Our 2022 Banking Cloud Rotation Index revealed that workloads in cloud adoption have nearly doubled since 2021, with a significant increase in core workloads. However, most banks lack a comprehensive cloud migration plan, leading to slow progress and challenges in unlocking cloud benefits. The research highlights uneven adoption across functional areas and regions, with North America leading in data & analytics and core migration, Europe in enterprise functions, and growth markets focusing on surrounds. Key findings include:
- Enterprise: ~79% of banks have partially migrated enterprise applications to the cloud, with collaboration & office applications leading (53%) and IT & operations showing the largest year-on-year increase (16%).
- Data & analytics: Moving data workloads to the cloud is prioritized for revenue growth and AI application. Data access & reporting has seen the most migration (25%), while regulatory concerns and organizational change complexity hinder progress.
- Surrounds: Migration is progressing similarly to data & analytics, with mobile banking (29%) and online banking (18%) leading. Banks are hesitant due to perceived high risks and leadership's risk aversion.
- Core: Only 7% of core workloads are in the cloud globally, with regional disparities. North America has the most ambitious plans, while Europe lags. Consumer banking and payments lead core migration (8%).
- Challenges: Security & compliance, legacy infrastructure, operational change complexity, lack of cloud skills, high transformation costs, data sovereignty concerns, and misalignment between business and IT remain significant barriers. The cost of transformation is becoming less of a hurdle due to higher interest rates.
- Recommendations: Reframe the cloud migration case to maximize business value, establish a developer experience platform for security, and implement observability by design for cloud system monitoring.
- Industry Cloud: Pre-configured cloud services tailored for banking are emerging, offering plug-and-play applications that save time, overcome talent shortages, and reduce costs. The shift to industry cloud is expected within three years.
The report emphasizes the need for banks to develop comprehensive transformation plans and leverage industry cloud to accelerate their cloud journey, focusing on distribution, product innovation, and servicing models to meet evolving customer expectations and gain a competitive edge.
