Financial services firms still don't get Cloud Computing

 Cloud Computing is encountering some resistance from financial services organisations, although IT people are showing considerable enthusiasm for the delivery model’s operational efficiencies.

The Financial Services Club surveyed 235 financial professionals from retail, commercial and universal banks, buy and sell side firms, exchanges, technology firms, consultancies, payments institutions, infrastructure providers and more. It found that the main concerns expressed by survey respondents revolved around security and basic confusion over what Cloud Computing actually is.

For IT people in financial organisations, Software as a Service (SaaS) and traditional security are the main areas of interest for IT investment today, cited by 17.9% and 16.4% of respondents respectively. But Cloud Computing is thought likely to rise higher on the agenda three to five years away, probably moving into second spot for investability with 16.2% of the vote.

But the confusion over Cloud definitions is taking its toll on the results. The FSC notes that if SaaS and Cloud Computing are perceived as the same thing, then it already accounts for the biggest area of interest for investment today with 32.6% of the vote.

As for where Cloud Computing business applications and systems can be deployed, the answers were wide ranging, going from CRM in the front office, to enterprise data management in the middle office and accounting in the back office. But the impetus to adopt such technologies is still coming from the IT departments, not from the line of business people. 

Some 56.9% of respondents said it was their IT people or IT vendors that are advocating Cloud Computing, with 23.4% saying that the line of business executives are asking for it. One respondent claimed: "The reason why people aren't going out to Cloud Computing, apart from economic reasons, is that we get sold-at a lot by consultancies and vendors. Cloud computing is now being driven hard by a variety of vendors and some suspect it is so they can get better control of their licensing and licence access."

For those who have made some Cloud inroads, cost – not surprisingly – is the main justification for adoption in the financial services sector. Some 39% of respondents agreed that: ‘Cloud Computing's on-demand capability plays a strong part in building a variable cost model for a financial provider’, while a further 22% affirmed that: ‘The ability to use Cloud Computing as an operational expense is a major driver towards the take-up of Cloud Computing in financial services’.

“There’s no doubt that  Cloud Computing offers the potential to deliver significant benefits to financial institutions in terms of time and money,” said Chris Skinner, Chairman, The Financial Services Club. “The biggest issue is not with the technology, but with how vendors discuss it. First, too many vendors claim their solutions are Cloud-related because anyone who offers any kind of outsourced service is calling it cloud right now.

“Second, the business applications, needs, benefits and fit are not being articulated well enough and, without such positioning, cloud may just go the way of other technology hype cycles, as in confusion and irritation. The technology industry needs to make the definition and relevance of Cloud Computing far clearer to banks and insurers, if this is to be a market that takes off.”

But the survey still makes for some gloomy reading None of the 230 organisations said their company had completed a Cloud Computing project. In the retail banking sector 37.9% of organisations said they are not considering Cloud Computing while in the investment sector that figure is 24%.  Things can only get better…