5 ways banks pushed deeper into the cloud in 2022

December 21, 2022 3:34 PM

After years of proceeding cautiously on cloud computing, U.S. banks took to the technology in a big way in 2021 and 2022.

Cloud computing was on the list of the top five 2023 spending priorities for more than 40% of U.S. bank executives who responded to a Arizent/American Banker survey that was released last week. Eighty percent of respondents said they expect to have at least 20% of their computing in the cloud in 2023.

You could argue momentum gathered for this push to the cloud in the fall of 2021, when JPMorgan Chase announced it would use a cloud-based core banking system from Thought Machine for its retail bank and Wells Fargo said it would migrate many applications to Microsoft Azure and Google Cloud.

Read on to find out about five cloud-computing initiatives at banks American Banker covered in 2022.

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KeyBank moves applications to Google Cloud

KeyBank announced in February a collaboration with Google Cloud through which the Cleveland bank said it would put "primary" applications on Google's infrastructure in a multiyear project expected to end in 2025. Deloitte is acting as systems integrator.

"Through our co-innovation with Google Cloud, we have built and quickly scaled cutting-edge digital services for our clients with security at the core," said Amy Brady, chief information officer of KeyCorp, the bank's $190 billion-asset parent company.

KeyBank said it would use data and artificial intelligence technologies in Google Cloud to create a more personalized digital-banking experience, launch products more quickly and improve fraud detection.

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U.S. Bank shifts software to Microsoft Azure

U.S. Bank also took a strong stand on cloud computing in February: The Minneapolis bank said it would move most applications to the cloud over the next three years. Specifically, it's migrating to Microsoft Azure.

"This is a major investment," said Dilip Venkatachari, U.S. Bank's global chief information and technology officer. "We are a financially disciplined organization. So we have structured every step of that to be as thoughtful and as efficient as possible. And we do plot as part of this cloud migration to further simplify and consolidate our data center footprint, and that will lead to efficiency gains."

The bank, a unit of the $601 billion-asset U.S. Bancorp, already had a business partnership with Microsoft. Staff were using Office 365 and Teams, for instance.

Security and resilience were big topics in the talks between U.S. Bank and Microsoft, said Bill Borden, corporate vice president of Microsoft's Worldwide Financial Services.

"A lot of those conversations were about how we continue to engineer and invest in resiliency," Borden said. "How do you recover [from a data breach or an outage] and what protections do you put in place around that? I don't think anybody's going to stand up and say they're 1000% sure that it won't happen."

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Capital One starts cloud software business

No large financial institution has embraced cloud computing as firmly as Capital One Financial in McLean, Virginia. The bank and card issuer, which has $434.2 billion of assets, completed the migration of computing from its data centers to Amazon Web Services in 2021.

In 2022, it went a step further and started its own business, Capital One Software, that will take internally developed cloud and data-management software and package it for sale to other businesses.

The unit's first product is Capital One Slingshot, a data-management tool for customers of Snowflake, a company that provides data warehousing, data engineering and other data services. It will help businesses more easily adopt Snowflake's Data Cloud, a network that lets companies securely access and share information across their business and with other organizations.

"We're excited to help other companies harness the full power of the cloud to accelerate innovation for customers," said Biba Helou, senior vice president of enterprise data platforms at Capital One.

Big cloud providers pitch confidential computing

Three cloud computing providers, Microsoft, Google and IBM, stepped up their pitch for the concept of confidential computing to banks in 2022.

Today in cloud-computing deployments, data is protected at rest (sitting in a database) and in transit (being sent from one system to another), but typically not while it's being used by a software application such as a marketing, fraud-detection or cybersecurity program.

Confidential computing fills this gap, cloud providers say. It puts sensitive applications in a walled-off area within a computer called a hardware-based secure enclave or trusted execution environment, so the data used cannot be seen by outsiders.

Banks could use it to share information about transactions with each other — for instance, to detect money laundering — without making personally identifiable information and transaction data visible to competitors.

"Suddenly the money laundering signal becomes much, much stronger," said Nelly Porter, head of product, Google Cloud Platform confidential computing and encryption at Google.

Toronto-based Royal Bank of Canada, which has $1.4 billion of assets, uses confidential computing in Azure to let merchants and RBC combine their data, run AI algorithms on it and then figure out how to target consumers without either party seeing the other's customer data.

London Stock Exchange will spend $2.8 billion on cloud tech

The London Stock Exchange Group announced in December it plans to spend at least $2.8 billion on cloud computing over the next decade, migrating its data platform and other technology to Microsoft's Azure cloud platform. The companies also said they would work together to develop data analytics and modeling solutions. Microsoft will buy a 4% stake in LSEG.

"This strategic partnership is a significant milestone on LSEG's journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers," LSEG Chief Executive David Schwimmer said in a prepared statement. "Bringing together our leading data sets, analytics and global customer base with Microsoft's comprehensive and trusted cloud services and global reach creates attractive revenue growth opportunities for both companies."

LSEG said it plans to enhance Workspace, its existing data and analytics solution, by integrating it with Microsoft tools such as Teams and Microsoft 365. The companies said they plan to develop a product that, for the first time, allows LSEG customers to connect with other customers within and outside of their organizations using Microsoft Teams.