The financial industry is experiencing a major shift where institutions are now migrating to the cloud, moving away from slow manual processes and expensive on-premises systems to start benefiting from improved operational efficiencies, lower costs and improved customer experiences through to cloud computing.
The growing demand for cloud from enterprises is driven by rapidly changing customer expectations. This will fuel the growth of the financial cloud market, which a research company forecasts will grow at a compound annual growth rate (CAGR) of 24% between 2018 and 2028 to become a US$52 billion market.
Although migrating data to the cloud has been an ongoing process for several years, change is accelerating and accelerating, said Mark Hermeling, CTO of Alveo, a provider of market data integration and analytics solutions for financial services.
“The entire data ecosystem [is] are now migrating to the cloud… to increase scalability and elasticity, and therefore provide an element of future-proofing,” Hermeling wrote in an article on IBS Intelligence. “It is no longer just the data management solutions and processes that are coming to the fore. Upstream, data providers place data on public cloud platforms and downstream, application providers do so as well. »
Data vendors and providers of applications such as portfolio management systems, trading solutions, and risk management and settlement systems are increasingly pushing their products directly to popular cloud platforms such as ‘Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform, signaling a ‘change’, Hermeling said.
This trend is forcing financial services companies to accelerate their adoption of cloud computing as they seek to exploit the potential benefits of adopting this environment, including faster time to market for new services, the ability to break down silos and achieve greater operational efficiencies at lower costs, the ability to leverage big data and conduct deeper analytics, and the ability to deliver superior customer experiences and engagement.
Industry-specific cloud ecosystems are growing
While cloud adoption is on the rise, the market is still a long way from mainstream adoption, with the cloud currently accounting for only 10%-15% of enterprise IT spending, pointed out Sanjiv Gossain, senior vice president and global head of Google Cloud Business Group at Cognizant.
One of the reasons for this is the reluctance of companies to move critical business functions onto the environment, as these workflows are highly customized to the needs of their specific industry, be it regulatory compliance or… a high need for data confidentiality.
Therefore, the next stage of cloud market growth will be industry-specific clouds, predicts Gossain. Industrial clouds offer a set of tools, services, applications and configurable frameworks specifically tailored to a particular industry, whether it’s claims management, virtual care or loan origination. .
In the area of cloud computing in financial services, several announcements have been made over the past year.
Microsoft announcement in November 2021, the general availability of Microsoft Cloud for Financial Services, an industrial cloud designed for regulatory requirements and industry control frameworks, including integrated multi-layered security, compliance and trust commitments. It also includes new features such as analytics and artificial intelligence (AI) specifically tailored to the financial services industry.
In 2021, IBM continued to expand its IBM Cloud for Financial Services, to add new ecosystem partners and the integration of additional banks as customers, including the Spanish banking group CaixaBank. IBM announcement the general availability of its industrial cloud for the financial sector in April 2021, a cloud platform that it had been designing with Bank of America since 2019.
In November 2021, Goldman Sachs unveiled a partnership with AWS to launch a financial services data management and analytics service. Goldman Sachs’ Financial Cloud for Data targets hedge funds, asset managers and other institutional clients, enabling them to leverage the bank’s own AI tools and applications and access advanced quantitative analytics on world markets.
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