Global Banking Sector Cloud Spending Could Constitute 25% of IT Budgets by 2024

Global banks are expected to increase their spending on cloud services in the coming years. This is because the banking sector has realized how important and beneficial cloud services can be. According to BanklessTimes.com, global banking sector cloud spending might reach 25% of IT budgets in the next two years.

This increase in spending can be attributed to several factors. For one, banks are looking to improve their efficiency by working with different cloud service vendors. This way, they can get the best services without investing in their infrastructure. Additionally, fintech has made it possible for banks to offer cloud-based banking services to their customers. This has given rise to a new generation of banking customers who are more comfortable with online money transfers and other digital banking services.

Speaking on the data, the CEO of BanklessTimes, Jonathan Merry, said,

The banking sector has been one of the biggest laggards in terms of cloud adoption, but that is quickly changing. As banks look to improve their efficiency and lower costs, they are turning to the cloud. This is a major shift that will have a profound impact on the way banks operate in the coming years.

BanklessTimes CEO, Jonathan Merry

Diversification as a Strategy

While investing in cloud services, most banks rely on different cloud service providers. The move allows them to enjoy specialized services from skilled vendors. Also, it reduces the need to have an in-house team of experts to manage the cloud services. The banks can focus on their primary goals while leaving the management of cloud services to skilled third-party providers.

Banks are not new to the idea of diversification. In fact, it is one of the core strategies that banks have used for centuries to maintain a stable growth trajectory. Banks can reduce their dependence on a single provider by investing in different cloud service providers.

An advantage of using several cloud service vendors is that it gives the ability to scale. Also, it reduces the risk of downtime and vendor lock-in if they maintain interoperability. Vendor lock-in often happens when the customer cannot switch to another provider due to technical reasons.

Fintech Is the Face Behind Cloud Banking

Fintech has earned its reputation as a game-changer in the financial services industry. However, this partial picture only scratches the surface of the sector's full potential. Traditional financial services providers are also benefiting from the innovations offered by fintech.

Banks can use cloud computing to simplify tasks. Cloud computing is simpler for client onboarding, account setup, and regulatory compliance management. Commercial bankers can cut underwriting times by as much as 81% by adopting cloud-based solutions.

Cloud-based technologies allow banks to respond to changing market trends faster. Thus, they can introduce a new product that spreads wide and fast. Cloud solutions allow businesses to avoid expensive capital expenditures on IT infrastructure.

Despite the many advantages that banks can enjoy by investing in cloud services, they face the risk of data breaches. When customer data is stored on the cloud, it is more vulnerable to cyberattacks. Banks must ensure that their customer data is properly encrypted to prevent unauthorized access.

Monitoring the Cloud Services

Banks must double-check their cloud services often for any issues. This will give them a clear understanding of how the services are being used and their impact on business operations. Additionally, banks should also track the performance of the cloud service providers and take action if there are any issues.

The goal is to ensure that the cloud services are meeting the needs of the business and that they are being used in the most efficient way possible. By monitoring cloud services, banks can avoid any problems that might arise in the future.