# Open Banking: why cloud is key to FS innovation Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2019-01-16 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: Challenges and Opportunities for Financial Institutions in Meta Description: Discover how financial institutions are adapting to the growing reliance on cloud services provided by big tech companies like Google, Amazon and Microsoft. URL: https://financedigest.com/open-banking-cloud-key-fs-innovationhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/open-banking-why-cloud-is-key-to-fs-innovation-1736840133172-compressed.jpg) Financial institutions across the world are increasingly reliant on cloud computing, accelerating company strategy through remarkable gains in agility and cross-sector collaboration. With that, however, big finance is becoming almost entirely reliant on big tech; with cloud services provided by the likes of Google, Amazon and Microsoft storing vast quantities of customer data. This has raised concerns about bank resiliency, with The Bank of England, for one, considering testing UK banks and analysing what would happen if their access to the cloud was disrupted. This raises some interesting questions about the [finance sector’s](https://www.financedigest.com/the-technologies-set-to-boost-the-finance-sector-in-2022.html "The technologies set to boost the finance sector in 2022") reliance – or perhaps, over-reliance – on third-party suppliers.However, of even more interest are the concurrent efforts some financial institutions are making – in particular EU bankers –to shore up their futures. These institutions recognise that they very same [tech giants that they rely on for their cloud services](https://www.financedigest.com/tech-amigos-provides-unrivalled-aws-cloud-service-support-for-autorama-groups-leading-brand-vanarama.html "Tech Amigos provides unrivalled AWS cloud service support for Autorama Group’s leading brand, Vanarama") are increasingly becoming their competitors and represent a growing a threat to their existing business models. This concern may have been exacerbated by the emergence and implementation of [Open Banking — which celebrate its one year](https://www.financedigest.com/four-years-of-open-banking-2022-may-be-the-best-year-yet.html "Four years of Open Banking: 2022 may be the best year yet ") anniversary this month — and associated regulations which may, on top of many things, allow tech firms to easily identify and cherry pick the most lucrative customers and services. This situation [leaves our financial institutions with two key](https://www.financedigest.com/russias-offer-to-foreign-firms-stay-leave-or-hand-over-the-keys.html "Russia’s offer to foreign firms: stay, leave or hand over the keys") responses: the first is to innovate and, the second, is to try and steer the direction of regulation in a way that is favourable to themselves. The second choice is a natural reaction, but it is not a long [term solution](https://www.financedigest.com/automotive-navigation-solutions-market-size-and-key-trends-in-terms-of-volume-and-value.html "Automotive Navigation Solutions Market Size and Key Trends in Terms of Volume and Value"). It will not protect a business from innovative and ambitious competitors that spot an opportunity and have already achieved [regulatory compliance](https://www.financedigest.com/how-a-zero-trust-architecture-can-help-accelerate-digital-transformation-for-financial-institutions-without-sacrificing-regulatory-compliance.html "How a zero trust architecture can help accelerate digital transformation for financial institutions without sacrificing regulatory compliance"). Instead, by choosing to actively innovate themselves and support the aims of Open Banking, financial institutions could end up actually helping to [drive](https://www.financedigest.com/rapidly-evolving-buy-now-pay-later-finance-drives-retail-growth.html "Rapidly evolving buy now pay later finance drives retail growth") awareness of their own new services with prospective and existing customers. Equally, treating financial data with the respect it deserves, could see legacy institutions also win in the fight for [customer confidence](https://www.financedigest.com/instilling-customer-confidence-in-the-pandemic-era.html "Instilling customer confidence in the pandemic era"). By embracing the principles of [Open Banking](https://www.financedigest.com/open-banking-as-a-means-to-enhance-social-commerce-security.html "Open banking as a means to enhance social commerce security"), established financial institutions could also become a hub for access to the very best of FinTech, perhaps even becoming the ‘AWS of financial services’. This is very exciting but will, undoubtedly, require serious and smart [investment in technology](https://www.financedigest.com/adnami-to-receive-six-figure-sum-of-investment-from-danish-government-in-recognition-of-its-pioneering-technology-and-strategy.html "Adnami to receive six-figure sum of investment from Danish government in recognition of its pioneering technology and strategy"). In particular, it will require some detachment from hyperscale [cloud providers and independent expertise in high-performance computing](https://www.financedigest.com/the-future-of-cloud-computing.html "The Future of Cloud Computing") (HPC). While hybrid cloud is here to stay, especially for non critical workloads, financial [services firms](https://www.financedigest.com/how-financial-services-firms-can-mitigate-against-their-top-data-security-threats.html "How Financial Services Firms Can Mitigate Against Their Top Data Security Threats") eager to stay ahead of the curve should be looking for technology partners which can help them deliver their own objectives without the conflict of being in competition. This especially applies to core IP as financial [services firms begin to increasingly make use of advanced](https://www.financedigest.com/how-advanced-self-service-technologies-are-changing-the-face-of-finance.html "How Advanced Self-Service Technologies are Changing the Face of Finance") techniques in machine learning and deep learning. It’s important to remember  that the compute-intensive applications at the very heart of all things related to [artificial intelligence](https://www.financedigest.com/artificial-intelligence-in-banking-robo-advisors-and-beyond.html "Artificial Intelligence in Banking – Robo Advisors and beyond") – from HPC to machine learning – require the support of innovative data centre solutions to support them. These applications also require considerable power as well as expert support to maintain and update them as ambitions grow and specifications or [demands change](https://www.financedigest.com/rapidly-changing-fashion-lifestyle-is-expected-to-spur-demand-for-clothes-closets-market.html "Rapidly Changing Fashion Lifestyle Is Expected To Spur Demand For Clothes Closets Market"). Ultimately, financial services institutions and organisations need [cloud providers that allow them to realise the potential](https://www.financedigest.com/french-cloud-provider-ovh-lines-up-diesel-generators-to-offset-potential-power-cuts.html "French cloud provider OVH lines up diesel generators to offset potential power cuts") of transformative market development on their own terms – both privately and securely. Without this, they will fail to capitalise on the opportuntiy to make [Open Banking](https://www.financedigest.com/open-finance-and-smart-ecosystems-wont-wait-for-banks.html "Open Finance and Smart Ecosystems Won’t Wait for Banks") work for them. Vas Kapsalis, Director of Deep Learning and HPC Solutions, Verne Global --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---