91% of banks and insurance companies have now initiated their cloud journey. This is a significant increase from 2020, when only 37% of firms had embarked on their cloud transformations. Despite this high rate and its corresponding investment does not translate to effective cloud adoption at scale. More than 50% of firms surveyed have only moved a minimal portion of their core business applications to the cloud. That is according to The Capgemini Research Institute’s World Cloud Report on Financial Services.

89% of financial services executives believe that a cloud-enabled platform is crucial for delivering the agility, flexibility, innovation, and productivity necessary to meet escalating business demands. Yet, most firms are still not cloud-native and instead tend to opt for a “lift and shift” approach that hinders the full benefits of cloud-based systems’ scalability and flexibility advantages.

62% of financial services firms have started using AI

Financial services firms are also using AI with a target to utilise it across the full value chain in the next two years. Despite their potential, AI, including generative AI and machine learning technologies, are yet to be used at scale in the financial services industry and therefore are having limited impact. The research found that to date much of the cloud investments have been applied towards modern, user-friendly, AI-based, customer-facing applications. Fewer investments are made in back-end core processing systems that are providing inputs to consumer-facing front-end applications, resulting in a poor overall user experience.

According to the report, the migration of internal core systems to suitable cloud-enabled ecosystems and platforms is critical to unlock the complete potential and efficiency of AI and generative AI. This will spark the emergence of a wider range of business growth opportunities over the coming years. Firms are testing their generative AI use cases across customer onboarding, credit analysis, financial planning, policy renewals and support client servicing models.

Ravi Khokhar, Global Head of Cloud for Financial Services at Capgemini, said: “For today’s financial services organisation, ignoring the cloud is simply not an option. Moving to the cloud requires looking beyond a cost-savings approach and being centred around driving innovation to gain a competitive edge. As companies race to adapt and implement generative AI, they need to be mindful that there will be no future AI benefits to be realised without cloud-enabled systems. By defining and establishing an effective cloud target operating model at scale, the full potential of these transformational new technologies can be harnessed.”

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