Most financial services firms (62%) expect cloud investments to increase their revenues in the next two years, while over half (52%) think they will boost profitability, according to research from consulting firm Capco and its parent company Wipro.
Capco and Wipro dug deeper in to the financial services industry data in Wipro’s 2021 FullStride Cloud Services study, which included 1,300 responses from global C-suite executives across 11 industries. Approximately a quarter of surveyed business leaders were from financial services firms, including banks, insurers, wealth advisors, and asset managers.
The data, unsurprisingly, found that the Covid-19 pandemic spurred banks to accelerate cloud investments. Seventy percent of banks said Covid elevated the prioritization of cloud as a way to improve customer experience; 54% said the pandemic enhanced recognition of cloud as a way to create more efficient processes; and 49% said it increased their willingness to make cloud investments.
Banks are well on their way to full digital implementation, spending an average of $36 million on cloud annually. Financial services firms expect to boost the proportion of business applications that run on the cloud to 55% within the next two years, up from 38% currently.
Though they expect cloud investments to pay future dividends, they have apparently already borne fruit. Sixty-two percent of surveyed banks said cloud investments have already improved profitability, and 55% said they have increased revenues.
Looking to the future, the top areas financial services leaders expect to target for cloud investment are product development (62%), cybersecurity (48%), and business development and sales (42%).
In terms of roadblocks to cloud implementation, 48% of banks cited difficulties selecting the best technology options; 45% were uncertain about 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 measures, and spending priorities, and that moderates other potential battlegrounds that can dilute implementation,” said Peter Kennedy, partner and cloud lead at Capco.
Addressing ROI uncertainty, Kennedy added, “We believe financial services firms often do not consider the total cost benefits when measuring return on investment (ROI) on the cloud. Only 40% cited benefits arising from decreased non-IT costs, and even fewer measure reduced carbon footprint, accelerated time to market, or improved productivity.”