Amazon Web Services Eyeing Big Banks?

Is Amazon’s cloud computing services unit eyeing the big banks?

According to unnamed sources cited by The Wall Street Journal, Amazon has been pitching its Amazon Web Services (AWS) unit toward major banks, including Citi, Goldman Sachs and JPMorgan Chase. What Amazon has reportedly been pitching is the ability for those banks to cut costs by using Amazon services, instead of relying on their own resources.

Amazon’s business model in this part of its business is focused on small business services and companies like Netflix, so this would be a bit outside the traditional realm of what it targets. Bringing on banks would add another layer of complexity, of course, because of the regulatory and security standards banks are held to.

But Amazon does have some experience in higher profile organizations, like the CIA, which uses Amazon for its intelligence agencies’ cloud services. Now, however, Amazon wants a piece of the cloud computing pie that has traditionally been dominated by IBM and Microsoft.

But Amazon has been slowly building up its cloud computing infrastructure, showing it wants to be a stronger player in the tech side. In fact, AWS has server clusters that include customers from across the cloud ecosystem. Those clients pay for the services as used and have the option to pay less when demand on the servers is lower.

Now, unnamed sources said Amazon is involved in conversations with the banks to get further in supporting services tied to mobile banking apps, crunching risk scenarios and functioning in a disaster, according to the report. But, of course, there’s one hitch that may hurt Amazon’s momentum in this specific sector: the fact that Amazon’s cloud businesses is open for anyone to join.

Because banks need specific security measures in play (which has been the reason they maintain their own servers), the option of shifting the burden to Amazon Web Services may sound better, in theory. Banking regulators would also likely have to weigh in on the matter, adding to the complexity.

But, according to Matt Zames, JPMorgan’s COO, the bank is looking to investigate how it can use these very types of servers in order to cut costs from its own infrastructure. This could be for extra computing powers, like when credit card usage is particularly high (retail shopping holidays). Zames told WSJ that the bank has been reviewing its public cloud computing options since last year.

Capital One is also looking to cut back its data center costs, according to the bank’s CIO, Rob Alexander. That’s why it has already started using AWS for some of its computing processing, like its mobile banking app. Relying on Amazon Web Services makes sense for certain cases, Zames said, since the bank doesn’t want to handle the “investing to build costly and complex infrastructure.”

While it may be a while before the biggest banks can turn to Amazon Web Services, the interest in the area certainly shows that the battle to win over cloud computing services is heating up.