More small- to mid-size banks embrace cloud computing (Part 2)

Continued from "More small- to mid-size banks embrace cloud computing"

According to Henley, the FDIC actually praised the new system for the ease with which they could access the bank's records, since it allows them to audit material via the server which they originally had to access on site. The benefits related to external audits are not specific to Insight, however, and for this reason more cloud computing companies are including the term "compliance" in their marketing materials, according to Jain.

A Wall Street & Technology article described 2010 as the year Wall Street could embrace software as a service, due to the strain of intensified compliance and financial regulation.

"Cloud providers can be expected to take care of the modifications needed to comply with new regulations," the article states. In a sense, the cloud could be a vehicle for banks to outsource their regulatory compliance.

Isaac Garcia, CEO of Central Desktop, a cloud services provider, said his company actually provided its services for the merger of two financial powerhouses back in 2008, the names of which Garcia was unable to disclose. In this case, the cloud provided a bridge for two IT departments that had never previously exchanged information. Many large financial firms have started handling mergers this way, according to Garcia.

For smaller institutions, however, the uncertainty surrounding the technology has been largely outweighed by the benefits: Immediate access to services which would otherwise have to be built in house. Dan Stechow, CEO of Select-A-Branch, a client of Central Desktop, felt that the cloud allowed companies, especially smaller ones, to focus on "product versus management."

Stechow said the arrival of cloud technology is part of a long-term trend toward the commoditization of Internet space, and insisted that the barriers to broader adoption are purely psychological. "You're turning everything into a product that you used to build on a one-off basis...you can build the service once, and use it an infinite number of times." Henley agreed that as bank CIOs overcome these psychological barriers the popularity of the cloud will increase.

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