Cloud adoption in the financial services industry in Europe is finally picking up pace. Overcoming initial hesitation caused by extensive legacy infrastructure, lack of clarity on regulations, and concerns related to compliance and data security, the industry will start to move core services to the cloud within the next three to five years. Cloud can assist stakeholders with challenges related to high cost, lack of innovation and personalisation in products and services, time to market, low consumer confidence, and lack of operational efficiency.
Frost & Sullivan’s Digital Transformation research finds that by providing access to relevant data for better insights, Internet of Things (IoT) and cloud enable faster and better-priced financial services. The use of cloud platforms also drives partnerships, use of application programming interfaces (APIs), and different pricing models. Leading cloud platforms include Amazon Web Services (AWS), Google Cloud Platform, IBM Bluemix, and Microsoft Azure.
“Start-ups using cloud at the core of their strategy are disrupting the way businesses are organised, forcing incumbents to rethink their cloud and data storage and usage strategies,” says Digital Transformation Research Analyst Deepali Sathe. “Emerging opportunities include new business models, such as peer-to-peer (P2P) payments, and data analytics to launch innovative products and services. As regulators step in with specific cloud-related guidelines, adoption is expected to accelerate.”
Use of cloud enables access to a larger pool of data and new markets and business models will enable a variety of services and products, to drive several growth opportunities:
- Artificial intelligence (AI) and machine learning (ML) will help channelise services like authentication and card and account aggregation
- Cloud platforms will be fundamental to providing blockchain services
- Payments is the largest market sub-segment and the P2P model, which is cloud based, will see massive growth
- As the ecosystem evolves, the regulatory technology (RegTech) services market will take off as the catalogue of regulations for cloud adoption is expected to go beyond 300 million pages by 2020. Services such as anti-money laundering (AML) and Know Your Customer (KYC) will be leading applications
“The cloud ecosystem is a complex web of stakeholders,” notes Sathe. “Innovations across the board will make available the best possible solutions and competitors will compete to strike a balance between security and innovation, even as commoditisation of services occurs rapidly.”