Infosys, in its latest report, said the banking sector is among the top industries likely to increase investment in cloud technology over the coming year. Despite this readiness, less than half of existing cloud commitments have been fully utilised.
The report, Cloud Radar: Banking Industry, sheds light on the state of cloud adoption and spending within the financial services sector. It surveyed over 2,500 respondents from companies across nine industries in countries including Australia, France, Germany, New Zealand, the UK, the US, and the Nordic region. Of these, 399 respondents were from banks.
In the next six to 18 months, data and AI will be a key incentive for banks to shift to cloud, Dennis Gada, Infosys executive vice president and financial services segment head said.
The generative AI phenomenon of 2022 showed banks the potential to use AI to unlock value in their data. They conducted experiments and proofs of concept in the last year and in early 2024. Finally, it’s time to put that potential to work. “Now everybody wants real scaling up of data and AI via cloud,” Gada said.
However, the report pointed out that only 49% of cloud commitments have been consumed, indicating significant room for improvement in cloud adoption and usage.
Cloud services are primarily being employed in areas like loan origination, underwriting, and managing card payment systems, according to the report.
But when it comes to more critical functions such as fraud prevention and risk management, cloud adoption has been slower. This suggests that while banks are using cloud technology for operational tasks, they have yet to fully tap into its potential for enhancing security and risk management.
Further, the report showed that 44% of cloud-related decisions are made in silos, which can lead to missed opportunities and inefficiencies. This fragmented approach to cloud strategy could hinder banks from realising the full benefits of their cloud investments and could also increase operational risks, the report said.
Despite these challenges, the report showed a positive trend toward infrastructure modernization. Nearly 75% of banks indicated that their cloud migration efforts have been either “very effective” or “extremely effective,” signaling optimism about the future of cloud adoption in the banking sector.