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Accenture Financial Services Technology AdvisoryCloud...Whats Stopping You?
Financial Services: An Industry Facing Unprecedented Challenges 5
Emerging Industry Trends 6
Barriers to Cloud Adoption: The Top Concerns in FS 8
EU and Global Regulator Landscape 14
Embracing Cloud as the Game-Changer 16
In Summary: No Time to Lose 19
Why financial services organisations top concerns about cloud computing no longer apply
1 Everyday Bank: Positioned to fulfil all their customers daily financial and non-financial life needs, through a customer-centric digital catalogue. See The Everyday Bank A New Vision for the Digital Age, Accenture, 2015. Access at: https://www.accenture.com/us-en/insight-everyday-bank-new-vision-digital-age-banking 2 Digital Enabled Capital Markets: Enabling cloud throughout their digital structures, spanning from trading, wealth and asset management, to communication hubs. 3 Connected Insurer: Creating direct & multichannel relationship with customers, leveraging the IoT and the full cloud stack. 4 The Everyday bank. The role of cloud computing in the future of banking, Accenture, December 2015. Access at: https://www.accenture.com/ca-en/insights-cloud-computing-banking 5 A new era in capital markets. Cloud computing changes the game, Accenture, 2014. Access at: https://www.accenture.com/t20150523T055756__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Technology_2/Accenture-A-New-Era-In-Capital-Markets.pdf 6 A new era in insurance Cloud computing changes the game, Accenture, 2012. Access at: http://insuranceblog.accenture.com/wp-content/uploads/2013/07/Accenture_Cloud_Computing_Changes_the_Game.pdf
Today, financial services (FS) organisations in the UK and Ireland (UKI) are facing unprecedented challenges as they seek to respond to increasing demands from customers and shareholders, and intensifying pressures to drive continued cost efficiencies while meeting ever greater regulatory requirements.
To navigate through these challenges, FS organisations are focusing increasingly on creating and enabling a new ecosystem that unites and integrates customer, digital and product-centric models as a single entity.
By taking this step, banks create an opportunity to become a customer-centric Everyday Bank,1 while capital markets firms can transform into a Digital Enabled Capital Markets2 model and insurance firms into a Connected Insurer.3 In each case, this
transformation brings FS firms services to the next level and positions them to better fulfil their customers daily financial and non-financial life needs. These evolved models spring from the fact that banks will be able to operate on a customer-centric model; capital markets organisations will restructure themselves, digitising trading, wealth and asset management and communication hubs; and insurance firms will create direct and multichannel relationship with customers, leveraging the full stack of cloud capabilities.
To create these new models and realise the potential benefits, FS organisations should simplify their IT infrastructures, accelerate time to market and drive innovation enabling them to generate unmatched business value. Cloud computing presents unrivalled opportunities to deliver against these imperatives, while
simultaneously improving efficiency, agility and scalability, and reducing total cost of ownership (TCO).
When FS organisations began leveraging cloud technologies some years ago, the initial focus was on private cloud solutions, owned and managed in-house. However, in recent years, public and hybrid cloud solutions have increased in popularity,4 because of their ability to leverage a combination of different deployment and service models, with a shift towards Platform as a Service (PaaS) and Business Process as a Service (BPaaS).5 Data analytics services sourced from the cloud are also generating significant and growing business value for FS organisations.6
...is Turning Increasingly to Cloud Computing
Financial Services: An Industry Facing Unprecedented Challenges...
FS organisations in banking, insurance and capital markets have all begun the journey towards cloud enablement (see Figure 1). However, the fact that theyre currently following separate digital and cloud agendas, mainly as a result of limited guidelines provided for cloud-based services from regulators7 is creating a risk that they will merely adopt advanced virtualisation projects, instead of creating the desired unified ecosystem. Having noted this issue, the UK
Financial Conduct Authority (FCA) released its guidance8 on cloud computing in November 2015, proposing a set of guidelines on how cloud could be approached by FS firms while ensuring that risks are appropriately identified and managed. Most importantly, the FCA identified existing loopholes and voiced its support for cloud enablement through both private and public cloud services.
Emerging Industry Trends
Figure 1: Percentage of FS firms that have used cloud services at least once, before 2015 Source: Secure Use of Cloud Computing in the Finance Sector, European Union Agency for Network and Information Security, December 7, 2015. Access at: https://www.enisa.europa.eu/publications/cloud-in-finance
7 The ING Group Transforms HR in the Cloud with ServiceNow, ServiceNow, News Release, March 24, 2015. Access at: http://investors.servicenow.com/phoenix.zhtml?c=251291&p=irol-newsArticle&ID=2028127 8 Who knew a bank could be this connected? Salesforce. Access at: http://www.salesforce.com/customers/stories/wells-fargo.jsp. 9 Secure Use of Cloud Computing in the Finance Sector, European Union Agency for Network and Information Security, December 7, 2015. Access at: https://www.enisa.europa.eu/publications/cloud-in-finance. Proposed guidance for firms outsourcing to the cloud and other third-party IT services, Financial Conduct Authority, Guidance consultation 15/6, November 2015. Access at: https://www.fca.org.uk/static/documents/guidance-consultations/gc15-06.pdf 10 Secure Use of Cloud Computing in the Finance Sector, European Union Agency for Network and Information Security, December 7, 2015. Access at: https://www.enisa.europa.eu/publications/cloud-in-finance. 11 Secure Use of Cloud Computing in the Finance Sector, European Union Agency for Network and Information Security, December 7, 2015. Access at: https://www.enisa.europa.eu/publications/cloud-in-finance. Some Banks are Heading to the Cloud - More are Planning to, Forbes, June 26, 2014. Access at: http://www.forbes.com/sites/tomgroenfeldt/2014/06/26/some-banks-are-heading-to-the-cloud-more-are-planning-to/#5dc2c9125991.
In retail banking, cloud investment is currently centred on private cloud and Software as a Service (SaaS), but public cloud is gaining ground in back-office functions. For example, ING bank recently deployed a ServiceNow, Inc. self-service HR portal solution using public cloud,7 while interest is rapidly increasing in cloud-based SaaS solutions for CRM, with examples including Wells Fargo & Companys use of Salesforce.com, inc.s customer relationship management service in social channels.8
In capital markets, use of SaaS is growing, but is not yet on the same scale as in retail banking. However, capital markets firms are collaborating on an initiative to realise cloud-
enabled unified communication hubs. There is also an increasing appetite among FS players to use Business Process Outsourcing (BPO) offerings in the form of BPaaS in areas such as post-trade processing, with significant amounts of capital being invested in cloud enablement.
In insurance, meanwhile, the perceived lower level of regulation is fostering faster and more aggressive cloud enablement. To date, interest has focused on the emerging Internet of Things (IoT) and enablers such as telematics, a technology that is being widely
used in personal and commercial vehicle insurance and set to have a major impact on the UK insurance market. These disruptive changes will lead to more personalised insurance coverage, benefiting both insurers and customers.
At the same time, regulators worldwide are increasingly embracing cloud provision9 as a viable option for the companies they supervise. Recent research10 shows that when this happens, cloud adoption by FS firms rises significantly11 a trend that points to strong pent-up demand for cloud in FS.
Figure 2: Future adoption trends of Public and Private solution