Amazon Web Services is going after big US banks as it looks to expand its business into what is perhaps the last market to fully embrace cloud technology.
Banks such as Goldman Sachs, JP Morgan and Citigroup have all been approached by the public cloud market leader, according to sources cited by the Wall Street Journal.
Big wins in the banking sector could go some way to softening the blow of losing Spotify, which has chosen to use the Google Cloud Platform to powers its data infrastructure.
The challenge that AWS faces in trying to break into the banking sector with its cloud services is the high demands for security and meeting regulation requirements. Why this is a challenge is because of the image that public cloud has.
The image is one of being less secure than on-premise deployments, which is why banks have chosen predominantly in their past to build their own infrastructure.
Amazon Web Services has spoken to CBR about this topic before with Ian Massingham, UK technical evangelist for Amazon Web Services, saying: "It’s possible to be more secure inside the cloud than it is inside your own premises, but we need to educate customers about why that is the case and do a better job about that. There is a bit of a gap there."
The company has spoken about combating negative from some companies but it clearly feels that its offering is secure enough to both offer scale and flexibility while meeting any regulatory requirements.
Although AWS is typically described as a public cloud company, effectively making it open to anyone to use, it describes itself as just a cloud company. This is because among its services it also offer a virtual private cloud with dedicated servers.
One way the cloud provider could swing the vote in their direction is by highlighting use cases in highly regulated areas where it is being used.
For example, in 2013 the Central Intelligence Agency selected Amazon to run cloud services for intelligence agencies, what this proved was that the vendor had developed both the security and reliability demanded to compete with the likes of IBM and Microsoft.
The areas of government computing and financial services have long been dominated by the likes of IBM and Microsoft, but this move by AWS could pose a threat to those areas of strength.
Points of focus for the Seattle based company are said to be in supporting mobile-banking apps, functioning in a disaster and it could help tech spending shift to new areas. Rather than focusing on maintaining data centres, it could spend more money on developing its business in other areas.
The benefits of cloud are well documented, from being able to better deal with scale demands, for example on busy shopping days such as Black Friday, where extra computing power may be needed.
This is one area which JP Morgan is investigating the use of cloud and has spoken to both Google and Amazon, according to sources.
The cloud vendor does have some previous in the finance sector with Capital One Financial as one of its customers.
During AWS re:Invent last summer, the bank was held up as an example and for good reason. The bank is cutting its data centre footprint from eight to three, in addition to using the cloud for its mobile-banking app.
If AWS is successful in this move then it could give the vendor another major market to expand in to and ease any concerns that may be felt by the growing pressure from public cloud rival Microsoft Azure.
In the never ending battle for cloud supremacy Microsoft is acquiring a company called Xamarin. Xamarin works on helping software developers to write applications for mobile devices.
Although acquisitions aren’t in themselves all that surprising, this deal gives Microsoft greater access to developers for both iOS and Android, this is because Xamarin develops tools to write apps for these operating systems, it also has around 15,000 customers in 120 countries.
What this shows is yet another move to bolster the cloud portfolio with offerings that developers want and another move to play catch-up with AWS.
Banks are the next big hope for cloud companies, mainly because of how big their budgets are for hardware and software.
Currently only around two to five per cent of computing work in the largest companies is run by companies such as AWS, according to Karl Keirstead a Deutsche Bank analyst.
So the challenge is to take that small percentage and increase it, to get banks to move away from their traditional system providers and turn to the cloud, if they don’t then the growth of cloud vendors may start to flat-line.
