Cloud not only reduces costs for banks, but also boosts profitability

07 March 2022 2 min. read
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Cloud computing helps banks find savings on their bottom line – but a new study suggests the more important factor in their use is that they can boost profitability. More than half of financial services leaders cite increased future revenues as a leading reason to deploy cloud technologies.

Cloud computing is the delivery of computing services – including servers, storage, databases, networking, software, analytics, and intelligence – over the Internet to offer faster innovation, flexible resources, and economies of scale. Due to its adaptability, and reduction on physical storage, the cloud offers major savings to firms of all shapes and sizes.

As a result, cloud computing is moving to the forefront as a focus for IT leaders, C-suite executives, and board members across all industries. In particular, banking and capital markets leaders increasingly recognise that the cloud is more than a technology; it is a destination for banks and other financial services firms to store data and applications and access advanced software applications via the internet.

Expected cloud benefits in 2 years

In line with this, a new study from consulting firm Capco and Wipro FullStride Cloud Services suggests many leading banks know that savings are far from the only benefit on offer from the cloud. According to the study, while 48% of banks expect cloud computing to lead to decreased costs in the coming two years, as many or more expect it can boost income.

Around 66% of banks believe cloud benefits will quickly include improved revenue – and leading on from this, 47% think this can boost profitability. Across the whole financial services sector, meanwhile, the number of professionals (also including capital markets and insurance leaders) who expect the cloud can boost profits rises to 62%.

Cloud promotes revenue increases three years after implementation

In fact, firms who have implemented cloud computing have already enjoyed large gains due to the technology. In the three years after implementation, very few financial entities said the cloud had no impact on their revenue. Only 7% of leaders in banking or capital markets said there had been no related change in revenue – while 15% expect that revenue increased by between 6% and 10%.  

Even so, firms may still be underestimating what the cloud can do for them. Peter Kennedy, Partner & Cloud Lead at Capco, suggested that financial services firms often do not consider the total cost benefits when measuring return on investment on the cloud.

He noted, “Only 40% cited benefits arising from decreased non-IT costs, while even fewer measured reduced carbon footprint, accelerated time to market, or improved productivity.”