Cloud transformation in financial services

The advent of COVID-19 forced most industries to speed up their plans to service their clients or end customers more effectively – and in many cases, this meant accelerating their digitization strategies. The ­ financial services industry has been no different, and during the pandemic, we witnessed the financial services industry responding rapidly to new demands and has emerged stronger and nimbler.

One of the key technologies that assisted the ­ financial services industry to address clients’ shifting expectations during the pandemic has been cloud services, neatly summed up by Microsoft as “the delivery of computing services – including servers, storage, databases, networking, software, analytics, and intelligence – over the Internet (‘the cloud’) to offer faster innovation, flexible resources, and economies of scale.

While IT spending, in general, is expected to remain static, cloud spending is likely to increase. Firms are broadly expecting cloud costs to rise in the 1-10 percent range. The cloud is fast becoming more intelligent, hyperconnected, and pervasive.

For the immediate future, ­ financial services ­ firms are focusing their cloud goals more on business growth and revenue generation than reducing expenses. Leaders said they expect to make their most significant cloud investments over the next two years in product development/ R&D (62%), cybersecurity (48%), business development and sales (42%), and procurement/supply chain (44%).

In a crucial shift, the cloud is moving from an ef­ficiency play to a growth driver. The survey results give financial services leaders real numbers around the benefits they can expect from a well-executed move to digital.

Almost all clients report revenue bene­fits over three years due to using the cloud to create new products, services, and business models. These gains average at around 4%, although about a third of ­ firms anticipate revenue increases of up to approximately 15%.

Lack of a cloud strategy is the biggest challenge facing companies across the board, financial executives say. The next few years will be critical for determining leadership in many industries, including ­ financial services. COVID will eventually fade, but the remainder of this decade will only see disruption escalate. That is because the pandemic unleashed new consumer expectations. They want 24/7 access to their financial resources from anywhere, and products hyper-personalized to their lifestyle choices.

For ­ financial services organizations to meet those requirements and grow, they will need to be driven by data, faster to market, and agile and resilient in execution. Some industry giants will fade. Some unknown companies will ascend. Products not even conceived before today will win the hearts and wallets of ­ financial consumers. The companies best designed to compete during this turmoil will be crowned new industry leaders. And those companies will be thriving in the cloud.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA