Earlier today I received a call from a friend in the IT outsourcing business with deep contacts on Wall Street. We had a great discussion regarding financial services and cloud computing. Neither of us had any first-hand evidence of any wide-scale cloud activity in the financial markets, banking or insurance.
That led us to a discussion of how the evolution will play out – with development environments, highly burstable high-performance computing tasks and departmental applications leading the way. It will be many years before production-level applications from large financial institutions move out of the corporate data center. At least that’s what it seems.
As with most other market segments, the cloud adoption curve will be uneven in financial services. Small asset managers, hedge funds and vendors will be the first adopters for mission-critical applications in the cloud. Decades from now, it’s likely that more the 50% of core applications at larger firms will still be run in-house. The economics of the cloud may make sense for the bulk of applications that run inside a large firm – but there will always be critical applications that IT will want to control from the wire up.