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The extent to which financial services institutions across the UK and US have embraced cloud has been laid bare in a piece of research from Bristol-based software house YellowDog.
The company polled 200 IT business decision-makers working at financial services institutions with 500-plus employees based in the UK and US about their cloud adoption plans, and discovered none of the respondents operates an IT environment that is entirely reliant on on-premise infrastructure anymore.
At the same time, just 2% of those polled said they would describe the infrastructure setup of their organisation as being “cloud-only”, which suggests firms in this sector are increasingly favouring the use of hybrid cloud setups.
But while cloud is playing an increasingly important role in supporting the way their organisations run, the research goes on to suggest it is the strength of a cloud provider’s data analytics and processing service portfolios that are increasingly dictating whose technologies they opt to use.
On this point, 81% of respondents described their cloud procurement preferences as “agnostic”, meaning their IT infrastructure does not favour any specific provider over another, and is designed to accessible to new market entrants as well.
“The cloud provider itself is the least important aspect for decision-makers when selecting their cloud providers. Instead, ‘insight and data-led’ approaches are prioritised, followed by a cost-led approach. This means financial institutions are choosing cloud providers based on their performance, rather than their brand,” the YellowDog report said.
This, in turn, could work in the favour of cloud firms that might be struggling to gain a foothold in other vertical markets because where the likes of Amazon Web Services, Google Cloud Platform and Microsoft Azure dominate, the report said.
“This will give a boost to challenger clouds like Oracle Cloud, IBM Cloud, Alibaba Cloud and others. They will be encouraged that they can challenge the big three in financial services through the suitability of their offerings rather than their legacy relationships,” it added.
That said, the report’s findings suggest that none of these providers is likely to be the only cloud supplier financial services firms enlist the help of, as firms increasingly follow a multicloud supplier sourcing strategy.
According to its data, the proportion of financial services companies that use four or more cloud providers is on course to double over the next five years.
At the same time, out of the companies that are only using a single provider’s technology today, 40% expect their setup to stay that way over the same time period, while almost 70% said they expect to be following a multicloud procurement strategy in the next half decade.
“For those companies currently using three clouds, the average will drop to 2.3 over the next five years. This suggests that one of the big three providers is set to lose out, as those companies currently using three or more providers look to consolidate their cloud strategy and drop back down to two to sit alongside their on-premise infrastructure,” the report said.
Gareth Williams, CEO of YellowDog, said the biggest challenge financial services firms will face over the next five years is finding a way to efficiently manage the expanding (or contracting) pool of cloud providers they use.
“In an era of increasing cloud maturity, it’s interesting to see financial services develop their cloud strategies as they discover what works best for them. Over the next five years, we’ll see most adopting hybrid cloud solutions,” said Williams.
“Due to this, financial services will need to find a way of optimising their cloud strategy and intelligently managing the relationship between their on-premise and cloud resources.”
Read more about cloud adoption within the financial services sector
- The financial services community has gone from being one of the least likely sectors to adopt cloud to becoming one of its keenest users, as regulator attitudes to using the technology have become more accommodating.
- Barclays Bank has revealed it is two years into a digital transformation project that will see it shut datacentres and go all-in on the Amazon Web Services (AWS) public cloud.
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