Dive Brief:

• Morgan Stanley is tapping Microsoft's financial services cloud to power digital transformation, the companies announced Wednesday. Microsoft unveiled its venture into an industry-specific cloud for financial services earlier this year. 

• Through the partnership, Morgan Stanley aims to build an updated application infrastructure, develop a more flexible and scalable cloud environment and use cloud-native services to more quickly implement apps. 

• As Morgan Stanley accelerates transformation efforts, it will share knowledge and shape Microsoft's future financial services cloud strategy, according to the announcement.

Dive Insight:

Industry-specific clouds promise highly-regulated sectors an option tailored to niche requirements and security needs. 

Consider the Capital One breach in 2019 that left companies questioning if public cloud providers could be trusted to handle sensitive data. Sector-specific clouds offer solutions for those concerns by baking regulations and security needs into offerings. 

Microsoft's venture into industry-specific cloud offerings responds to growing customer demand for industry relevance, Alysa Taylor, corporate VP of Microsoft Business Applications and Global Industry, told CIO Dive when Microsoft announced its financial services cloud in February.

"We have to be able to tailor our cloud services to help organizations be more agile, be more responsive and future proof," Taylor said. Microsoft's partnership with Morgan Stanley will shape the cloud provider's financial services offerings, such as the adoption of GitHub for a SaaS-based development environment. 

Other major cloud providers — namely AWS, Google and IBM — all offer industry-specific cloud offerings for financial services, too.

IBM was an early vendor in offering a financial services cloud, announcing the offering in late 2019 and signing deals with major banks such as Bank of America and French international banking group BNP Paribas. It also formed a Financial Services Cloud Advisory to tailor its cloud policy framework to the highly regulated sector. 

With more offerings to choose from, financial services leaders are investing in the cloud to deliver value for their organizations. Two-thirds of financial services executives plan to increase tech spend on APIs, microservices and cloud this year, according to a Gartner survey released in August. 

But to realize the cloud's full potential, financial services organizations have to plan carefully. 

Morgan Stanley implemented a technology business management framework to rein in spend on public cloud services to get the most benefits without going over budget, Tas Sarwar, technology business receiver transparency and demand management lead at Morgan Stanley, said at an event in November. The bank built a cloud value framework to track agility, pricing, resiliency and other factors. 

Moves to the cloud are happening at other financial institutions, too. JPMorgan Chase began its move to the public cloud in 2017 and plans to increase its tech investments by nearly $1 billion this year, including its own private cloud, Jamie Dimon, chairman and CEO, said on the Q4 2020 earnings call.