Banks talk big cloud game but few have migrated over 30% of apps

Less than half said business leaders in their bank understood 'opportunities of cloud'

A report into cloud adoption in the international banking industry shows that despite a broad appetite for cloud services, only around a third of banks have migrated more than 30 percent of their applications.

The Future of Cloud in Banking report found the majority of retail and commercial banks aim to triple their use of cloud services by 2025, and migrate more client-facing applications and data. However, the usual concerns about security, a lack of cloud skills and a lack of understanding of cloud benefits are said to be holding back some adoption.

The report comes from Publicis Sapient, a digital transformation company, and was compiled in collaboration with Google Cloud. The state-of-play findings are based on a survey of 250 executives at retail and commercial banks conducted in September and October 2021 across the EMEA, North America, and APAC regions.

According to the authors, the banks can be divided into three groups – Cloud Leaders, Cloud Followers, and Cloud Conservatives – based on their attitudes towards cloud adoption. However, the ambition to ramp up usage of the cloud is common across all three groups.

Only the Cloud Leaders have more than 30 percent of their applications in the cloud, and this group tends to place greater store in the business benefits of cloud-enabled transformation than Cloud Conservatives, for example, which in turn see reducing costs as the primary focus for cloud adoption, driven by their finance and technology teams.

Those business benefits cited by the Cloud Leaders include an enhanced ability to innovate at speed, apply advanced analytics, and transform operating and business models.

There are regional differences here, with only 29 percent of North American banks stating that they see advanced analytics as a cloud benefit, while the figure for EMEA is 40 percent and 58 percent in the APAC region.

Likewise, about 60 percent of banks in North America plan to increase investment in cloud over the next three years, with the figures for EMEA and APAC at 82 percent and 83 percent, respectively.

The report states the evident gap between ambition and execution is the major obstacle to cloud transformation, with only 44 percent of respondents in the survey indicating that the business leaders in their bank understand the opportunities of cloud.

"Despite the lack of progress in some areas, 68 percent of banks believe they are ahead of the competition in innovation. This suggests some level of complacency," commented Jan-Willem Weggemans, head of the Cloud Practice at Publicis Sapient.

Respondents also expressed concern that they lack execution speed and are not seeing the full benefit from existing investments due to security concerns and a lack of skilled people to drive implementation.

Meanwhile, a separate report from cloud and hyperconverged infrastructure outfit Nutanix claims that financial services organizations are lagging behind other industries in adopting a multi-cloud strategy that spans a mix of private and public clouds, trailing the global average by 10 percent.

The findings, which come from its global 2022 Enterprise Cloud Index (ECI) survey, indicate that adoption is likely to almost double from 26 to 56 percent in the next three years.

"While the financial services industry appears to be in the early phases of deployment, the evolution to an interoperable multi-cloud IT infrastructure that spans a mix of private and public clouds is under way," said Nutanix VP of Product and Solutions Marketing Anand Akela.

The survey was conducted by Vanson Bourne and involved 1,700 IT decision-makers around the world during August and September 2021.

Nutanix said that 31 percent of financial services in its survey are still operating non-cloud-enabled three-tier datacenters as their only IT infrastructure. A surprising 59 percent said that they are still using no public cloud services at all, which Nutanix attributes to substantial existing legacy investments in applications and the highly regulated nature of the industry.

As ever, security concerns are cited as a barrier to multi-cloud adoption by 50 percent of respondents, with integrating data across clouds and performance challenges with network overlays also listed.

According to Nutanix, the top IT priorities for the next 12 to 18 months for financial services companies are improving security posture, improving multi-cloud management, and developing and/or implementing cloud-native technologies. ®