Cloud budgets continue to grow.
Cloud has become a key part of the strategy of banks to attain and maintain a competitive advantage in digital financial services. This is a big leap from many years of hesitating on cloud, owing much to initial regulatory hurdles that banks had to overcome.
According to the research, cloud budgets continue to grow, with 92 per cent of the Asia/Pacific banks surveyed planning to increase their cloud spending in 2022 compared with 89 per cent in 2020. Asia/Pacific banks are at an inflection point for hybrid and multicloud environments. Around 93 per cent expect to operate in hybrid and multicloud environments in 2023.
“Cloud is now seen as the underlying architecture for business applications, even those deemed mission critical. The key imperative now is to prioritize which application-based workloads will give more business value once they are on the cloud,” says Michael Araneta, Associate Vice President for IDC Financial Insights
The report pointed to horizontal technologies, which are applications not specific to financial services, that appear to be moved as the priority toward cloud. The top five of these applications and business capabilities are finance applications, back-office, contact center, enterprise resource planning, and email.
There are however applications specific to banking that are being moved to the cloud. The top five of these financial technology applications and business capabilities are consumer/SME mortgage origination, cybersecurity for banking apps, fraud detection and prevention, staffed channels, and digital service channels.
“Nothing is as mission critical as core banking systems, with applications related to core banking also cited as being primed for the cloud. The use of cloud for core banking systems will come from two directions: from banks building digital banking brands that are standing up digital-native core systems and from legacy banks modernizing their legacy core banking systems through the abstraction of the business logic of key functions that are used to be part of a monolithic core (e.g., deposits, lending, payments). These applications are refactored into microservices and then on a piecemeal basis migrated to the cloud,” Araneta added.
