branches gradually disappear. Computers and the internet have speeded up capital flows, bringing greater volatility in markets and making it harder to keep track of money laundering. Regulators are already struggling to keep up.

But the benefits of the cloud are irresistible. Some big banks are moving important chunks of their business onto internet-based data systems developed in-house – so-called private clouds. As some of these projects have led to big cost savings, more are following. Most recently, and potentially most radically, bank chiefs are also paying more attention to the potential of the so-called public cloud that the likes of Amazon, Google and Microsoft are developing.

Singapore’s DBS is one of the first to make a wholesale move to the cloud. Firms following a similar path include Spain’s Bankinter, plus neo-banks such as Holvi and UK challengers Starling, Monzo and OakNorth. Like DBS, they are using Amazon Web Services, by far the biggest public cloud provider.

Disadvantage

Big banks in Europe and the US are at a disadvantage, as their generally bigger, older and more entangled IT systems are harder to migrate.


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