Financial service firms are accelerating their adoption of cloud technology, with the vast majority using it to develop and scale new AI capabilities, according to research from the London Stock Exchange Group (LSEG).

After polling more than 450 senior FS executives around the world, LSEG’s latest report, Cloud Strategies in Financial Services, found that 87% of firms have boosted cloud spending in the past two years, with 42% reporting that they are now investing much more in their cloud solutions, consuming more than a third of IT and data budgets.

These investments are placing a growing emphasis on delivering outcomes through AI deployment. 

Nearly all (91%) of firms are either already using or planning to use cloud services for AI initiatives within the next twelve months, with genAI (60%), fraud detection (50%), and risk management (50%) the top use cases.

Firms are seeing other tangible benefits from cloud adoption, too. More than half (54%) reported that they are already seeing value in areas like risk management, customer engagement, and enterprise data access, with 83% of FS firms using cloud for risk management having completed migration, the highest among all use cases.

Interestingly, ROI is increasingly measured by strategic outcomes. Half (51%) of FS firms said that they assess cloud success by scalability, 47% by revenue growth, and 47% by improved security and resilience. 

Only 34% prioritise immediate cost savings, which LSEG said signals a shift in how cloud value is perceived, though most (61%) still reported reduced IT infrastructure costs as being a major benefit.

The study shows that across the board, businesses are prioritising flexibility and diversification in their strategies, as 82% of firms now operate with either a multi-cloud or hybrid-cloud approach, but growing interest in Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) could mean that firms are preparing to build more bespoke applications in-house. 

Standing in the way, however, are persistent cybersecurity concerns. Nearly half of respondents (47%) said the sophistication of cyberattacks was their primary worry in adopting cloud services, followed closely by concerns around data privacy and breaches. 

The current legal landscape is also proving to be a problem, with a third (33%) of FS firms citing regulatory challenges as their main barrier to achieving ROI from cloud investments. 

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The majority (84%) said they have been forced to adjust their cloud strategies in response to new regulatory frameworks, like DORA in the EU, with more than a quarter having to make extensive changes.

“The results of our survey show that adopting cloud is no longer a technology or engineering-led decision; it is a key business imperative,” said Stuart Brown, group head of data and feeds at LSEG. 

“Companies are increasingly driving meaningful value from cloud, improving operational resilience, and preparing for the next wave of innovation. Over the next three years, that innovation will be driven by AI and machine learning, with financial institutions increasingly using cloud to power fraud detection, risk management, data analytics and generative AI.”