Written by: Magadi Madhusudhan, Consulting Partner & Thought Leader, Managing Director, NTT DATA
According to a recent Everest Group study, “Maximizing Value from Cloud Investments in Banking and Financial Services”, the adoption of cloud computing in Financial Services is not what one might expect. Only 20-30% of banking workloads currently live in the cloud. However, evidence validates the importance of cloud transformation in this sector.
Executives are Realizing Benefits from the Cloud:
1) Over 70% of Financial Institution (FI) executives say that they face challenges when realizing benefits from their cloud transformation journey
2) Over 88% of FI executives state that maximizing value acceleration from cloud investments is a top strategic priority
Despite current challenges, Fortune 500 FIs alone could generate $60 billion to $80 billion in run-rate EBITDA in 2030 through the cost-optimization levers and business use cases unlocked by cloud (as per McKinsey insights 2022.) A handful of leading FI’s, including retail, commercial banks, and capital markets, have already reaped the benefits of native hybrid-cloud and multi-cloud services and data platforms. Others are still preparing for cloud transformation by perfecting their investments and operating models. However, these examples are still outliers in FS; they represent the untapped potential for advanced cloud financial and operational efficiencies (FinOps). FinOps can support extensive modernization initiatives and drive significant business value, including:
- Strategy & Management: Well thought out path for scaling
- Functional / Business Domain Disposition: IT Modernization powered business transformation
- Strengthen Foundational Capabilities: Automated application patterns (Security-as-a-Code and hybrid FinDevSecOps)
A decade from now, banks will be unrecognizable as digital advancements redefine the bank of the future. FI’s must operationalize their modernization strategies to align to consumer expectations, emerging technologies, and new business models, and propel them into the future. Cloud computing is top-of-mind for C-suite executives and board members. FI market leaders now recognize that cloud is more than just a technology; it is a destination for banks and FIs to store data, applications, and access advanced techniques that offer unmatched speed and agility.
The cloud also offers a significant opportunity to balance the enterprise by breaking down operational and data silos across risk, finance, regulatory, customer support, and more. After years of focusing on the technology’s value as a cheaper, faster, and more “elastic” alternative to on-premises data storage. Additionally, FI leaders are considering how they can leverage the cloud to balance the enterprise, drive business innovation, and unleash upskilled talent. The cloud also offers new ways of working and helps to create top line impacts, new business frontiers & resilient operations, enhanced security, and on-demand computing scale to create bottom line impacts. Once vast, optimized data sets are located in one place, the organization can apply advanced analytics for integrated inferences, including bringing the metaverse into play and helping banks improve business performance and return on equity.
Access a Complimentary Copy of the Everest Group Study.