As banks continue to move ahead with their digital transformation plans, cloud computing could help them create digital and personalized solutions at a steadier and faster pace.
However, there are still some obstacles when it comes to banks using cloud – ranging from figuring out what the actual benefits are to understanding the integration process.
Publicis Sapient, in collaboration with Google Cloud, looked into where banks are at in terms of cloud computing in their ‘The Future of Cloud in Banking’ report.
In four charts, here's what they found:
Majority agrees: Cloud is important
83% of respondents agree that cloud technology is at least important to a moderate extent when it comes to the bank’s business and transformation plans, with 54% of them claiming it’s very important.
Over 40% of respondents agreed that the major benefits of cloud include automating processes and analytics capabilities, embedding fintech partnerships, and developing new products.
Still, there seems to be a gap between the importance bank execs attribute to cloud and the actions they’re taking to adopt it. According to Jan-Willem Weggemans, senior client partner and alliances lead at Publicis Sapient, that has to do with the level of understanding of the benefits of cloud – similar to knowing that vegetables are good for you but not really knowing why and not being all that motivated to incorporate more into your diet.
“I think what we're seeing is a limited understanding of cloud technology, especially at the executive level. And when there’s little understanding, what tends to happen is it gets ranked lower in investment priorities,” said Weggemans.
The three sorts of cloud adopters and what they think of the benefits of cloud
The report divides respondents into three categories: cloud conservatives, cloud followers, and cloud leaders.
According to the report, 27% of the respondents are cloud conservatives – meaning they have at most 10% of their applications on the cloud. 28% of respondents are cloud leaders, meaning they have over 30% of their applications on the cloud. Somewhere in the middle, then, is the biggest group – cloud followers – which have between 11% and 30% of their applications on the cloud.
What’s interesting is the difference in these groups' perception of cloud's benefits. “You can almost have two lines of thoughts,” said Weggemans. “Is this about technology optimization or is this about business transformation?”
When comparing cloud leaders’ top priorities to cloud conservatives’ top priorities, you start to see differences in interpretation. Cloud leaders see the cloud as part of their business transformation plans. Top benefits for this group include enhanced analytics and being able to better transform banks’ business level. On the conservative side, cloud’s benefits fall under tech enhancement, like being able to develop more products or building better IT infrastructure.
The main takeaway here, then, may be that the more you use cloud, the better you can understand its benefits.
“[Cloud leaders] know how to operate and move things to cloud, but they also know that they can achieve more with it, [and that] once you have it in place, you can actually transform the rest of the organization on the back of some of their characteristics,” said Weggemans.
A cloudy understanding of cloud
A challenge in going from a so-called cloud conservative to a cloud leader may have to do with a lack of communication between the main decision-makers at the company. Top execs at a bank who are not directly involved with tech adoption and development may not be aware what the benefits of cloud computing really are. Keeping everyone in the know may be key here.
“What you see in the market is that quite often the CFO is the first supporter outside of the CIO space, because they look at the numbers, they look at the business case, and they actually find it interesting,” said Weggemans. “So I think for a CIO, there's two ways to go: One is a direct conversation with the rest of the executive team about the benefits of cloud, and making sure it's not too technical, but about transformation. And the second one is to look to your CFO as your first supporter in the discussion. And it's a crucial supporter, because they will always be trusted with the numbers, so if they say the business case adds up, the rest will understand that's the case.”
Obstacles in the way of adopting cloud
Obstacles still abound on the road to cloud adoption, with the top roadblock being security concerns. The problem is that banks often don’t have the right experts on staff to deal with these issues, and they don’t really know how to go about hiring to fix the gap. According to Weggemans, that’s where banks may need to be putting the biggest focus.
“To the point of the skills, you need to really invest not just in the skills of the engineer that needs to build the cloud platform, and not only the engineers that build on top of the platform, but also in the security, compliance and risk people that need to look at this new animal called cloud that they need to control,” he said.