Financial institutions are navigating a challenging landscape filled with data management inefficiencies, cybersecurity vulnerabilities, complex regulations and shifting customer expectations. The report shows that banks and insurers increasingly adopt cloud solutions to mitigate these risks, evident in a 26% rise in cloud-related terms in the annual reports of the top 40 tier-one banking and insurance firms from 2020 to 2023.
However, these firms struggle with optimising cloud benefits, as operational challenges affect C-level decision-makers, slowing the returns on cloud transformation investments. Less than 40% of executives report being highly satisfied with their cloud solutions, particularly regarding reduced operational costs (33%), enhanced scalability (27%), accelerated innovation (26%), improved data and analytics (24%), and advanced security and compliance (21%).
Challenges arise primarily from using a lift-and-shift approach to cloud migration, rapid scaling leading to unanticipated costs, complex pricing models and inefficient governance.
Cloud adoption is the beginning of a transformative journey for long-term business growth, not an endpoint.
Ravi Khokhar pursues, “while technology serves as a foundation for financial institutions, some still view the cloud merely as a cost-saving measure, whereas innovative disruptors use it to redefine operations. Embracing a cloud-native approach enables banks and insurers to create new products, enter new markets, and enhance customer satisfaction. With Gen AI becoming a priority, a cloud-based technology foundation can help maximise investments in new technologies.”
Financial institutions hold vast amounts of customer data but struggle with securing and managing it. Primary concerns include:
- Legacy systems causing data integration issues (71%)
- Protecting customer data and ensuring privacy (70%)
- Poor data quality with inaccuracies and missing information (69%)
Starting in 2025, Europe’s Digital Operational Resilience Act (DORA) will require financial institutions to meet stricter compliance requirements. Increasing regulatory pressures and the Consumer Financial Protection Bureau’s open banking ruling highlight the need for cloud-native solutions to maintain scale, reduce costs, and ensure compliance.
81% of executives feel the lack of appropriate technology hinders their business goals. Most view AI (81%), predictive analytics (75%), and robotic process automation (65%) as essential for a cloud ecosystem. Yet, traditional institutions struggle with capability maturity: only 15% reached maturity in AI, 30% in predictive analytics, and 22% in robotic process automation.
To enhance efficiency and spur innovation, banks, and insurers must adopt a data-driven, cloud-focused approach, develop cloud-native applications, invest in skilled professionals, and foster a culture of idea-sharing and technology access for all teams.
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