Moving to the cloud was once a distant goal for most in the financial services industry. Facing changing customer expectations and increasing pressure to save costs, financial organizations are now embracing the cloud as a critical focus for future growth.
Cloud technology encompasses a wide array of innovative products that can help banks, credit unions, brokerage firms, and insurance companies improve revenue generation, solidify market insights, and cut costs.
However, migrating to the cloud still presents its challenges. To meet the growing need for cloud solutions in financial services and address migration challenges, financial institutions must consider several factors, from assessing the level of need to choosing the right cloud vendor.
The Need for Financial Services Cloud Migration
Accenture reports that in banking, cloud investment has grown strongly in recent years and is forecast to continue at 15 percent per year between the third quarter of 2020 and 2022.
Insurance companies are eyeing cloud technology as a worthy investment. In a 2021 insurance trends Deloitte report, cloud computing is second only to cybersecurity as a spending priority, with 59 percent of respondents expecting some level of increased investment in cloud computing and 17 percent expecting a “large increase in spend.”
Why The Cloud Rush?
The cloud provides adaptability, enabling financial institutions to keep pace with the market’s evolving expectations for a highly accessible, continuously improving user experience. The cloud promotes organizational efficiency, too. It provides employees with the ability to instantly access and share information from anywhere at any time with nothing more than an internet connection and the appropriate authorizations at hand. As a result, employees can easily collaborate, meet critical deadlines, and respond to customer needs more efficiently.
Cloud technology can help reduce data management costs by keeping maintenance at a minimum and eliminating the need for costly infrastructure during expansion. According to a survey by Atlassian, 64 percent of financial services organizations cite eliminating the cost of hosting and hardware as a reason for migrating to the cloud, and 52 percent say that eliminating manual upgrades is also top of mind.
Financial Services Cloud Migration Challenges
Faced with ballooning customer expectations and technology advancements among competitors, financial services organizations are under immense pressure to migrate to the cloud. However, several challenges make this task easier said than done.
Although cloud migration is an investment that promises returns of increased efficiency, streamlined processes, and lower administrative costs down the road, getting there can feel like a costly uphill battle. Successful cloud migration requires a rewrite of application architectures, investment in the needed specialists and tools, and training for end users on the new systems. Without proper financial analysis beforehand, many institutions may falter along the way.
Resistance to New Technologies
Historically conservative and traditional methods and processes in the financial services industry may present roadblocks to adopting cloud technologies. Stakeholders may be resistant to change and disruption. Moreover, competing priorities between finance, IT, and other business units within an organization may drown out the importance of investing in financial cloud solutions.
Data security is a top concern for decision-makers in financial institutions, primarily because they remain hesitant to hand over their private data to third-party vendors. According to a Nutanix report released in early 2021, 62 percent of financial services organizations ranked security and privacy as top concerns when running applications within public cloud solutions. This sentiment is driving private cloud adoption throughout the industry.
Before moving to the cloud, executives and managers want to know that their new service can guarantee the same or better data security levels.
The financial sector’s intricate regulatory environment creates additional complexities for financial services organizations that plan to implement new technologies. To migrate successfully, institutions must choose vendors competent in cloud implementation and conversant with financial data regulations.
Effective migration requires partnering and collaboration with IT, end-user teams, and third-party vendors, as well as full support from C-suite decision-makers.
The Future of Cloud
Cloud is the way forward for financial services as the industry positions itself for growth in a digital-first world. A successful migration plan is built on establishing the business outcomes you hope to achieve with migration, partnering with the right cloud vendor, and determining the deployment model that best suits your needs.The cloud provides adaptability, enabling financial institutions to keep pace with the market’s evolving expectations for a highly accessible, continuously improving user experience. Click To Tweet
The ideal cloud environment provides everything financial services organizations need for successful cloud migration. Look for an end-to-end data management and business intelligence (BI) solution that offers the flexibility, scalability, security, governance, and simplicity needed to address critical data issues such as availability, insights, and interoperability—both now and in the future.
Download the ebook, Planning for growth: Three keys to successful cloud migration for Financial Services, to learn key tips on successful cloud migration and explore how TIBCO can help you on your digital journey.