The UK financial sector needs its own ‘community cloud’ to encourage use of public cloud resources and overcome regulatory barriers, according to CIO of Mitsui Sumitomo Insurance, Richard Williams.
Williams leads Mitsui Sumitomo’s UK and European IT operations, with most of the firm’s business traded at the 326-year old Lloyds’ of London market.
Like many insurance CIOs, Williams is tasked with adapting the company to meet the modern demands of the industry, and this includes considering more cost-effective and flexible models of IT infrastructure delivery to support the wider business.
However, Williams feels that adopting the public cloud to achieve this goal has been a stumbling block for the company for a variety of reasons.
“We do look at the cloud, but I don’t think at the moment that true public cloud is for us,” he said.
“The obvious reason is that a lot of the big cloud providers are American and there are the implications of the Patriot Act and all of the NSA stuff, so that is a very clear concern of ours. The other is just the general concern about the security and applicability.”
Williams believes an industry-specific cloud for financial services firms could help alleviate some of these problems, and encourage access by those within the sector.
“What we are quite keen on is the idea of a community cloud. So a semi-public cloud, whereby we would go with a provider and share infrastructure with other financial services organisations who have the same concerns as us, the same oversights, and the same regulatory regime as us,” he said.
While he acknowledged the lower economies of scale involved in a more targeted cloud offering, when compared to the ongoing price cuts of the largest players, Williams said a smaller and more tailored shared environment should still provide benefits from a cost perspective.
Furthermore the connectedness of those operating in the Lloyds market would be a good place for service providers to begin target with such an offering.
“I have been talking to some of the hosting providers and have been saying that the London insurance market would be a perfect place to start – we collaborate naturally anyway, we are all paying for our own infrastructure – it might just make sense if one of the vendors was to come in and look at setting up a London insurance collaboration or community cloud, I am sure it would work.”
The company does use some cloud services already for non-customer related services, such as UK-based collaboration platform Huddle. However, ready access to more public cloud services would help in reducing infrastructure costs for certain data intensive applications.
“We may have to look at using the cloud in the future for some of our analytics, where the data is sufficiently anonymised to be able to do that, just because of the rapid growth of the amount of data that we are having to look at and analyse. If we are to have a true Big Data play then I think we probably don’t have a choice,” he said.
Data growth is likely to become even more of a challenge in future as the internet of things begins to impact more widely on insurers.
Williams said that, while the general insurance market may have more immediately apparent use cases, more specialist insurers will also need to process large volumes of information from a wide variety of sources to remain competitive in future.
“Will we ever as wholesalers get to the position where you can have pay-per-use insurance? I think it is unlikely because we aggregate risks. But if we were to see telematics from an airplane or ship, for example, then we would know if it has been maintained on an almost per journey basis. We would then be able to better price for the company who did an oil change when it was needed, rather than the one who left it for a couple of weeks.”
He added: “Getting an understanding of the data that is flowing out of that will allow us to price more accurately, and being able to price more accurately is a benefit to the insured too. It allows us to be more competitive, but it also creates a more meaningful partnership between the insurer and the customer.”
In May 2013, Williams wrote the guest article Insurance in the age of agility for CIO UK.