I heard a story on the radio today about an old man who had donated an overcoat to charity, forgetting that one of the pockets contained his life savings. It seems that he was one of those people who are uncomfortable with the idea of trusting their money to a bank. Its been suggested more than once that avoiding public cloud computing is tantamount to keeping your money in a mattress. Given what’s happened over the last 4 years, why would anyone automatically assume that the use of banks represents a low level of risk?
The history of banking has been checkered with countless failures. Many people and many institutions have been ruined when their financial institution failed. Today, in many parts of the world, your money is safer in a bank than it is in your mattress, but this is a recent and unique situation in the several millenia evolution of the banking sector. Banks were not really ‘safe’ until risk transference mechanisms were developed in the 20th century, and only national governments had the ability to underwrite the risks, insuring individual deposits and in some cases, intervening to ensure the economic viability of a major bank. Given the European debt crisis, this seems a particularly apt time to question the relative advantages of mattresses and banks.
Banks are highly-regulated institutions and their customers can rely on multiple forms of government intervention, and consumers can rely on government insurance to prevent the complete loss of deposits. Bank customers benefit from huge levels of transparency. In contrast, clouds are a brand new form of depository institution with minimal transparency, no risk transference mechanisms, and no expectation that national governments consider them too big to fail.
In practice, moderately-skilled private individuals, let alone small to medium business, are able to provide an in-house IT service that far exceeds the reliability of a mattress as a piggy bank. Individuals have no ability to create duplicate copies of cash, but data can be easily backed up and stored off site. Cash must be physically protected from theft, but data can be encrypted. The suggestion that the avoidance of public cloud computing is tantamount to keeping your life savings in a mattress is a deeply flawed one, if not an outright lie.
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