Amazon Looks to Increase Presence in Financial Services Cloud
November 7, 2011
Most big financial services companies have been eager to tout their own private clouds, but only a few have made a large move to public cloud offerings, citing security and compliance concerns. However, Amazon Web Services, the division of Amazon that runs its cloud computing offering, has been making inroads in the highly regulated financial services industry…Recently, Wall Street & Technology caught up with Adam Selipsky, AWS’s cloud computing evangelist, to discuss how financial services companies are approaching public cloud and how firms’ attitudes toward cloud security are shifting.
WS&T: Most large financial services companies have already established internal "private" cloud architectures. However, most have not moved to external "public" cloud offerings. Why is that?
Adam Selipsky, Vice President, Amazon Web Services: What we’ve found in working with financial institutions and other large enterprises is that private cloud is often the term that is being used by vendors who are selling virtualization of existing on-premises technology. Virtualization, and many other technologies being termed private clouds, lacks many of the central benefits of the cloud.
For example, with a private cloud, organizations must still invest in capital expenditures and must invest enough to handle rapid demand if needed. This means that there is often low utilization of assets and waste for large portions of the year. Additionally, many of these enterprises are finding that with a private cloud they are still stuck managing the muck of technology infrastructure, which really doesn’t differentiate their businesses.
AWS is working with a growing number of forward-leaning financial services institutions who’ve realized that there is a good deal of efficiency, cost savings and innovation possible in the cloud. For some, there can be a psychological hurdle involved in making the first leap into the cloud, but once organizations learn about AWS security practices, the amount of control they have in the cloud and the cost savings that can be achieved, they quickly begin offloading more of their technology infrastructure to AWS.
Data intensive processing is a common early uses case for financial services customers, including risk analysis, algorithm and model testing and financial simulations. Web and mobile applications and storage and content distribution are also common use cases.
WS&T: Does the willingness to move to public cloud differ by size of bank? Are mid-size or smaller banks more likely to move to the cloud?
Selipsky: We’ve not found that the size of the bank is a big factor in determining the rate of adoption. AWS has financial institutions of all sizes leveraging the services. For example, Bankinter, one of Spain’s five largest banks, has adopted AWS for their credit risk simulations. Bankinter uses HPC on AWS to run credit risk simulations to evaluate the financial health of their clients. By incorporating AWS into their IT environment, Bankinter has managed to take their average time for running simulations from 23 hours to 20 minutes.
UniCredit, is a pan European bank based in Italy with approximately 40 million customers and 9,500 branches in 22 countries making Unicredit the largest international banking network in the Central and Eastern Europe. Unicredit worked with AWS partner, Scube NewMedia, to create an advanced web and mobile application built entirely on AWS. The service matches proprietary business data with geographic information to create UniCredit Locator, which is an application which helps customers find the financial institution’s offices, branches, and ATMs.
NASDAQ is a long time user of AWS. NASDAQ has created a tool called the NASDAQ Market Replay, which is a powerful analysis tool, allowing users to view the consolidated order book and trade data for NASDAQ, NYSE and other regional exchange-listed securities at any point in time. Investors can use Market Replay to help validate best execution and Reg NMS compliance. Brokers and traders can use the tool to reconstruct the events around their trade to determine whether there was a missed opportunity or an unforeseen event. Brokers can send clients a NASDAQ-validated screen shot of the moment their particular trade occurred, confirming the quality of the execution and reducing the number of customer inquiries.
The U.S Department of the Treasury has built Treasury.gov on AWS. Treasury.gov has the modern capabilities expected in such a critical, public-facing web channel and allows the agency to better communicate with the public in a more open and transparent manner.
Selipsky: As you can see from some of the above examples, we’ll continue to see a broad array of uses of AWS in the financial services. As more financial services firms learn about AWS, our security processes and certifications and the cost savings possible, we believe that an increasing number will begin offloading more applications to the cloud.
What we’ve seen is that most large companies end up moving pieces of their application to the cloud first. Typically applications that benefit from high availability and scalability are good candidates for first moving to the cloud. Larger companies typically run in this hybrid mode where certain applications run in their data centers, others in the cloud. Once these companies gain literacy and experience with the cloud, they begin transitioning more.
Big Data is another trend we see financial services customers embracing. With the amount of data stored continuously increasing, customers are looking to put that data to work. With services such as Amazon S3 to inexpensively store large terabytes and petabytes of data, Amazon EC2 for processing data and Amazon Elastic Map Reduce for massive data analysis and mining, AWS provides a compelling big data solution for businesses.
AWS also provides the services that financial services customers have been asking for, specifically a great deal of control over their data. Identity Access Management and consolidated billing of their accounts are examples. Services such as the Amazon Virtual Private Cloud (VPC) also provide financial institutions to provision a private, isolated section of AWS’ Cloud and launch AWS resources in a virtual network that they define. This service gives users complete control over their virtual networking environment, including selection of IP address range, creation of subnets, and configuration of route tables and network gateway. Amazon VPC became available worldwide in 2011 so we expect financial institutions who haven’t made the jump to the cloud, to take their first steps using services like Amazon VPC.
WS&T: Financial services firms have long maintained that compliance and security concerns are one reason why they are not using "public" cloud offerings for mission critical banking systems. How have cloud providers, including AWS, improved security and compliance capabilities for customers who are in the financial services sector?
Selipsky:Security is top of mind for many customers and it’s Job 1 at AWS. We have security controls and certifications such as FISMA, SAS-70, ISO 27001, FIPS 140-2 compliant end points, and PCI DSS Level 1 that ensures credit card data can be securely stored. AWS also provides an environment that enables agencies to comply with HIPAA regulations and we’ll continue to pursue certifications that are important to our customers.
Today, AWS has more than 100 government agencies leveraging the services with some of the most security-conscious agencies such as NASA and the CIA publicly advocating for the cloud (see a recent Federal News Radio story).
We talk to a lot of CTO’s and CIO’s about security and many have told us that they can achieve higher levels of security at AWS than they can in house. Once enterprises understand our security processes, the topic quickly changes to migration plans. This is in large part because in examining the AWS cloud, you’ll see that the same security isolations are employed as would be found in a traditional data center. These include physical data center security, separation of the network, isolation of the server hardware, and isolation of storage.
Amazon Web Services provides the same, familiar approaches to security that companies have been using for decades. Importantly, it does this while also allowing the flexibility and low cost of cloud computing. There is nothing inherently at odds about providing on-demand infrastructure while also providing the security isolation companies have become accustomed to in their existing, privately owned environments.
WS&T: How many financial services clients does AWS have at this time? What is the size of this client base, in terms of a percentage of all of AWS’s clients?
Selipsky: This is not data that we release at this time, but I can tell you that we are very pleased with the adoption of AWS in financial services and the incredible innovation taking place in the space. At a time when many enterprises are asked to do more with less, we’re continuously amazed by the innovation in the financial industry and in a wide array of other industries.