In a crucial shift, the cloud is moving from an efficiency play to a growth driver. Financial services leaders cite increased future revenues (62%) and improved future profitability (52%) as leading reasons to deploy cloud technologies, according to a fresh
analysis of a Wipro FullStride Cloud Services study conducted by Capco.
Wipro FullStride Cloud Services’ 2021 global survey and report – Making Business Thrive: A Cloud Leader Roadmap for Achieving 10x ROI – incorporated 1,300 responses from C-suite executives and key decision-makers across 11 industries, of which 26% were drawn
from financial services — specifically, banking, insurance and capital markets, including wealth advisory and asset management firms.
The survey results give financial services leaders real numbers around benefits they can expect from a well-executed move to digital. Capco found that the acceleration of technology roadmaps driven by the pandemic has prompted more than half of leaders surveyed
to invest more in cloud to improve customer experience (62%), increase business continuity and resilience (49%), and facilitate remote work and collaboration (38%).
Almost all financial services institutions (FSIs) surveyed report revenue benefits over three years due to using cloud to create new products, services, and business models. These gains average at around 4%, although about a third of firms anticipate revenue
increases of up to approximately 15%.
As one banking executive commented: “Customer relationship management using a PaaS solution via cloud technology is our organization’s most successful revenue-generating cloud initiative.”
Other executives pointed specifically to automation as a cloud enabler that provides quick returns. They touted wins with automation in policy governance (insurance), claim settlement and operational efficiency (insurance), market settlements and clearing processes
(capital markets) as effective ways to generate more returns.
FSIs tend to see cloud investment paybacks over 24 months or less from a data center perspective and for migration of legacy systems. For modernization and cloud-native development, results tend to be more variable and spread over a more extended period.
The biggest eye-popper: Return on investment (ROI) generated from the cloud multiplies tenfold as firms advance on their cloud journey. While beginners see a 6% annualized cloud-related ROI, this grows to 44% for advancers and 59% for leaders. “Cloud adoption,”
an insurance leader said, “gives (us) the ability to convert fixed infrastructure costs into variable costs.”
Cloud usage drives significant cumulative bottom-line gains. While beginners see a lift of about 2.6% in total revenue gains and cost reductions when starting cloud computing, cloud leaders get a boost of up to 12%.
Here is another financial benefit: Hyperscalers — the leading cloud platform providers — are helping fund this digital future. They pick up all or some of the upfront and implementation
cloud costs for about three-quarters of firms, covering 78% of related software costs on average.
Companies often do not consider the total cost benefits when measuring the ROI on the cloud. Only 40% include benefits from decreased non-IT costs, and even fewer measure reduced carbon footprint, accelerated time to market, or improved productivity.
Asked to identify the main benefits from using cloud beyond revenue and profitability gains, the list-toppers were:
- Increased market share/expanded client base
- Improved customer satisfaction and retention
- Greater teamwork and stronger corporate culture
- Improved planning and decision-making
- More effective risk management and compliance
COVID will eventually fade, but the remainder of this decade will only see disruption escalate. That’s because the pandemic unleashed new consumer expectations. They want 24/7 access to their financial resources from anywhere, and products hyper-personalized
to their lifestyle choices.
For FSIs to meet those requirements and grow they will need to be driven by data, faster to market, and agile and resilient in execution. Some industry giants will fade. Some unknown companies will ascend. Products not even conceived before today will win the
hearts and wallets of financial consumers. The companies best designed to compete during this turmoil will be crowned new industry leaders.
And those companies will be thriving in the cloud.