The sector still runs a significant percentage of traditional datacenters and is struggling to find the best IT talents
Financial services firms today are facing mounting competitive pressure to streamline operations while delivering a differentiated experience to their customers, including leveraging new technologies such as blockchain. This FinTech revolution, combined with the growing burdens of regulatory compliance, data privacy, and security issues are pushing CIOs to fundamentally transform the technological underpinnings of their institutions.
In view of that, a new report released by Nutanix, many financial organizations are still struggling with modernizing their outdated legacy IT architectures and processes, resulting in inefficient operations and potential vulnerability with regards to data breaches. In fact, the report revealed financial services run more traditional datacenters than other industries, with 46% penetration. Despite their progressiveness on the hybrid cloud front, financial organizations have lower usage levels of private clouds than any other industry, at 29% penetration compared to the average of 33%.
The survey conducted by Vanson Bourne that polled over 2,300 IT decision makers worldwide including India, observes, like other industries, the financial services sector cites security and compliance as the top factor in deciding where to run its workloads. Nearly all respondents also indicated that performance, management, and TCO are critical factors in the decision. However, more than 25% cited these same factors as challenges with adopting public cloud. In other words, as is often the case with new IT solutions, the most important criteria are also the most difficult to achieve. This could account for part of the disparity between the high desire to adopt hybrid cloud, and today’s relatively low hybrid cloud penetration levels of just 21% in the financial services sector.
“Legacy systems and processes are significant impediments to the agility that today’s business demands. The BFSI segment in India has been a trailblazer in adoption of new tech such as HCI, Hybrid cloud, AI and ML,” Sankarson Banerjee, CIO, RBL Bank says, adding that at RBL, Hybrid Cloud is at the forefront of our IT vision and strategy for driving agility in responding to business and customer needs across channels and products.”
The positive outlook for hybrid cloud adoption globally and across industries is reflective of an IT landscape growing increasingly automated and flexible enough that enterprises have the choice to buy, build, or rent their IT infrastructure resources based on fast transforming application requirements.
However, challenges do exist. The report reveals that IT skills are a barrier to adopting hybrid cloud in the financial industry. While 88% of respondents said that they expect hybrid cloud to positively impact their businesses, hybrid cloud skills are scarce in today’s IT organizations. These skills ranked second in scarcity only to those in artificial intelligence and machine learning (AI/ML). Financial services respondents generally reported slightly greater deficits in skillsets across all categories except for AI/ML.
91% of financial services organizations surveyed said that hybrid cloud was the ideal IT model. This belief in hybrid cloud, and the fact that the sector has higher than industry average adoption of hybrid cloud, is likely driven by the recognized need for digital transformation. Yet conversely, the data shows a lower adoption of private clouds than the global average across industries. This might be explained by the fact that portions of the financial services space have been change-averse and also an indication of the overall complexity of modernizing existing legacy infrastructures.
“Increased competition combined with more stringent regulatory and compliance environments is forcing the entire industry to re-assess the capability and relevance of its current IT infrastructure,” says Neville Vincent, Vice President A/NZ, ASEAN and India, Nutanix.
Vincent however believes, the good news is that the industry is already seeing the customer and company benefits of hybrid cloud infrastructure. But he raises a word of caution to the CIOs. “The concern is that at just over 20%, there is still a long way to go to satisfy increasingly sophisticated and demanding customers and achieve the ultimate customer experience,” he concludes.