Will Amazon’s cloud service succeed with major US banks?

Amazon is looking to the giant banking firms in the United States in a move to expand its cloud computing market by trying to convince such companies as J.P. Morgan, Goldman Sachs and Citigroup of great savings when they opt to pick Amazon’s servers for high-performance computing tasks rather than build their own storage platforms.

But Amazon faces a spate of challenges as it tries to penetrate into those U.S. banks, given that these companies have a high standard when it comes to complying with security regulations set by the United States federal government. On the other hand, Amazon has been founded on the delivery of computer solutions to consumers and retail companies, an area beyond the territory of governance.

Fortunately, Amazon Web Services has over the years built its name developing and maintaining a wide array of servers that are accessible to subscribers and clients via the Internet. This business model is called cloud computing, where customers can choose from a catalog of services to outsource computing resources and storage according to their unique requirements and scale back the consumption if need be.

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Amazon has been spurred to break into this market with the growing adoption of mobility in financial institutions, where mobile banking apps are increasingly becoming a norm. This will help minimize disruption to operations in the event of a catastrophe. More to the point, the shift to cloud computing platforms will put many banks at an advantage because then they can minimize the cost of maintenance for a large cluster of data centers.

The problem, of course, is that Amazon offers a public cloud service, where any customer – from both the private and government sector – has a premium access to the service. Financial institutions will have to adjust to this kind of computing and Amazon must be able to convince them that public cloud is safe and secure, lest they tread on the regulatory borderline.

JP Morgan is one such company that shows willingness to adopt a public cloud infrastructure as the company seeks to reduce costs incurred by storage and other expenses. Indeed, according to expert estimates, the bank will be able to save hundreds of millions of dollars if it chooses to transition to the public cloud, the demand for which has been increasing both in the public and private sectors.

But Amazon must fail to address the issues surrounding cloud, such as access management, security, compliance and control.