Societe General, the Paris-based bank, is looking to leverage cloud to lower its costs and to provide better services to its customers. Eventually, it wants to become the largest European bank to adopt cloud computing for a good amount of its operations.
To this end, it has entered into an agreement with Microsoft and Amazon. In fact, Societe General’s developers and engineers have been running pilot programs for more than a year now on both Azure and AWS to check for security and reliability of these public cloud platforms.
More importantly, these pilot programs looked into the feasibility of using public cloud for banking transactions, where confidential information of users and processes at stored at giant third-party data centers, in a faraway place.
So far, the tests have been satisfactory and Societe General wants to use public cloud services by June. Initially, it plans to start with non-client and non-sensitive content such as financial research and marketing data. Depending on the success of these changes, the bank plans to eventually have 80 percent of its infrastructure and data on internal and external cloud systems.
One of the challenges that Societe General, or for that matter any bank in Europe will have, is the regulatory concerns laid down by the ECB. Currently, ECB has restricted banks to use clouds for storing only non-sensitive data and operations like product development. However, these regulations are expected to ease out in the near future because there is a greater pressure on banks than ever before to reduce costs and improve efficiency.
According to IBM, moving to the cloud can save banks about ten percent of the budget allocated to information technology and operations, to start with. Continued use of cloud can allow banks to save almost 40 percent of costs because they can do away with systems that are not needed anymore. At the same time, their investment in capital infrastructure is also greatly reduced when they have their operations in the cloud.
Intense competition between banks is another factor that can propel banks to take to the cloud. Currently, competition has ensured that profit margins are not easy to come by, so more banks are increasingly looking to move their operations to cloud to leverage its lower costs.
To top it, the millennial generation wants to have a digital banking experience, where everything is customized to meet their specific needs. To cater to this demand, banks are forced to embrace advanced technologies and again, want to leverage the power of cloud to run these technologies.
A case in point is Big Data, using which banks can better understand their customers and their expectations. Using these insights, they can provide a more customized service to their customers, that in turn, can go a long way in retaining existing customers and attracting new ones into their fold.
Due to these many advantages, some financial institutions have already started moving to the cloud. HSBC Holdings has partnered with Google while Capital One Financial Corp has partnered with AWS to move its operations to the cloud. This trend has started in Europe too, with Societe General leading the way.