– Verity Gibbons, Marketing Director at FinTech Connect, says:

In the previous two articles we spoke about “utilizing the cloud to enhance competitive positioning” and “cloud and regulations in financial services” which mostly represented a view from the perspective of the financial institution and rarely from that of the service provider. For this reason, throughout this article we will be focusing on showing how the Cloud also creates a whole new world of opportunities for specialist service providers.

In the first edition, when we spoke about the Cloud models, we described Community Cloud as a Cloud built to provide industry specific services and compliance with an industry specific regulator. This means that the customer needs to do its own due diligence in order to make sure they comply with all regulations and that they build their specific services based on their needs. This is very interesting from a perspective which allows better quality infrastructure services, better cost, enhances scalability and elasticity and much more. This can invoke a number of questions, but continue reading and I will try to help you understand this better.

If you are a Financial Service Provider (e.g. Retail Bank, Investment Bank or Insurance Company) some of the questions might be:

  • Is there any example of this type of Community Cloud?
    How would this really help me?
    Would any regulator even allow this?
    What type of financial services model would exist in this kind of Cloud?

If you are a specialist Financial Services provider your questions might be:

  • What examples of this type of Cloud are there?
    What type of services would I be able to provide?
    Would any Cloud provider even be interested in doing something like this?
    What type of business model would support this?

Finally, if you are a Cloud provider the questions might be:

  • Would the regulators really accept this?
    What type of specialist Financial Services providers should I engage with?
    What would this mean in terms of my current infrastructure and business models?

All these questions are very important and should have an answer before any of these actors start this journey. For this reason, throughout the rest of this article I will be focusing on giving you examples of Community Clouds and how this would be a huge opportunity for all 3 actors described above.

Community Cloud

Let us start discussing a bit about an example of Community Cloud which is already implemented and servicing a very specific and regulator-restricted industry. I am talking about the Government Cloud (G-Cloud) .

Government Cloud is one that has been already created and is moving full steam ahead with customers. Both Microsoft1 and AWS2 provide their own Government specific Cloud offering. Both of these offerings are based on their typical Cloud platform but enhanced with all the requirements by the Government regulator, like physically isolated data centers and network, data located in the customer specific country, operated by government screened personnel and many more compliances which are mandatory to have with this type of offering. It is important to say that in both of these cases this Government Cloud exists only for the US Government at this point, which is easy to understand since it is where both of these Cloud providers are registered. This doesn’t mean that it is something which only make sense for US customers, but just that it was easier to start in that country because they are closer to their headquarters.

How does this work in reality?

In this case, both of these Cloud providers worked with the regulator in order to better understand the requirements which every government entity would need to comply with and created specific data centers and processes to make sure they were always maintained. This way whenever a new government agency needs to take advantage of a Cloud offering they won’t need to go through the usual challenges of making sure their provider complies with the rules they need, since that is already given right from the start. By doing this, the Cloud providers make the adoption more seamless and allow their government customers to quickly start taking advantage of the offerings they provide making this a win-win situation. In order to do so they did not need any specialist Service provider but in this case Microsoft created a listing3 of specialist Service Providers which they partner with in order to facilitate and enhance their services.

While this works for the US Government because both Microsoft and AWS are US companies, it would not work for any other governments because that would mean there would need to be a partnership with a local Service Provider to make sure the specific country regulations were meet. This is actually what happened with Microsoft when the China Data Center4 for Azure was launched in mainland China. Due to the Chinese regulations, this data center would require to be done in partnership with a local company, which in this case was 21Vianet.

Financial Services Community Cloud

By looking at the previous example we understand that Cloud providers are willing to go the extra mile and partner with specialist Service Providers if the demand makes sense, but also that specialist Service Providers won’t be replaced by these giant Cloud Providers, but in reality create a new symbiotic business relationship. What this means is that we can definitely begin seeing these kinds of symbiotic relationships being initiated in the Financial Services space as potential customers generally aren’t a problem.

For example, imagine if one of these cloud giants would want to start building a Financial Services Cloud offering. They would need a specialist Service provider to help, understand the regulatory compliances, provide auditing to the processes, infrastructure and other components, but also to have even more services to enable a quicker onboarding process for their customers. Examples of these specific services would be Trading Platforms as a Service, Auditing as a Service, Montecarlo simulations as a Service, Derivatives as a Service, Risk Analysis as Service and many others. Just imagine the opportunities this would generate for Financial Services organizations and Service Providers but also for Cloud Vendors.

Of course not everything would be simple but would definitely make Cloud adoption much easier in the industry since all the regulatory compliances would be a given.

Potential Business Models for the Financial Services Community Cloud

So we already spoke about examples of Community Cloud and how it would be possible to apply it to the Financial Services industry. Now, let’s take a look at the very important variety of business models.

From a perspective of the Cloud providers, the model would most likely be the same as that of their Public Cloud offerings which usually have a consumption-based pricing model similar to the G-Cloud initiative.

Now from the perspective of the specialist Service providers, a lot could change depending on the type of service they provide. If we imagine that we have a specialist Service Provider which will provide a service to the Cloud provider in order to make this offering possible, we will most likely be talking about a model which would be based on a percentage of the services cost charged by the Cloud provider to their customers. If we imagine that the specialist Service Provider is only making their services available on this specialist offering, we will probably have a big shift to subscription based costing, which should not only enable an easier onboarding process for the clients but also open up possibilities for the long tail (smaller customers who don’t usually have dimension or money to be able to access these services) to subscribe to these services thus increasing their overall revenue. So again, it will represent not only an opportunity to continue their business but to also significantly increase it.


In summary, Financial Services Community Cloud is not actually a mirage, it is possible and can be closer then we think. It needs supporting by a collaborative approach between Cloud and specialist Service Providers and we should then see all the current onboarding issues related to Financial Services disappear and most of all have a win-win situation where all Financial Services companies decrease their challenges of leveraging all the benefits of the cloud and the Service Providers enabling the ability to increase revenues. We just need to do one thing, and that is MAKE IT HAPPEN because with every challenge a new opportunity appears and this is a major one that is within reach.