We found that an ambition and execution gap are the two major obstacles to achieving cloud’s full potential. First, over half of the executives and non-executives still undervalue the cloud’s transformative potential, thus limiting the business transformation ambition with the cloud. Second, our participants believe they lack execution speed and don’t fully benefit from existing investments due to security concerns and a lack of skilled people.
Only 44 percent of participants said their business leaders understand the business-related possibilities and opportunities of cloud, and just 34 percent said the same about their non-executive board.
Q: To what extent do business/strategy leaders and the non-exec board at your bank understand the business-related possibilities and opportunities of cloud? (Figure 9)
When asked about the benefits they believe cloud can deliver, business stakeholders—including CEOs and those that work in strategy, digital, or transformation—see a much narrower range of benefits than those in the IT or finance team. For example, 51 percent of respondents that work in the IT function see the ability to automate processes as a primary benefit of cloud, compared with just 36 percent of business stakeholders. In addition, 45 percent of finance function leaders consider cloud’s ability to transform business and operating models as a main benefit, compared with just 33 percent of business leaders.
There is a huge opportunity for bank leaders to drive innovation across the bank by gaining a greater understanding of the full potential of cloud technologies to support innovation for their customers whilst managing risk.
This disconnect needs to be resolved. If senior leadership at a bank is invested in cloud transformation, it will spread to teams throughout the organization. It is crucial for people working on cloud migration to get clear support from business leaders, especially in the early stages of transformation.
More than half (52 percent) of banks admit that they have not maximized the business benefits of their cloud investments to date and a sizeable minority (40 percent) admit that they are not progressing as fast as they should be.
Q: To what extent do you agree with the following statements regarding cloud strategy, investment and implementation at your bank? Rating only (Figure 10)
Our research shows that the major obstacles to banks’ cloud adoption include concerns over data security and fraud, difficulties in hiring people with the right skills, and limited understanding of the business benefits to making this shift.
All these hurdles can be overcome.
Q: Which of the following, if any, are significant obstacles to adopting cloud at your bank? Ranked in order (Figure 11)
Banks identify security concerns, including data security and fraud, as the most significant obstacle to adopting cloud (see Figure 11).
In general, the base security of cloud is stronger than most on-premise infrastructures. But it’s not clear cut. On-prem environments can reach the default level of cloud security through lots of know-how and effort. And weak cloud configurations without the proper expertise can expose vulnerabilities. This is especially true when data is transferred to the cloud. It’s important for banks to partner with a cloud provider that prioritizes security at the design stage and has security engineers working around the clock. Google Cloud, for instance, takes advantage of industry megatrends—such as increasing deployment velocity and economies of scale—to compound the advantages of cloud security [source: Megatrends drive cloud adoption - and improve security for all, 2022]. They also apply the same security levels as Alphabet allowing customers the benefits of data encryption at rest, in transit and in use.
In addition to the obvious—such as engaging with regulators to understand how their thinking on cloud is developing—banks should pay attention to how their counterparts in other countries have succeeded or failed in different regulatory environments. Banks in the United States, for instance, have a great deal to learn about navigating the perils and promises of open banking from British financial services firms. It’s important to adapt one’s long-term approach strategy for security and compliance to burgeoning regulatory frameworks.
Banks identify a lack of cloud expertise as their second greatest obstacle to adopting cloud. To plug this shortfall, IT teams need to work with their HR departments to determine the specific skills they need and the optimal balance between recruiting new employees, consulting with external experts and training existing team members. The technology skills that organizations need are constantly changing. It is important for banks not to rely too heavily on external hires to fill talent gaps. As technology changes, those new hires will develop skills gaps of their own. Banks need to keep training and upskilling their existing employees to ensure the entire organization is moving in the right direction.
As Publicis Sapient CEO Nigel Vaz points out, replacing talent is costly, and making decisions based on short-term challenges can slow organizations down.
The answer lies with continually reskilling and upskilling your existing talent. Curiously, given the importance and potential impact of addressing the technology skills gap, many businesses are slow to respond.
There are also important disagreements between groups within banks over the benefits of accelerating cloud adoption, often related to the differing levels of understanding. Business leaders in particular have less appreciation for the more transformative possibilities of cloud adoption and focus instead on cost reduction.
This points to the business side’s general lack of understanding when it comes to the longer-term benefits of cloud migration and business transformation as opposed to simply technology and process transformation. Addressing these knowledge gaps on the business side is vital if the truly transformative benefits of cloud adoption are to be captured.
The aforementioned gulf between technology heads (among whom two-thirds understand the business benefits of cloud adoption) and business leadership (among whom just one-third share that understanding) partly explains the gap between the ambition to capture the benefits of cloud migration and the extent to which it’s achieved.
IT leaders need to devote time to explaining the potential business benefits that cloud can deliver. In return, they will be rewarded with increased executive sponsorship and ultimately more investment budget.
Q: Which of the following do you consider to be the main benefits to your bank of adopting cloud? By function (Figure 12)
