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Pandemic Drives Majority of Banks to Accelerate Cloud Adoption

Michael Behr

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banks cloud
As established financial institutions deal with threats from challenger banks and fintechs, the cloud is helping provide the flexibility and agility needed to operate in a digital world.

A new report has found that banks have increased adoption of cloud technology in the face of the pandemic.

According to research from The Economist Intelligence Unit and Temenos, 72% of surveyed banking IT leaders said that incorporating the cloud into products and services will help achieve their organisations’ business priorities.

For European banks, 67.3% said that the cloud would help their priorities, with 28.8% saying it would help to a ‘great extent’. This figure is in line with Asia-Pacific banks, and more bearish than those in the US and Latin America.

The report stated that banks have generally been slow to move their operations to the cloud. However, the move towards a software as a service (SaaS) model offered by major players such as Amazon Web Services, Google and Microsoft has accelerated since the start of the pandemic.

The primary motivation is to cut costs, along with accelerate digital transformation projects. Of the survey respondents, 42% cited cost reduction as being behind their decision, with adoption of AI second at 34%.

Business agility, improving customer experience and employee efficiency also featured among the reasons.

“This comes as established banks figure out how to use incumbency to fend off fintechs and ‘challenger’ banks, while the newer entrants use the cloud to advance quickly into new market opportunities,” the report noted.

In addition, 82% of the respondents said they have a clear strategy for adopting cloud technology.

However, with the increased pace of adoption, challenges still remain around cybersecurity, accessing appropriate skills and governance, the report warned.

Data security was towards the bottom of the reasons for adopting cloud computing, with 18% citing it as a driver. And 16% said they were motivated by increasing resilience and performance.

Meanwhile, around 60% of IT leaders said security and compliance are the main risks posed by cloud adoption. This increased to 69% for European banks.


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On top of this, 43.9% of people were concerned over uncertainty around how cloud infrastructure is/will be regulated and governed; 41% by legal liability and compliance of data stored by third-party providers; and 38% by interoperability of data or services in multi-cloud adoption.

Another 44% of respondents agreed that their organisation lacks the regulatory understanding it needs to advance its digital transformation objectives.

With increased adoption becomes the risk of greater reliance on cloud services. This is concerning regulators, as banks may over-rely one provider to run critical systems, threatening financial stability.

This is particularly worrying as public cloud services are increasingly provided by a handful of major tech players, reducing competition in the field.

As such, 68% of executives surveyed agreed that big tech companies will become so mission-critical to the banking industry that they will become regulated institutions.

This could see the rise of a multi-cloud strategy, as operations are split up to increase resilience. However, this comes with its own security and liability challenges.


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Michael Behr

Senior Staff Writer

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