Public Cloud in BFSI Market Market Trends

Growth Drivers

• Increased migration towards cloud-based services: Cloud services reduce the need for extensive on-premise infrastructure, lowering operational costs. Cloud solutions allow BFSI organizations to scale resources quickly in response to changing demand, enhancing agility. Moreover, with the rise of remote work, cloud solutions enable seamless collaboration among teams and clients.
  
  Machine learning (MI) and artificial intelligence (AI) enhances forecasting capabilities, allowing BFSI organizations to process large volumes of data stored in the cloud for better insights, risk assessment, and decision-making. An estimated USD 35 billion was invested in AI by the financial services sector in 2023, with banking leading the way with more than 22 billion.Among the top banks in the U.S. and Europe, Capital One leads in AI deployment, followed by JPMorgan Chase and the Royal Bank of Canada. . Technology advancements, process automation, organizational reorganization, and product innovation are all part of the cloud transformation path, and they all work together to lower business risks and increase operational efficiency.
• Growing support from the governments: Governments are establishing regulations that encourage the use of cloud services, emphasizing data security, privacy, and compliance. For instance, the European Union’s General Data Protection Regulation (GDPR) provides guidelines that promote secure cloud practices.
  
  Many governments have adopted cloud-first strategies, encouraging public sector organizations to prioritize cloud solutions. The U.S. federal government’s Cloud Smart Strategy promotes cloud adoption to improve efficiency and service delivery. According to the U.S. Department of the Treasury, the use of cloud computing has been an important element of the U.S. Government’s longstanding effort to modernize its IT infrastructure and improve cybersecurity across U.S. agencies.   An Executive Order was issued in May 2021, improving the Nation’s Cybersecurity, articulating a vision of Zero Trust Architecture for Federal Government networks.
• Operational efficiency: Public cloud eliminates the need for substantial upfront capital investment in on-premises hardware and infrastructure, allowing BFSI organizations to shift to a pay-as-you-go model. By leveraging cloud services, organizations can optimize operational costs through automation and reduced maintenance expenses, enabling them to allocate resources more effectively. Moreover, organizations also found that moving workloads to the public cloud lead to Total Cost of Ownership (TCO) savings of 30-40%.

Challenges

• Increased data security issues: Public cloud adoption in the BFSI industry is hindered by the deployment of various third-party services that are a component of cloud computing and may give rise to security or confidentiality concerns. Mobility, networks, endpoints, databases, cloud computing, online applications, and virtualization are among the other infrastructures that are addressed.
• Lack of technical expertise: There is a notable shortage of professionals with cloud computing expertise, making it difficult for BFSI organizations to implement and manage cloud solutions effectively. Moreover, a lack of skilled personnel can foster resistance to change among existing staff, as employees may be unfamiliar with new technologies and hesitant to adopt them.