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![Banks Tiptoe Toward Their Cloud-Based Future (Published 2022) (1) Banks Tiptoe Toward Their Cloud-Based Future (Published 2022) (1)](https://i0.wp.com/static01.nyt.com/images/2022/01/03/business/00cloudbanking/00cloudbanking-articleLarge.jpg?quality=75&auto=webp&disable=upscale)
Cloud computing is slowly changing how Wall Street banks handle their business, but concerns with security remain.
Credit...Cate Andrews
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Michael W. Lucas made big plans to take a trip around the world in March 2020. He arranged to travel from his home in Detroit to Tokyo, then attend conferences in Hong Kong and Bangalore, India, before making a final stop in Paris.
But on his first attempt to buy plane tickets, this ambitious itinerary — costing $2,932.48 — got the attention of Capital One, which blocked the charges.
“I was both annoyed and pleased that the credit card company caught that someone was booking unusual flights,” said Mr. Lucas, a 54-year-old technology writer who is also an author of mystery novels. After calling the bank to explain his plans, the transactions went through smoothly. (The trip, however, was ultimately canceled because of the pandemic.)
Mr. Lucas’s fraud alerts were made possible by an invisible force tiptoeing into Wall Street: cloud computing. Before moving into the cloud, his bank, Capital One, was limited to tracking fraud using the bandwidth of the servers it owned. Now that it rents capacity from Amazon Web Services, the bank can use machine learning to crunch numbers faster — and on an enormous scale — to detect anything out of the ordinary.
As Mr. Lucas put it: “The cloud is a fancy word for ‘other people’s computers.’”
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Banks see huge potential for cloud technology to make their systems faster, more nimble and responsive to the needs of their customers. Consumer banks can develop cloud-based tools to quickly introduce new features in mobile banking apps or detect fraud. Lenders can use the cloud to process loan applications and analyze underwriting decisions for everything from mortgages to corporate borrowing. They can use machine learning to detect money laundering. When volumes spike in financial markets, traders can use extra computing power to analyze price movements and handle bursts of client activity.
Still, the banking industry has been mostly slow to adopt cloud computing. Currently, major banks run their own data centers, which house computer servers that process vast troves of customer account data, payment records and trading logs. Running the machines is costly because they require a lot of electricity and also need to be kept in air-conditioned rooms.
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