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The evolution of cloud adoption in Financial Services
The second edition of the “Cloud in Financial Services” report re-examines the research conducted by Reply with financial institutions, and addresses the unique challenges facing financial institutions in the EU, Switzerland, and UK.
#Cloud integration
#Cloud governance
#FinOps
Adopting cloud in FS: progress since 2021
The latest report on cloud adoption in the financial services sector highlights significant changes since the 2021 edition. Financial institutions are now more discerning in their approach to cloud technology, emphasising hybrid and multi-cloud environments for a strategic use. While asset management leads in adoption, most institutions still use the cloud primarily for non-critical applications. The perception of cloud benefits has evolved, shifting from cost reduction to system resilience as the top priority. Challenges such as regulatory compliance and data sovereignty persist, but security concerns have diminished. This reflects a maturing understanding of cloud technology. Our report emphasises the need for a tailored approach, incorporating multi-cloud and hybrid cloud strategies, and a strategic understanding of cloud technology to maximise its benefits and navigate regulatory complexities.
Cloud strategy enabling a business strategy
Aligning cloud with business strategy is complex but critical. Forward-thinking organisations assess constraints and strategically leverage cloud, including the integration of SaaS applications. Exploring the synergy between business and cloud strategies, our findings indicate a significant shift in organisational approach.
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Strategic cloud integration
Successful organizations align cloud strategy with core business goals for competitive advantages in existing operations and new areas. Our research shows a drop from 59% to 36% in respondents believing their cloud strategy aligns with their business strategy, indicating challenges in harmonising cloud technology with business goals.
Cost considerations
As organizations progress with cloud implementation, the initial cost advantage over on-premise infrastructure often diminishes due to various factors. While about 50% of organizations initially experience cost reductions, practical observations from most surveyed organizations indicate that cloud expenses often increase more than on-premise cost reductions.
Business growth
Our survey underscores cloud's role in driving innovation and supporting new initiatives, highlighting its potential to fuel business growth. 20% of respondents chose on-demand scalability as the most important benefit of using the cloud, while 14% valued enhancing system resilience and business strategy implementation the most.
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Cloud governance: a prerequisite for success
Leveraging the full potential of cloud technology in finance extends beyond technology itself, it's a strategic shift. Our findings underscore the vital role of cloud governance. While 38% of the respondents express confidence in their cloud governance, there are noticeable gaps, particularly among the 35% of respondents who only have a moderate level of confidence. Institutions adapt to the dynamic cloud landscape, prioritising cybersecurity, automation, and risk management.
Managing cloud costs through FinOps presents challenges and opportunities, offering transparency and control. A Cloud Centre of Excellence (CCoE) emerges as a strategic hub for consolidating expertise and governance. Embracing these shifts is the key to unlocking cloud's true potential in finance.
The impact of cloud regulation
Within the dynamic landscape of cloud technology adoption, we consistently encounter a set of challenges and regulatory intricacies that have endured over time. These hurdles, which have persisted since our previous report, continue to exert a profound influence on financial institutions.
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