Cloud Now A Growth Driver For BFSI Sector
There is a growing demand for cloud technology among retail banks and insurance companies, according to new research.
While cloud is seen to have reached a maturity level in these industries, the findings of the SAP-Ovum survey reveals that Software-as-a-Service (SaaS) solutions are now being considered in almost all new IT investment projects.
According to Daniel Mayo, Chief Analyst of Ovum. “The cloud is now a growth driver for banks and insurers, rather than a medium just for bringing costs down. They are buying SaaS solutions to simply operations, develop better products and quickly enter new markets. The industry has made it clear that SaaS will radically change the banking and insurance landscape.”
Banks and insurers face increasing pressure from new competitors, tighter regulatory requirements and highly sophisticated customers. These companies now realize that the cloud can create efficiencies and protect their competitive position, especially in the case of SaaS. Previously restricted to horizontal functions, the study reveals that SaaS is already supporting a majority of functions within the line of business as evidenced by 42 percent of banks and 36 percent of insurers.
Some of the highlights from the survey includes:
- IT decision makers in retail banks expect to see the greater future investment in cloud. In total, 42 percent expect SaaS spend will “increase significantly” over the next 18 months, compared to 33 percent among insurers.
- SaaS is the preferred option for 27 percent of banks and insurers, with a further 42 percent considering it for every IT project.
- Within the lines of business, 49 percent of decision makers expect SaaS to see increased or significantly increased investment over the next 18 months. This will be focused most heavily on operational functions within insurers and delivering growth objectives for banks.
- Among IT decision makers, 80 percent agreed with the view that SaaS enables organizations to respond more rapidly to market opportunities. Another 79 percent agree that SaaS makes it easier for new entrants to the market.
- Banks and insurers see concerns over regulatory compliance (36 percent), concerns over reliability and availability (35 percent) and the difficulty of integration SaaS with existing systems (31 percent) as the most important barriers to the greater adoption of SaaS.
The surveys were conducted with IT decisions makers in 400 banks and insurance companies from North America, Europe, Asia Pacific, the Middle East and Latin America over telephone and mail.
To access the complete research report, Click Here.
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