The banking industry, which has long been stunted by archaic systems and practices, is at long last making its way into the 21st century. The banking industry, although it gets a bad wrap for its slow to adopt mentality, is actually held back because of many tight governmental regulations. However, according to The New York Times, many banks are now finally evolving to integrate cloud-computing models into their business.
Capital One is one bank that has already hopped onto the cloud computing train. Michael W. Lucas, a tech writer and mystery author, came to learn this first hand back in March of 2020 when he attempted to purchase an array of airline tickets that totaled close to $3,000. Lucas had long been planning a trip around the world, however, his bank was unaware and when he attempted to complete such a large transaction the bank flagged it as fraud and prevented it from going through. Lucas told The New York Times that, “I was both annoyed and pleased that the credit card company caught that someone was booking unusual flights.”
What was unbeknownst to Lucas at the time was that Capital One was able to immediately detect the usual transaction at such lighting speed because they had just added cloud-based servers from Amazon Web Services to their own internal servers. This extra computing power makes it quicker and more efficient for Capital One to identify fraudulent transactions because cloud-based computing makes it possible for them to take advantage of things like machine learning.
Cloud-based machine learning has other advantages that banks can utilize, as well. In addition to fraud detection, banks can use cloud computing to easily update and add features to their online banking apps, more effectively assess loan applications, and even identify potential patterns or activities related to money laundering. Despite the endless potential that banks can gain by using cloud computing, getting the majority of them on board is going to be a slow burn.
David M. Solomon, the chief executive of Goldman Sachs, explained that because of the nature of the information that is going to be transferred to and passing through the cloud it has to be done slowly and cautiously in order to mitigate any cybersecurity leaks. Solomon emphasized that that is the very reason why banks have “…got to go slowly and…go cautiously.”At present, only a small fraction of about 12% of banks use cloud computing in a major way.
Still, even though banks moving to cloud computing is happening at a slower rate than say the adoption of electric vehicles, it is happening. A survey put out by Accenture that measured the “Banking Cloud Altimeter” revealed that, that 12% could very like become 24% over the next two years. JP Morgan Chase executives have already asserted their intention to move to cloud-based computing models in the coming years and have even said they are looking into other types of artificial intelligence that could suit their business.
JP Morgan Chase is not alone in its assertions. Many of the major financial players have announced their plans to move to cloud-based models. Wells Fargo is teaming up with Microsoft and Google to make it happen. And Bank of America beat everyone else to the punch by actually building their own cloud servers. Banks are now truly sitting on the precipice of a newly framed financial future.