Global spending by financial services companies on cloud computing in 2023 amounted to $93.2bn. By 2028, it will have grown to $205 billion at a compound annual growth rate (CAGR) of 17%.

The cloud is now the dominant model for delivering and maintaining enterprise IT resources. Sharing IT infrastructure and services creates a flexible, scalable, and on-demand IT environment.

Economic pressures are a major issue for financial services

Migration to the cloud can help financial service providers reduce costs and potentially increase revenues. This is particularly beneficial as financial services companies are under growing pressure on their bottom lines due to higher interest rates, tighter regulatory scrutiny, and slow economic growth. Using cloud services instead of on-premises IT can help companies significantly lower operational costs. The cloud operates on a usage-based subscription model, meaning businesses only pay for the processing power and storage they use, allowing them to scale their resources up or down as needed. However, financial pressures remain a challenge and are likely to affect profitability. While adopting cloud technology is a necessary long-term investment, it is unlikely to enhance profitability by the end of 2025.

Cloud computing is essential for digital transformation

The advantages of using cloud computing in the financial services sector are extensive. It can help companies modernise infrastructure, scale operations, reduce costs, improve resiliency, and build new revenue streams and services. Cloud-based systems have helped companies adapt to the rise in remote working, increased customer app use, and reduced associated security and fraud risks. It is now a question of how, not if, banks should migrate to the cloud. Ensuring a smooth, tailored, and targeted cloud migration is essential, especially in a heavily regulated industry like financial services.

Further information and sample content relating to the report: Cloud Computing in Financial Services: Strategic Intelligence is available via this link.