JPMorgan Chase has announced their plans to host 75% of their data in the cloud by the end of this year in a move aiming to enhance their analytic and AI-usage capabilities while improving delivery speed and reducing costs. Unusually, however, the bank has revealed their intention to balance this upload between private and public clouds which in their eyes will avoid vendor method lock-in.  

The uptake in cloud-computing being utilised by banks has long been predicted, but the speed at which they are switching reveals some key insights not only into the sector and its tidal wave of innovation, but more poignantly into the thoughts and concerns held by those making the leap. 

Banks globally are expected to significantly increase their cloud-computing spending, with forecasts predicting a growth rate of over 20% annually through to 2026. This surge in demand is reflected by the increasing impact of cloud-computing on overall company revenue for suppliers, with Amazon releasing that their Amazon Web Services (AWS) has accounted for over 50% of their operating profit since 2019. 

JPMorgan Chase’s fears regarding methods used and vendor lock-in seem to stem from a mixture of past negative experiences with third party vendors, encouragement from financial regulators to adopt a multi-cloud strategy, and pressure from vendors to pick a method and stick to it. This nervousness in choosing between SaaS or Customer Managed Deployments (CMD), private or public clouds, and higher security by going all-private or knowledge-sharing through a community model has plagued the sector for too long. The growing divide between cloud-utilisation methods is intensified by this vendor pressure, but also by technological advancements pushing the boat out, and by the rare banks willing to speak up on picking a side. 

In an unprecedented move, HSBC announced their partnership with Google Cloud in February 2024, launching a sustainability project that backs SaaS and publicly validates Google’s cloud server. As well as pushing for climate tech, this development exemplifies the trend of cloud-computing adoption by banks, and highlights the sentiment that banks in this digital age must decide not just whether to stay On-Prem or move to the cloud, but also to pick either SaaS or Customer Managed Deployments.

Vendor pressure is mounting, and now more frequently forcing firms into an SaaS box regardless of whether they fit there or not. In doing so, vendors are choosing the easy way out for themselves and not the best route forward for the company. The merits of either SaaS or Customer Managed Deployments can be debated til the cows come home, but what in our minds cannot be debated is the behaviour of vendors in understanding the requirements of the client. Smaller firms with more agile architecture may be more likely to switch to SaaS, but pressuring larger firms to integrate speedily will not foster success. Customer Managed Deployments are something that many companies still want, expect, and feel comfortable with, and what is clear from the divisive nature of recent announcements is that several banks are unsure on where to stand. 

The benefits of moving to the cloud offer a risk-reward endeavour that is currently being boxed in by some vendor’s push towards only serving SaaS. Rather than asking clients to jump first and think later, we advocate for meeting clients wherever they are at the minute, with whatever quality of data they have and on whatever method they find best suited to their needs. By being able to do it all, to host it all, and to progress with it all, we move past meeting merely in the middle, in preference of meeting on your side - literally and metaphorically.

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