Finance industry will start to shift core services to the cloud within three to five years to harness emerging growth opportunities, finds Frost & Sullivan’s Digital Transformation team.
Cloud adoption in the financial services industry in Europe is finally picking up pace. Overcoming initial hesitation caused by extensive legacy infrastructure, lack of clarity on regulations, and concerns related to compliance and data security, the industry will start to move core services to the cloud within the next three to five years, says Frost & Sullivan. It also says that cloud can assist stakeholders with challenges related to high cost, lack of innovation and personalisation in products and services, time to market, low consumer confidence, and lack of operational efficiency.
Cloud Platforms Powering FinTech in Europe, 2017, part of Frost & Sullivan’s Digital Transformation Growth Partnership Subscription, finds that by providing access to relevant data for better insights, Internet of Things (IoT) and cloud enable faster and better-priced financial services. The use of cloud platforms also drives partnerships, use of application programming interfaces (APIs), different pricing models, and free offerings for consumers. Leading cloud platforms include Amazon Web Services (AWS), Google Cloud Platform, IBM Bluemix, and Microsoft Azure.
“Start-ups using cloud at the core of their strategy are disrupting the way businesses are organized, forcing incumbents to rethink their cloud and data storage and usage strategies,” said Digital Transformation Research Analyst Deepali Sathe. “Emerging opportunities include new business models, such as peer-to-peer (P2P) payments, and data analytics to launch innovative products and services that will increase convenience for consumers. As regulators step in with specific cloud-related guidelines, adoption is expected to accelerate.”
Use of cloud enables access to a larger pool of data and new markets and business models will enable a variety of services and products, to drive several growth opportunities:
- Artificial intelligence (AI) and machine learning (ML) will help channelize services like authentication and card and account aggregation
- Cloud platforms will be fundamental to providing blockchain services
- Payments is the largest market sub-segment and the P2P model, which is cloud based, will see massive growth
- As the ecosystem evolves, the regulatory technology (RegTech) services market will take off as the catalogue of regulations for cloud adoption is expected to go beyond 300 million pages by 2020. Services such as anti-money laundering (AML) and Know Your Customer (KYC) will be leading applications