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Fintech Fridays 9/09: Cloud Computing

What is Cloud Computing?

Cloud computing delivers computing services over the internet to companies and individuals. Cloud computing has allowed companies and individuals to rent access to services that include: data storage, networking, analytics, intelligence, storage, servers etc. These services would traditionally require companies to invest in expensive computing infrastructure and data centres, adding complexity and cost to their operations. An example of cloud computing is services such as iCloud, which stores users' pictures and other data on a storage server. Allowing users to avoid the limitations of the physical storage constraints of their device.


  • Cost: it eliminates the capital expenditure of buying hardware and software and maintaining it.

  • Speed: On-demand self-service access to vast amounts of computer resources within a couple of mouse clicks. Removing the need for businesses to plan and create their own capacity.

  • Security: Highly standardized and scrutinized, leading many providers of cloud services to offer a broad set of policies, technologies and controls that improve security.


  • Downtime: Cloud services cannot be accessed when the service is down or the own company's connection is down. If the company using the service is in the middle of a major project, this can be quite costly.

  • Closure of cloud service: Since cloud computing is a relatively new service, many companies are competing for business. So in the future, many cloud service providers may run out of money and shut down. Since it is difficult to migrate from one provider to another, this could be catastrophic.

Application to Finance

The main reason that financial services would use cloud systems is to reduce the cost associated with storing their own data. As described by deloitte, it is a “cheaper, faster and more elastic alternative”. This is because all the maintenance and software updates are handled externally, rather than in house and so these businesses can focus on what they do best, but still get access to the latest technology to achieve their goals. This is particularly important for the financial industry, because most of these large companies tend to be operating on legacy systems. The cloud thus provides a sustainable solution to ensuring that their technology remains up to date and is able to compete with the smaller, leaner start up companies trying to break into the industry. It also allows for larger scale data analysis, which is important in many applications. For example, banks can analyze a larger amount of data to become better at fraud detection.

However, there are challenges associated with the cloud. For example, there are often stringent regulatory requirements for financial services around handling their consumers' financial data. It is difficult to guarantee compliance when the software they are using is being hosted by a third party. There are also questions around data privacy, as there is an added layer of difficulty in maintaining that privacy when using the cloud.


Cloud computing is a wonderful phenomenon which will continue to have many applications both in the financial sector and more broadly. However, it is important to realize that the term is often used to create hype around some new initiative or piece of technology that really isn’t that special. After all, the cloud is just someone else’s computers. Keep that in mind the next time you read an article about the cloud.

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The views expressed within this article are those of the authors and do not represent the views of the Finance Student's Association. All images and references in this article are for fair and educational purposes only. The content in this article is not intended as legal, financial or investment advice and should not be construed or relied on as such.

References and Further Reading

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