Spurred by the pandemic, financial companies have accelerated digital transformation, including cloud computing. Among many benefits, cloud technology helps financial companies meet the evolving needs of consumers and lower infrastructure costs.
An Atlassian poll of customers revealed why financial companies are moving to the cloud and how it compares with customers in other sectors. The two largest reasons are no surprise: lowering costs and complying with digital transformation. Our 2022 State of Digital Transformation report revealed that the finance industry is modernizing rapidly and has the highest percentage of companies that plan to spend over $1 million on digital initiatives in 2022. This growing digital appetite is facilitating rapid cloud adoption.
Below are four more trends about financial companies and cloud migration.
The pandemic has moved financial companies toward the cloud.
Actually, it sped up everyone’s move toward digital transformation, especially the financial companies. According to McKinsey, the COVID-19 crisis has accelerated the digitization of customer interaction by several years. The jump was even more significant in high-integrity sectors like finance.
That is not a huge surprise because financial companies were previously moving at a slow pace and quickly went into high gear when remote work became necessary in 2020. The finance sector has been hesitant about cloud computing for reasons including security and hiring talent. In 2018, only one in four banks had a strategy to move to the cloud, according to Accenture.
The publication CIO Dive sums it up nicely: “If there was any doubt America’s biggest financial institutions are ready to embrace and invest in cloud technology this year, it’s gone.”
“If there was any doubt America’s biggest financial institutions are ready to embrace and invest in cloud technology this year, it’s gone.”
Major cloud providers such as AWS, Microsoft Azure, and Google Cloud Platform, are at the forefront of strengthening security and complying with data privacy regulations. As a result, several organizations in high-integrity industries, including financial services, are realizing that the cloud is a much more secure option than on-premises servers.
Innovation is a top driver for financial companies moving to cloud technologies.
Financial companies want to meet the expectations of today’s consumers with technological advances, even beyond online banking. For example, deploying artificial intelligence at scale is a priority for banks, and for many banks that is only possible in the cloud.
Innovation is also one of the top benefits of moving Atlassian software to the cloud, according to the Atlassian poll of 25 financial service customers. A whopping 75% of respondents reported innovation is better in the cloud versus server (with 25% saying it’s equal, and no one saying it’s worse).
Change management tells a similar story: 62% of financial services companies say it’s better in the cloud, and 38% say it’s equal to server. Other features that rank high for financial services include reliability (83% say it’s better in the cloud), availability (79%), and automation (71%).
The cloud supports innovation in both product and operations. For example, one of our clients wished to expand its operations into Europe. AWS enabled them to manage the entire project in 12 weeks. This would have been impossible if the company wished for an on-premises solution. Building infrastructure from scratch to comply with European data laws would take several months.
The benefits of cloud technology happen rapidly for financial companies.
Financial companies might have been shy to get to the table, but once they embrace the cloud, they see quick gains.
When Atlassian interviews customers across all sectors, 89% say they were reaping rewards within six months. For financial companies, 100% report it took less than six months to see Cloud benefits.
Due to their scale, cloud adoption leads to significant cost savings for financial firms. They often recover their investment in the change journey within a few months. Additionally, it increases operational agility, enabling organizations to capitalize on dynamic market trends and opportunities.
One of the largest challenges to cloud adoption financial companies face is people.
No, it’s not security, regulation, compliance, C-level support, or infrastructure (although those are all real concerns). The biggest challenge for financial companies is finding technical hires. Only one-third of banks are well-staffed to handle cloud capabilities, according to Gartner.
Technical hires are critical for the success of any strategic digital initiative, including cloud transformation. However, several financial firms struggle to attract and retain technical talent due to the widespread prevalence of legacy systems. According to PwC’s CIO Global Banking Survey, only 5% of banks would consider their technological framework to be cutting-edge.
Attracting great technical talent requires stellar developer experience, which requires modernizing legacy technology, which requires great technical talent. Several financial firms struggle with this chicken and egg situation.
That’s where an experienced partner can help accelerate digital transformation. Modus Create has helped some of the world’s biggest financial firms reimagine their business for the digital age. If you’re interested in learning how cloud adoption can help your business, talk to Modus.
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