Despite all the talk around public cloud services, including Amazon Web Services, Microsoft Azure, and Google Cloud Platform, they have struggled to crack into the more regulated industries like the banking sector so far because of concerns about security and control.
But that’s about to change, potentially opening up a huge market for the largest public cloud players, according to a Deutsche Bank note published Thursday.
The note says that it’s been hearing that “most” US financial firms will be evaluating the public cloud model starting in the second half of this year, and possibly start using services like AWS starting next year.
Although the consensus view from the traditional banking sector is still “learning about the cloud/AWS,” a growing number of banks are feeling more confident about the public cloud services’ security, it said.
“While security and control were key considerations cited by one customer, another said that ‘in 5 years we’ll be laughing at the security concerns we have now,'” the note said. “We expect financial services adoption to accelerate in the coming years and we remain bullish about this mega-trend.”
In fact, Capital One is already in the process of shutting down 5 of its 8 private data centres to move most of its data to AWS by 2018. Another “large” bank cited in the note said it’s committed to shutting down all of their private data centres by 2020, although it’s more likely to start with hybrid of cloud and on-premise data centres, according to the note.
These kinds of changes will only speed up the adoption of the cloud by other sectors too, expanding the overall pie for public cloud vendors. Gartner estimates spending on public cloud sevices to increase from $85 billion in 2014 to $180 billion in 2019, according to a note by Bank of America.
“The market for public cloud services is significant, potentially growing to address large parts of the $3.1 trillion enterprise IT market — customers increasingly are using multiple clouds — matching specific workloads to specific public clouds and on-premise infrastructure,” Bank of America wrote in a note.
Here’s a chart by Bank of America, citing IDC data, that shows the growing size of the public cloud market:
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