The finance industry is a cautious one, and a new survey from Nutanix confirms that the sector trails others in multi-cloud adoption. However, as industries continue to embrace multi-cloud, the survey also finds that finance should follow. Here’s what the 2022 Enterprise Global Cloud Index survey and research report has to say.
Finance has always been cautious and conservative
As a highly regulated industry, the technology adoption curve in finance looks very different than in other industries—even those traditionally considered conservative. Finance also maintains heavy investments in legacy infrastructure, making integration with newer technologies trickier.
This isn’t just about customer experience. Financial assets are a frequent target of cybersecurity threats, and even a single threat incident could have far-reaching consequences for a bank or other institution. Because of that, financial organizations have been very cautious about jumping into new technology, preferring an older, slower, but safer infrastructure.
Massive digital disruption has changed that trajectory a bit. Traditional banks are seeing competition from digital-first institutions. Finance startups in lending, payments, and others are disrupting even processes no one thought would change. With cryptocurrency on the rise and governments pushing for an agile response, finance is rethinking how it adopts new tech.
Finance trails behind other industries in multi-cloud adoption, but that’s changing
Although the research found that fewer financial services had adopted multi-cloud than any other industry, it is expected to grow significantly over the next three years—nearly double based on survey responses. It will span a mix of public and private clouds.
This will be a significant change considering that right now, many finance organizations aren’t even using a cloud at all. In fact, 31% still leverage a non-cloud data center as their only infrastructure, and 59% use no public cloud services. The biggest reason for this delay is likely legacy investments and stringent regulations that would prevent them from moving as quickly to newer technologies.
However, signs point to early development that could soon reach a critical tipping point. Respondents do imply that flexibility and mobility would be significant factors in a decision to finally adopt multi-cloud as the finance industry continues to evolve to meet current customer demand worldwide.
Obstacles remain, although solutions are more readily available
Security is still the biggest concern. The finance industry is tightly regulated, and the penalties for security lapses could be severe. Other challenges include:
- Integration: 46% responded that connecting and operating across multiple cloud environments still prevent adoption.
- Lack of skill: A big majority were quick to respond that they didn’t possess the necessary IT skills to meet current business demands.
- Performance challenges: Nearly half of respondents cited performance challenges with network overlays as a critical bottleneck in deployment.
As the pandemic continues, the push to create flexible operations in finance could push companies to invest in the talent and infrastructure necessary to manage multi-cloud. This could account for the predictions that put multi-cloud adoption on a fast track for the next three years.
Creating intelligent infrastructure is also key to multi-cloud adoption
It’s not that finance doesn’t want to transition to technologies like multi-cloud. However, 98% of respondents have already moved an app to a new IT environment over the past year, so the momentum is building. Many of those moves are likely from a traditional data center to a private cloud.
Financial services wants to leverage the cloud—or at least newer IT products—to facilitate and simplify new app development. They also want to take advantage of newer multi-cloud offerings to remain competitive, especially as other companies and products continue to disrupt the industry. The adoption of containers would greatly facilitate moving to the cloud, and most respondents verify that containers will be necessary to their organization within the next year.
Top finance priorities over the next year see security in the number one spot, followed by improving multi-cloud management. Since the pandemic, more finance companies have increased security spending and investments as expected, but there’s another more surprising move.
64% invested in artificial intelligence tools designed to facilitate self-service. This simplification likely has improved the overall customer experience. It also enables big finance companies to manage a host of functionalities associated with online banking and other services. Another 64% invested in general infrastructure upgrades.
Operational resiliency is critical for the finance industry post-pandemic
According to the survey, 82% agree that some mix of public and private cloud architecture is ideal, although there must be interoperability for those to work. A top-of-mind focus for many of these organizations is operational resiliency. A hybrid multi-cloud model could offer just what finance companies need.
It would allow them to pivot quickly based on external disruption while maintaining productivity and delivering excellent customer experiences. Many of these institutions have also invested in other infrastructure updates, including artificial intelligence. This adds to the finance industry’s growing digital transformation.
A maturing multi-cloud field could help alleviate some concerns that companies have over security and integration. These hesitations are not unique to the world of multi-cloud adoption. However, finance, as a highly regulated industry, has taken a conservative approach to adoption.
Predictions from the survey see a tipping point, however. As more finance groups adopt multi-cloud operations, others will follow in an attempt to remain competitive. This is especially true if the benefits of multi-cloud capabilities pan out. Multi-cloud can prevent downtime and outages as well as limit the spread of security threats, in theory.
Investing in talent to maintain these systems, specifically as they relate to finance, might also be on the table. However, multi-cloud maturity could also finally bring simplification, which would go a long way to ensuring these predictions come to fruition. With easy integration and better security monitoring, there wouldn’t be much keeping the finance industry from adopting multi-cloud.
Elizabeth Wallace is a Nashville-based freelance writer with a soft spot for data science and AI and a background in linguistics. She spent 13 years teaching language in higher ed and now helps startups and other organizations explain – clearly – what it is they do.