More than half of their institutions' transactions will be supported via cloud infrastructure by 2015, Gartner found.
A rapid shift in attitude
toward cloud banking is happening within the financial services industry,
according to Gartner. A survey by the IT research firm found that cloud
computing is the top priority for global financial service CIOs and that 39
percent of those surveyed expect more than half their transactions to be
supported via cloud infrastructure and software as a service (SaaS) by 2015.
The survey found that in
Europe, the Middle East and Africa (EMEA), 44 percent of financial service CIOs
expect more than half all their institutions' transactions will be supported
via cloud infrastructure by 2015, and 33 percent of them expect that the
majority of transactions will be processed via SaaS by 2015.
"Early cloud adoption,
especially in the FS [financial service] sectors, may have been limited to
non-core areas and proofs of concept, but it is set to go mainstream, moving
the heart of the business, transaction origination and processing, into the
cloud," said Peter Redshaw, managing vice president at Gartner. "Cloud banking
should be innovative, dedicated to this industry and transformative."
Among the most attractive
benefits of cloud banking is being able to deploy (in an economically feasible
way) the "champion-challenger" model. This adds a competitive dynamic to the
way processes are improved and chosen. As banks progressively replace people in
the value chain with algorithmic operations (AOs) to run processes and make
decisions, their intellectual property increasingly resides in these
algorithms. The value of people is not in running operations but in improving
the AOs, the report said.
"Cloud banking has the
ability to drive -creative destruction,'" Redshaw added. "As well as helping to
improve or optimize an existing service or process, cloud banking can provide
the wealth-or the freedom-to try completely new services and processes, such as
reverse auctions and third-party core banking systems, maybe even running them
in parallel. Successful new cloud services can displace the existing and
dominant process for design, distribution or transacting in a disruptive way,
rather than just incrementally improving them."
Although the technology is
still immature in many places, cloud is a top priority for banks that need to
continue a long-term focus on efficiency and support the CEO's growth strategy
by becoming more flexible and agile to support new business models, new markets,
new channels and new products, the report concluded.
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.