Financial institutions’ technology departments recognise the potential efficiency benefits afforded by cloud computing, especially those in capital markets where technology is a key driver, but a lack of clear business applications, security concerns and wider market confusion continue to inhibit future industry growth. This is the key finding from the Financial Services Club Autumn Report, authored by Chris Skinner, sponsored by Cisco and entitled, “The Impact of Cloud Computing on Financial Services.”
The research report, which encompasses the views of over 230 financial professionals, includes anonymous anecdotes, thoughts and opinions from key players within the market and demonstrates a clear desire to increase the use of cloud computing within most financial institutions. Its benefits are clear to the IT departments of institutions, and the potential to increase existing levels of operational efficiency and avoid further capital expenditure will ensure that the issue rapidly rises up the management agenda.
However, the relevance of such technologies to the wider business is not being articulated well, and the concept still suffers strong opposition from some quarters. Equally, a general misperception that cloud computing has to be off-site and in a third party public domain means that most institutions have security concerns about its usage, which will constrain faster market growth.
According to the report, the primary focus for current IT investment is Software as a Service (SaaS) and security, each registering 17.9% and 16.4% of the vote respectively. Analysis suggests, however, that over the next three to five years this focus will shift, as cloud computing moves up to second place for IT spending, securing 16.2% of the vote and beaten only by SaaS. In fact, as SaaS is a component of cloud computing, the survey shows that almost one third of respondents would put the combined entities at the top of their spending lists.
Although there are positive predictions for future cloud computing take up, the research reveals an increasing disconnect between technologists, vendors and consultants, and the wider business community. Indeed, while two thirds (56.9%) of respondents state that IT or technology vendors are pushing cloud computing, just under one quarter (23.4%) of individuals believe that this demand is being driven from an end user, business perspective. Clearly then, there is a need to enhance the way in which its benefits are articulated to IT departments and the wider financial services community.
“There’s no doubt that cloud computing offers the potential to deliver significant benefits to financial institutions in terms of time and money,” said Chris Skinner, Chairman, The Financial Services Club. “The biggest issue is not with the technology, but with how vendors discuss it. First, too many vendors claim their solutions are cloud-related because anyone who offers any kind of outsourced service is calling it cloud right now. Second, the business applications, needs, benefits and fit are not being articulated well enough and, without such positioning, cloud may just go the way of other technology hype cycles, as in confusion and irritation. The technology industry needs to make the definition and relevance of cloud computing far clearer to banks and insurers, if this is to be a market that takes off.”
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