Adoption of the Cloud in the Financial Services industry
By | Posted January 26, 2016 | In ArticlesBusinessEnterprise
[Originally published on Linkedin Pulse] The financial sector is slowly coming around to the idea of entrusting its apps and data to the Cloud, however, the financial industry is still in the early stages of Cloud adoption. The majority, 61% of banks, are developing a financial services cloud adoption strategy within their organization. The most common strategies use a mix of private, public, or hybrid Cloud environments. The exact deployment models used by companies are correlated to the maturity of their Cloud strategies. Only 9% of respondents with existing Cloud policies reported predominate usage of private Clouds.
Financial companies utilizing the Cloud are using public Clouds, while many other companies are utilizing both private and public Clouds, with a large percentage actively taking on the integration of in-house services within public Cloud environments. Companies developing their Cloud strategies do not plan on relying as heavily on public Clouds. Additionally, 18% of the companies still working towards Cloud development, plan on using a private Cloud-only model. That is double the percentage of companies that are actually only using private Clouds. These two statistics show added comfort and assurance when practicing in the Cloud and is an encouraging sign of maturity in Cloud confidence.
REASONS FOR FINANCIAL SERVICES CLOUD ADOPTION
Having a flexible infrastructure, reduced time for provisioning, reduced total cost of ownership, and a shorter time to market are some of the primary reasons for financial services Cloud adoption. The most desired features, reported by respondents in the CSA survey are increased transparency and better auditing controls (80%). Better data encryption tools (57%), receiving logs in real-time (51%), and remote auditing (48%), lead the remaining top requests.
The service itself, and more importantly how the Cloud provider accommodates these top features, will determine how readily a particular Cloud service is embraced. The top Cloud services/applications that are being adopted provide a snapshot into what organizations are leveraging from current Cloud providers. CMR tools (46%), application development/testing environments (46%), and email (43%) not surprisingly led the way. Collaboration platforms (41%), storage capabilities 41%, and data intelligence 41% are also popular Cloud applications. Not one single Cloud application category has been adopted by the majority of the survey respondents, which suggests that the business Cloud market has substantial growth ahead.
“The Cloud has made solid in-roads in this industry with many firms looking to harnessing its power. There’s plenty of room for growth, particularly for providers who can fill the void for the auditing and data protection controls that are at the top of respondents’ Cloud wish list.” says Chenxi Wang, Vice President at CipherCloud
For those organizations that have a strict private Cloud-only policy, the main reasons are: security concerns (86%), compliance concerns (86%), privacy (79%), data retention and destruction (79%), and data residency (57%). 70% of companies with existing financial services Cloud adoption strategies have moved from hybrid Clouds to either a mix of private and public Cloud or mostly the public Cloud. This is another sign of a growing confidence in adopting Cloud services and relying less on in-house IT.
Key faces of FSI Cloud adoption:
As Cloud computing becomes more prevalent throughout the financial sector, a mixed strategy of leveraging both private and public Clouds is emerging as the norm for most businesses.
Most organizations do not have a concerted Cloud migration strategy.
Data protection is a pre-eminent security concern for the financial sector moving to the Cloud. In particular, data protection standards and relevant laws are “top of mind” to our survey respondents.
Industry regulation drives compliance requiring financial institutions to implement specific security measures to consider migrating to Cloud services
According to current trends, Microsoft Office 365 remains the most popular enterprise Cloud app in financial services, followed by Concur and Salesforce.