The pace of cloud adoption by financial services companies has picked up markedly in recent years, but progress is still being hampered by regulatory uncertainty and the complexity of legacy systems.
That is according to the results of a Google Cloud survey of 1,300 leaders working within the financial services space in organisations based in the US, Canada, France, Germany, the UK, Japan, Singapore and Australia.
The research, conducted on the public cloud giant’s behalf by market intelligence agency Harris Poll, pinpointed several barriers that are slowing the pace of migration to the cloud for financial services companies.
“The barriers to adoption vary, from the complexity of legacy systems, to trust and skills gaps, regulatory uncertainty, and fragmentation of compliance requirements,” the company said in a statement.
“Although many companies have embraced the benefits of cloud technology, more robust cloud adoption – especially around core back-office functions – will require additional facilitation, including through regulatory harmonisation and streamlining.”
A large majority of respondents (83%) said they are using cloud as their “primary computing infrastructure”, with 38% relying on a hybrid setup while 28% rely on a single cloud to meet their organisation’s IT needs. A further 17% said their organisation favours a multicloud approach.
Of the companies that are yet to have gone down the multicloud route, 88% said they are considering shifting their cloud strategy to accommodate multiple providers within the next 12 months.
Many survey respondents said they have migrated “substantial workloads” to the cloud so far, but there is still some reluctance when it comes to shifting core, back-office applications off-premise.
“Across Europe, cloud usage for core activities like underwriting scored low, with the UK listing only 30% adoption,” said Google.
Read more about cloud adoption in the financial services market
- IBM claims to have secured support for its push to provide sector-specific public cloud offerings to financial services firms from more than 100 collaborators since the initiative made its debut in March 2020.
- The UK financial system’s growing reliance on a small number of cloud service providers could be subject to closer regulatory scrutiny, based on the findings of a report by the Bank of England’s Financial Policy Committee.
This is despite the fact that more than 88% of those surveyed said they feel very strongly that using the cloud will benefit their organisations and how they operate, particularly when it comes to meeting their regulatory compliance obligations.
Even so, the report also indicated that “regulatory-induced challenges” are creating hurdles that are preventing financial services companies from moving to the cloud as quickly as they would like to.
“Most respondents (84%) agree that regulatory reviews and approvals take too long because of regulatory fragmentation across regulatory bodies,” said Google. “And 78% say that regulatory uncertainty over the use of public cloud prevents their organisations from adopting cloud technologies that would otherwise provide benefit to them.
“Additionally, a third of all on-premise respondents (38%) say that the large investment of resources for the regulatory approval process is a reason why they are not using cloud services.”
Jerry Silva, research vice-president for IDC Financial Insights, said the survey highlights just how varied the pace and progress of cloud adoption is across the financial services industry.
“While many banks have already deployed hybrid cloud environments, others are still in various stages of planning and deploying,” said Silva.
“Clearly, hybrid infrastructure is a reality, and financial institutions must focus not only on leveraging the modern infrastructure model to gain efficiencies, resilience and agility, but also on taking the necessary steps to manage such environments, including the security and compliance of cloud services.”