Now it is official: Israeli banks can use cloud computing technology for their customers. Supervisor of Banks David Zaken yesterday published the final regulation on the subject allowing the banks to use cloud computing technology, subject to various restrictions. In particular, the banks are barred from using cloud computing in their core banking activities or system. In addition, each bank seeking to put data on the cloud will have to obtain separate permission from the Bank of Israel.
Israel's two largest banks, Bank Hapoalim (TASE: POLI) and Bank Leumi (TASE: LUMI), plan to use cloud computing technology. Bank Leumi has been planning the transfer of some of its customer data to the cloud through US company Salesforce, and has been waiting for the regulator's approval. It is believed that Bank Leumi plans to put some of the data on Salesforce's cloud in the UK within a few weeks. Bank Hapoalim is also in the process of transferring data to cloud computing technology. The bank currently has two projects in this area, and it is believed that some of the data will be moved to the cloud by the end of the year.
The banks can transfer data only to a cloud subject to European Union information protection regulation. The preference for Europe over the US probably stems from the fact that in the US, regulatory and government agencies have more access to cloud data,while in Europe they are more restricted.
Zaken has also ruled that the board of directors must approve the use of cloud computing technology, and the bank must conduct thorough due diligence for the cloud computer services provider before it is selected, and must regularly monitor the provider during the period of the agreement. The bank must also make sure that the Bank of Israel Banking Supervision Department will be able to conduct audits of the cloud computing services provider, if necessary.
"The use of cloud computing technology will enable us to create a more secure and completely different interaction with the customer. We'll be able to understand the customer better, and offer him or her personally tailored value propositions," Bank Leumi first executive VP and head of technologies division Dan Yerushalmi told "Globes."
Yerushalmi explained that the bank had selected Salesforce because of its customer management solution, with the product itself using cloud computing technology. The bank is expected to move basic data to the cloud, such as names, account numbers, and other identification fields. At the same time, data which offers are relevant to the customer will also be put on the cloud.
Yerushalmi adds that the user of cloud computing technology also has advantages in efficiency. "With the cloud, resources can be optimized, thereby saving up to 20% on regular computerization and development costs. We have also trained the bank's employees to operate and maintain the system working with the cloud, so we don't have to recruit additional personnel," he said.
Salesforce VP business development Natan Gavish said, "The Supervisor of Banks' decision now allows the market to improve its ability to provide access to advanced technologies for financial institutions. It's only a matter of time before financial institutions decide to adopt these technologies, and in my opinion, in a short time we won't be able to understand how we ever did without them."
What is cloud computing?
Cloud computing technology is in effect obtaining computer services through a remote computer hooked up through the Internet or a communications lines. The use of cloud computing saves money on equipment, infrastructure, and storage for a large volume of data.
Published by Globes [online], Israel business news - www.globes-online.com - on July 2, 2015
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