Most financial services firms (62%) expect cloud investments to increase revenue over the next two years, while more than half (52%) believe it will increase profitability, according to research by consultancy Capco and its parent company Wipro.
Capco and Wipro dug deeper into financial services industry data in Wipro’s FullStride Cloud Services 2021 study, which included 1,300 responses from global C-suite leaders across 11 industries. About a quarter of the CEOs surveyed belonged to financial services firms, including banks, insurers, wealth management advisers and asset managers.
The data, unsurprisingly, revealed that the Covid-19 pandemic prompted banks to accelerate cloud investments. Seventy percent of banks said Covid has elevated the priority of the cloud as a way to improve customer experience; 54% said the pandemic has heightened recognition of the cloud as a way to create more efficient processes; and 49% said it increased their willingness to invest in the cloud.
Banks are on track for full digital implementation, spending an average of $36 million per year in the cloud. Financial services firms plan to increase the proportion of enterprise applications running on the cloud to 55% over the next two years, from 38% currently.
Although they expect cloud investments to pay future dividends, they have apparently already paid off. Sixty-two percent of banks surveyed said cloud investments had already improved their profitability, and 55% said they had increased their revenue.
Looking to the future, the top areas where financial services leaders expect to target cloud investments are product development (62%), cybersecurity (48%), as well as business development and sales (42%).
In terms of barriers to cloud implementation, 48% of banks cited difficulty selecting the best technology options; 45% were unsure of ROI and use cases; and 42% said they lacked an enterprise-wide strategy and roadmap.
“Early in the transformation process, it is crucial to develop an enterprise-wide cloud strategy and roadmap that details technology choices, governance metrics, and spending priorities, and moderates others. potential battlegrounds that could dilute implementation,” said Peter Kennedy, partner and cloud. lead at Capco.
Responding to ROI uncertainty, Kennedy added, “We believe financial services companies often don’t consider total cost benefits when measuring return on investment (ROI) on the cloud. Only 40% cited benefits from reduced non-IT costs, and even fewer measured reduced carbon footprint, faster time to market, or improved productivity.”