It's been a decade since Amazon (AMZN  ) released Amazon Web Services (AWS). AWS revolutionized Silicon Valley forever. With it, private companies could remotely buy servers as they needed them instead of building personal servers to host users. This detachment from hardware to run systems made organizations well suited for rapid expansion and helps reduce operational costs and liabilities. Some of the major companies that have used or are currently using AWS include Netflix (NFLX  ), 9GAG, Pinterest, and Adobe (ADBE  ).

Now, Amazon is attempting to sells its cloud computing infrastructure to American banks. The Wall Street Journal reports that AWS has pitched its services to J.P. Morgan, Citigroup, and Goldman Sachs. The banking sector represents an enormous growth opportunity for AWS just as social media did when AWS first was founded.

But, it's not new for Amazon to go after large, high-security businesses.

In 2014, Amazon Web Services built a cloud for the CIA. The $600 million cloud helped unify the 17 agencies within the CIA. Agencies could seamlessly share information with one another, preventing large gaps in knowledge from forming. The CIA also believed that AWS helped heighten their already potent security levels.

Amazon's encounter with JP Morgan may not be its first with the financial market. Capital One (COF  ) uses AWS to deter cyber criminals and to reduce operational costs. Representatives for the company have said that switching to AWS has also allowed them to set up servers in much less time. At the end of the day, Capital One is not an iconic trading bank like JP Morgan.

It makes sense for AWS to target banks. Banks are center of private investment in the United States Market. Their day to day operations require hosting secure servers that can be accessed by employers and consumers alike.

In the past, banks have been notorious for spearheading new technological initiatives. During the high frequency trading era, banks constantly updated their equipment to cut milliseconds off of their trade executions times. Since then, they have been very secretive about the technologies they possessed.

A former employee of the CIA and Goldman Sachs said that he had to pass only two security checks to reach his desk in the CIA, but five to reach his desk at Goldman Sachs. For this reason, big banks may be an even bigger security hurdle for AWS to overcome if it wishes to truly penetrate that banking market.

These shifts in AWS clientele are important because AWS has not won the cloud monopoly yet. Its most significant competitors, like Microsoft Azure and Google Cloud, still own a remarkable percentage of the market share.

Google Cloud has boasted lower prices, especially for bigger consumers. Google has recently won the contract for Spotify. Spotify claimed that while Amazon offered a greater degree of customizable services, Google was more cost efficient.

Perhaps if AWS can successfully insert itself into the banking niche, it can negate the price disparity it has with Google.

Even though there is fierce competition between the cloud rivals, the cloud market is currently expanding. Only about 2 to 5% of computing for large companies passes through cloud computing companies like AWS. If AWS continues increase its sales to larger companies in new markets, it may very well dictate the future of Amazon and the future of any organization that conducts business online.

Sources

Amazon. "All AWS Case Studies." Amazon Web Services, Inc. N.p., n.d. Web. 01 Apr. 2016.

Darrow, Barb. "Pssst, Amazon Cloud Is Not Really New to Banks." Fortune. N.p., 25 Feb. 2016. Web. 01 Apr. 2016.

Dow Jones Newswires. "Amazon Web Services Takes Aim at Big Banks." Fox Business. N.p., n.d. Web. 01 Apr. 2016.