Big tech, cloud adoption accelerating in banking sector - report
Cloud adoption in banking is accelerating as banks ramp up digital services, according to a new report from the Economist Intelligence Unit.
In a new survey of IT executives in the banking sector, conducted by The Economist Intelligence Unit and supported by Temenos, more than seven in ten (72%) report that incorporating the cloud into their organisations products and services will help them to achieve their business priorities. Just under half (47%) say that it will do so to a great extent.
According to the report, cost is the biggest driver of cloud adoption at 43%, followed by the adoption of artificial intelligence at 34%. and improving customer experience at 21%. Business agility, elasticity and scalability are together cited by 40% of respondents as top drivers.
The report, titled Capturing value in the cloud, finds banks have generally been slower to take to cloud computing than other sectors. But the adoption of software as a service (SaaS) and cloud infrastructure has accelerated since the start of the pandemic, as banks seize an opportunity to cut costs and ramp up their digital transformation projects, with 82% 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," says Andrew Reeves, head of cloud at Temenos.
"However, cloud is also a prerequisite for success in the world of open banking and Banking as a Service," he says.
"These are megatrends, powered and enabled by the cloud, that are shaping the future of banking."
Temenos is a banking software provider to more than 3000 banks across the globe, including 41 of the top 50 banks.
The company offers cloud-native, cloud-agnostic and AI-driven front office, core banking, payments and fund administration software enabling banks to deliver frictionless, omnichannel customer experiences and gain operational excellence.
Temenos software is proven to enable its top-performing clients to achieve cost-income ratios of 26.8% half the industry average and returns on equity of 29%, three times the industry average. These clients also invest 51% of their IT budget on growth and innovation versus maintenance, which is double the industry average, proving the banks IT investment is adding tangible value to their business.