A recently released report from Temenos, a large banking software provider, on cloud technology adoption in different business sectors attempts to determine why the banking industry has been slower to adopt it than other sectors.
The survey of IT executives in the banking sector, conducted by The Economist Intelligence Unit and supported by Temenos found 72 per cent report that incorporating the cloud into their organization’s products and services will help them to achieve their business priorities. Just under half (47 per cent) say it will do so “to a great extent”.
Cost is the biggest driver of cloud adoption, and was cited by 43 per cent of respondents, followed by the adoption of artificial intelligence, which was mentioned by 34 per cent. Improving customer experience was cited by 21 per cent while the combination of business agility, elasticity and scalability are together cited by 40 per cent as top drivers.
Temenos’ report Capturing value in the cloud finds banks have generally been slower to take to cloud computing than other sectors. That appears to be changing with the adoption of software as a service (SaaS) and cloud infrastructure, which has accelerated since the start of the pandemic. Banks are seizing an opportunity to cut costs and ramp up their digital transformation projects, with 82 per cent of banking IT executives saying they now have a clear strategy for adopting cloud. This comes as established banks figure out how to use incumbency to fend off fintechs and challenger banks, while the newer entrants use the cloud to advance quickly into new market opportunities.
According to the report, banks are tapping into the cloud to speed up their ability to gain insights from data, and in turn to be able to innovate faster. Yet barriers stand in the way of a wholehearted embrace of the cloud—including security, privacy, compliance and governance concerns. These challenges are leading firms to invest in both technology and talent.
“The pandemic has clearly lit a fuse under cloud adoption with banks having to deliver and scale digital services rapidly,” Temenos head of cloud Andrew Reeves said. “However, cloud is also a prerequisite for success in the world of open banking and Banking as a Service. These are megatrends, powered and enabled by the cloud, that are shaping the future of banking.”