91% of banks and insurance companies have now initiated their cloud journey, a significant increase from 2020, when only 37% of firms had embarked on their cloud transformations, according to Capgemini.
This high rate and its corresponding investment does not translate to effective cloud adoption at scale.
More than 50% of firms surveyed have only moved a minimal portion of their core business applications to the cloud.
89% of financial services executives believe that a cloud-enabled platform is crucial for delivering the agility, flexibility, innovation, and productivity necessary to meet escalating business demands.
62% of financial services firms have started using artificial intelligence, with a target to utilize it across the full value chain in the next two years.
Despite their potential, AI, including generative AI and machine learning technologies, are yet to be used at scale in the financial services industry and therefore are having limited impact.
The research found that to date much of the cloud investments have been applied towards modern, user-friendly, AI-based, customer-facing applications.
Today, in banking and insurance, firms are testing their generative AI use cases across customer onboarding, credit analysis, financial planning, policy renewals and to support client servicing models.
With 95% of firms now factoring ESG impact into all key investment decisions, the cloud also has a pivotal role to play in aiding the industry's effective management of ESG reporting to help achieve their sustainability goals.
Cloud providers are starting to develop solutions that can track and report scope 1, 2 and 3 level emissions, offering comprehensive visibility into a firm's carbon footprint across business functions and products.
Cloud migration priorities include risk and customer relationship management.
Industry executives surveyed in this report across health insurance, life insurance, capital markets, payments, retail banks and wealth management, identify risk management and customer relationship management amongst their top three areas ripe for early cloud adoption.
39% of retail banking executives emphasize transitioning complex credit risk management to the cloud to shorten loan processing decision time, through cloud-enabled automated processes and integrated analytics.
Among life insurance executives, customer relationship management stands out as the highest priority for their cloud journey.
Cloud adoption constrained by data security and cost challenges.
Despite significant advantages, industry executives express concerns about the challenges associated with cloud migration.
68% identify data security as a barrier to adopting cloud solutions, while 51% point to high operational and transformation costs as potential obstacles.
Recently, the Digital Operational Resilience Act mandated that financial institutions subject to European Union regulations must rigorously implement, document, and uphold the requisite systems, protocols, and tools to provide sufficient reliability, capacity, and resilience.
Which provides secure and independent cloud computing infrastructure to countries to help them ensure data privacy and sovereignty, is therefore fast becoming a common deployment option.
To address these concerns, 39% of executives reported a preference to leverage public cloud, 49% prefer private cloud, and the remaining 12% think hybrid cloud is the best option.
This Cyber News was published on www.helpnetsecurity.com. Publication date: Wed, 27 Dec 2023 04:13:05 +0000