Sibos 2018 saw representatives of the main cloud players in financial services with AWS, Google Cloud, IBM and Microsoft Azure filling seats on panels and providing a cloud technology perspective on digital transformation initiatives they are contributing to.

 Most of the larger financial institutions are pursuing a hybrid multi-cloud strategy, and some are publicly talking about the impact it’s having. With a mix of public and private cloud, and multiple cloud vendors across the business, they are using cloud to reduce cost and infrastructure complexity on the one hand, whilst also becoming more responsive to customer needs, experimenting and delivering new applications quickly.

 Singapore’s DBS was an early adopter of cloud and announcing in mid-2016 that they expected to shift up to half of their compute workload to the cloud over the next two years. One of the first use cases was in their treasury and markets business, for pricing and valuing financial instruments for risk management - something that requires extensive computing power. Having now migrated their Murex solution onto the cloud to take advantage of elastic scale computing power, DBS expects to save 70% and is aiming for 90% of its related costs.

 Australia’s ANZ is also on the record as embracing a diverse multi-cloud strategy, initially being a big user of AWS and IBM alongside their own private cloud. But ANZ have also begun to look at Google Cloud and Microsoft Azure for particular projects, finding that different services and service levels, and different external partners, mean they can find the best arrangement to keep cost and barriers low for new innovations. ANZ are also looking to rival DBS’s achievements in the risk management space with their own digital transformation initiative in the capital markets business.

 While the US-based tech giants are dominating the cloud services space, other competitors are emerging out of China. For example, Baidu is deploying advanced private financial clouds for customers including China Union Pay, AI Bank and the Agricultural Bank of China, and optimising the Baidu Cloud solution for security and AI applications, including anti-money laundering (AML).

 It’s not just the big established players burdened with legacy technology and in the midst of transformation projects that are benefiting from cloud. The neo banks, or challenger entrants, also have a lot to gain. Speed to market and agility are one of their main competitive differentiators so they are benefiting from the partnerships established between core banking system vendors and cloud service providers. These include Temenos and Microsoft Azure, Infosys Finacle and AWS, and smaller and newer core banking players operating in the cloud, such as Mambu, Ohpen and Fiincore.

 Swift, too, is evolving their cloud offering. Over the past three years they have made cloud product announcements such as Alliance Lite2, their cloud access gateway, as well as hosted solutions such as Sanctions Screening, and the Correspondent Banking Suite. This year they have taken that even further - doing a proof of concept to see whether core messaging solutions can be hosted on Microsoft Azure to enable cloud-native payments, rather than Swift’s own physical network and on-site gateways.

 Cloud adoption seems to be evolving past the stage of regulatory concerns with a number of market infrastructures and regulators also embracing the major cloud providers for their own use.  While most are still recommending their regulated entities take a cautious and security-first approach to cloud, they themselves are finding use cases, particularly for dealing with storage and rapid analysis of massive data sets, or for delivering industry customer facing applications. Examples includes Finra in the US, and ASX in Australia.

 Within the next 5-10 years, the use of public and private clouds will increase driven by requirements around machine learning and artificial intelligence. This is true particularly with the expected growth in voice and natural language processing, but also in areas of technology such as databases and coding frameworks, which might seem locked down today but are evolving with developments such as serverless frameworks and cloud-centric databases.

 Workload placement and how well financial institutions can quickly select and use the best execution venue across the spectrum of cloud will be a key factor in achieving their time to market and cost control ambitions.