Page 23 - Banking Outlook 2014 - An Industry at a Pivot Point

Banking Outlook 2014: An Industry at a Pivot Point | 21

As banks look to build new revenue sources via new product, service and channel
offerings, they will incur costs for new hardware and software—and will almost
certainly need to boost staff. An obvious option for mitigating hardware and software
costs is to take advantage of cloud computing.

Increase Use of

the Cloud

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 227982
Many banks remain attached to their legacy IT environments and still harbor basic concerns about cloud
© 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A.
security, trust, safety, and privacy. But efficient organizations are becoming increasingly confident in their
use of cloud technology, both to avoid the high cost of hardware that is often underutilized over time, and
to speed time-to-market for new products and services. They recognize that cloud vendors who were once
relatively secretive about their operations have become much more open about the types of controls they
maintain and the reports they can provide, making it easier for banks to become comfortable with the
technology. And they see that cloud vendors employ vastly more people dedicated to data security than
they do, suggesting that data in the cloud could actually be more, not less, secure than data held internally.
TheInfoPro, a service of 451 Research, projects that the worldwide cloud computing market will grow at a
36 percent compound annual growth rate through 2016, to a total market size of $19.5 billion. 19
While cloud computing is becoming more common and trusted, banks must still approach the cloud
carefully. Among the issues they must consider:
• Data strategy and internal controls. Banks taking advantage of cloud computing must develop a robust
data strategy that allows them to evaluate cloud service providers empirically. Understanding how much
internal control the bank has over its data will help it make intelligent, business-driven decisions about
which data and business functions can shift to the cloud.
• Data sovereignty. Users of cloud computing may not always know where their data is being housed,
or under whose jurisdiction it may fall. There are no global standards governing data sovereignty or
residency, and many countries in the EU and Southeast Asia have rules not only around the privacy of that
data but also around how that data can or cannot be moved from country to country. Banks must work
with cloud service providers to make sure sovereignty issues and risks are addressed in their service
contracts.

19 “Predicting Enterprise Cloud Computing Growth,” by Louis Columbus, Forbes, 9/4/13 – http://www.forbes.com/sites/
louiscolumbus/2013/09/04/predicting-enterprise-cloud-computing-growth/