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Financial institutions think twice before investing in cloud computing

Thursday, Aug 02, 2012

Dubai: Financial institutions in the Middle East and Africa are likely to be reluctant to invest in cloud computing solutions until they have greater knowledge about and confidence in the technology, industry experts said.

“Cloud computing is rapidly gaining traction across the Middle East, where areas such as the Gulf are witnessing an increase in their technology-savvy population who are pursuing technology-based initiatives to diversify their local economy. Add to this the major investments being made across the region towards more advanced IT infrastructures and national initiatives to develop knowledge-based societies,” said Chad Meyer, product marketing director at Epicor.

The UAE in particular “is emerging as a prime location for introducing cloud computing services because of its fast internet connection speeds and reliable networks — the region has the fastest download and upload speeds, not only in the Middle East but across the entire Mena region, and has relatively low internet costs compared to other parts of the region,” he said.

The role of Dubai as a commercial hub makes the UAE a preferred platform for launching cloud services to the rest of the Arab world.

“Although cloud computing has been considered by many financial institutions in the region, factors such as security concerns, compliance standards, and an overall lack of knowledge have slowed adoption levels,” said Bijen Ramdas, senior research analyst, IDC Financial Insights Middle East, Turkey, and Africa.

Due to the sensitivity of the data that financial institutions possess, there is a definite bias toward private and hybrid cloud technologies. Cloud adoption “will accelerate in the coming years, as many financial institutions already say that cloud technology is part of their short-to-medium-term plans,” Ramdas said.

Global studies show that cloud services could post $800 billion (Dh2.94 trillion) in net new business revenue through 2013. IBM also predicts the growth of cloud computing into a $241 billion industry by 2020.

IDC said as financial institutions are a very important custodian of citizens’ information, inadequate security could lead to data leakage and result in potentially grave liability consequences.

Although there are numerous benefits that make cloud computing compelling, organisations are also putting “a lot of trust in the vendor and should address upfront any security and data privacy concerns they have,” Meyer said.

As with any other information technology, he said cloud computing poses “some risks” to the unprepared and uninformed. Businesses should look closely at their current systems and how they would work in the cloud.

“The potential of the cloud is too compelling to be ignored. A well-executed shift to cloud computing offers unprecedented benefits like lower total cost of ownership, improved utilisation of resources [both capital and people], simplified operations, and competitive differentiation,” Meyer said.

By Naushad K. Cherrayil Staff Reporter

Gulf News 2012. All rights reserved.

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