The rise of Big Tech has a lot of people concerned. But while the spread of misinformation and election interference has garnered most of the headlines, the real concern shared by governments and business leaders around the world is where our data is being stored.
German Chancellor Angela Merkel recently said as much, saying that the European Union should claim “digital sovereignty” from the Silicon Valley tech giants that control the cloud.
“So many companies have just outsourced all their data to U.S. companies,” she reportedly told German business leaders.
And she has reason to be concerned.
Based on figures from their most recent earnings reports, Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) collectively control roughly 63% of the global cloud computing market. Though the growth rates of their respective cloud products has slowed, paving the way other companies like Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), IBM (NYSE: IBM), and Oracle Corporation (NYSE: ORCL), the dominance that a few U.S. firms have on the world’s information storage has gotten to the point where other solutions are being sought out beyond Big Tech and internal clouds.
The financial services industry began taking matters into its own hands last week, with Bank of America Corp (NYSE: BAC) announcing a partnership with IBM to launch a public cloud specifically for financial services. Red Hat, officially acquired by IBM in July, and Promontory Financial Group, IBM's compliance arm, are also involved in the project.
According to Bank of America Chief Operations and Technology Officer Cathy Bessant, 80% of the bank’s workloads run in its private cloud. Bridget van Kralingen, senior vice president for global industries, clients, platforms and blockchain at IBM, said that “Governance, risk and compliance consumes around 20% of the operations costs of most major banks.” The move to a public cloud specific to banks is simultaneously meant to reduce costs, increase security, and improve compliance.
“Generally speaking, banks have compliance issues, not storage problems,” said Darren Conte, founder and CEO of Siftsort.com, a secure documents and messaging platform. “Migrating to cloud technology is driven by its cost savings. But for regulated industries, that approach has to be carefully thought out to avoid creating compliance risks.”
It also comes in the wake of Capital One Financial Corp’s (NYSE: COF) data breach, after which members of Congress had asked regulators to consider more oversight of the cloud services being provided to financial services.
Conte, a former Goldman Sachs Group (NYSE: GS) executive, feels that in the wake of various “virtual private cloud” breaches affecting top-tier banks, the idea of a proprietary cloud designed specifically for banks starts to make more sense, especially if regulation is mandated.
“As cloud technology gets wider adoption from banks, compliance rules will continue to change to ensure strict adherence and governance. Over time, that may force banks to build or migrate to a regulated solution specific to their industry needs.”