Societe Generale is embracing the cloud.
The Paris bank is working with Microsoft and Amazon.com to become one of the first large European banks to adopt cloud computing for the bulk of its operations.
Societe Generale will start using external cloud services by June for some non-client content, such as financial research and marketing data, said Carlos Goncalves, the head of global technology services. By 2020, the bank intends to have 80 percent of its infrastructure on internal and external cloud networks.
"We are ready to go to scale," Goncalves said. "According to the European Central Bank, we have put in place the benchmark for the industry."
While it's not unusual for small lenders to use cloud providers to cut technology bills, the French bank is among the first large financial firms on the continent getting ready to shift most of its operations to the cloud. The decision signals an accelerating evolution in how banks handle one of their most valuable and sensitive assets: information.
Societe Generale's developers and engineers from Microsoft Azure and Amazon Web Services have been running pilot programs for more than a year to test the security and reliability of the so-called public cloud — Internet-based computing that lets users store and process information at giant third-party data centers.
An ECB spokeswoman declined to comment on individual institutions.
Regulatory concerns have until now led Europe's top banks to confine their use of public clouds to less sensitive operations like product development. Now, cloud companies say pressures on the financial industry to cut costs and improve returns are pushing more banks to strike deals with the big providers such as Microsoft, Amazon, IBM Corp. and Alphabet Inc.'s Google.
"It is more something that has opened up in the last 18 months to two years," said Matt McNeill, the head of Google Cloud Platform for the U.K. & Ireland.
Moving to a cloud-based model can initially help save 10 percent of a bank's annual operations and information-technology budget, said Likhit Wagle, general manager of banking and financial services at IBM. Savings may reach 40 percent for lenders able to work out what technology systems aren't needed anymore, he said.
"Many banks have started using cloud," said Sean Foley, chief technology officer for Microsoft's financial-services business. "Initially these were largely private clouds, but now increasingly the majority of work in this area is shifting toward public clouds."
Bloomberg LP, the parent of Bloomberg News, also offers data-storage services to financial institutions.
Google this month identified HSBC as a cloud client. In the U.S., Capital One Financial is moving a number of core business and customer applications to AWS.
Spain's CaixaBank, another early cloud adopter, keeps "sensitive" information on its internal cloud, but may start moving some such data to external clouds as soon as next year as rules across Europe become clear, said Mario Maawad, director of fraud prevention.
Regulators are keen to make sure the banks remain responsible for their data, regardless of where it resides.
"It's the bank's responsibility to ensure security and data protection," said Slavka Eley, the head of the European Banking Authority's supervisory convergence unit in London. "If they outsource to the cloud, they need to cover the risk in contracts and their activities."
Banking authorities in countries including the Netherlands and France already spelled out guidelines or good practices for cloud use, and a continent-wide framework is underway. The EBA plans to provide its final guidance later this year after issuing a consultation paper in the second quarter.
There have been notable hacks of cloud providers. In 2012, more than 60 million accounts were breached at cloud-storage company Dropbox Inc.
"Regulators are extremely keen on making sure the banks are going to be able to sign off on the requirements around security," said IBM's Wagle. "We are working very closely, both through our cloud business and security business, with our clients so they can meet those regulatory requirements."
Societe Generale started its in-house cloud three years ago and plans to continue relying mostly on that, while keeping key market activities running on physical systems, Goncalves said. Still, the bank recently completed the legal terms of future partnerships with cloud providers in a way that satisfies requirements from banking regulators, he said, describing the cloud as "an innovation enabler."