The slow transition to the cloud by banking is hindering the sector in its ability to take full advantage of digital technologies.
That's according to new research from Accenture, based on a global survey of banking executives across Asia Pacific, Africa, Europe, South America and North America with responsibility for technology and information security.
The findings indicate that although the majority of banks recognise the advantages of building new IT systems on cloud platforms, many have been slow to transition to the cloud, with only one in four claiming to have a solid adoption strategy.
“To drive growth, banks must provide customers with a stellar digital experience, and cloud is a core component to accomplishing this,” said Andrew Poppleton, head of technology advisory within financial services at Accenture.
"Cloud provides the capacity and agility that banks need to use big data and analytics to identify the best products and services for their customers and to quickly develop and get them to market, which is crucial to keeping pace with competitors in this digital age."
Furthermore, through cloud adoption bankers expected a number of key benefits, namely, the ability to scale their IT operations up - and down - as needed (cited by 77 per cent) and the ability to launch applications faster (63 per cent); only 49 per cent cited cost savings as a top benefit.
Despite these benefits, 43 per cent of the bank executives surveyed claimed their organisation lacked a cloud adoption strategy or they have only started implementing basic cloud practices.
Furthermore, only 26 per cent of the executives surveyed have what Accenture considers a solid cloud-adoption strategy, which includes ongoing measurement of efficiencies for continuous improvement.
“The cloud provides extraordinary opportunities for banks to transform how they conceptualise, develop, manage and sell their products and services - but this cannot be accomplished without the right talent in place to advance the cloud agenda,” said Chad Duncan, a managing director of technology within financial services at Accenture.
"At the same time, our research shows that many banks still lack a comprehensive strategy to rapidly shift to the cloud, leading to limited deployment.
"Because cloud is fundamental to how banks will conduct business and grow in the future, it is time to move past the experimental phase and put an aggressive cloud transition strategy in place."
The report found that for many banks their initial focus in regards to the cloud has traditionally centred around infrastructure-related functions, with the survey finding that the two most-common functions that banks have moved, or are in the process of moving, to the cloud are disaster recovery (80 per cent) and data back-up (74 per cent).
Furthermore, progress was cited in identifying which legacy applications are good candidates for early migration to the cloud, with the top three being retail customer access channels, such as email, mobile, internet and ATM (65 per cent); foreign exchange (60 per cent); and regulatory reporting (40 per cent).
The report also found that the two impediments holding back widespread cloud implementation for banks include existing legacy IT infrastructure as well as the skills gap.
In fact, nearly all bank executives surveyed said they expect that transitioning to the cloud will require new IT operating models with more than two-thirds (69 per cent) intend to operate in a ‘bimodal’ way - maintaining key legacy systems and those not easily replicated on cloud platforms, while transferring other systems and adding new applications in the cloud.
Additionally, the skills gap was seen as a major impediment despite nearly nine out of 10 bankers (89 per cent) surveyed rated the skills and experience of their employees in charge of cloud strategy and management as ‘mature’ or ‘advanced.’
However, they were less confident about their teams’ ability to manage cloud infrastructure and applications.
Furthermore, more than half (55 per cent) rated their team’s skill level as ‘novice’ or having ‘no experience’ in managing cloud infrastructure, and 40 per cent gave the same skill rating for managing cloud applications.