Financial institutions continue a rush toward cloud-based digital transformation journeys, but they also continue to stumble due to a lack of clear direction and understanding of how to best travel down this technology path.

A recent survey and report from Capgemini found that 91% of financial services firms have adopted at least one cloud platform, which is a significant increase from the 37% that had reached that same goal in 2020. However, Capgemini’s analysis of survey data also found that just 12% of those firms “can be considered cloud innovators” that are using those platforms to drive top-line revenue growth.

More stressing is that 84% of financial institutions have embarked on cloud-based digital transformation efforts in an attempt to drive operational efficiency, but less than 40% of executives were “highly satisfied” with the outcome of their cloud investments. This included just one-third satisfied with that investment being able to reduce operational expenses; 27% finding an increase in scalability; 26% benefiting from accelerated innovation; 24% tapping into advanced data and analytics; 21% noting improved security and compliance.

Ravi Khokhar, global head of cloud for financial services at Capgemini, explained to SDxCentral in an interview that poor strategic planning is often the cause for these underwhelming outcomes.

“People have jumped to adopt cloud early on and then somewhere along the line they realize that, oops, I've spent a little more than what I expected,” Khokhar said. “Some people have used the lift-and-shift, re-host method to realize later on that my cloud cost is a little bit out of control.”

This realization has contributed to a significant portion of financial institutions having to adjust and extend their cloud-based innovation strategies.

“Many of them have the right vision. They even have the right scalable platforms. Many of them actually have established a very clear, diverse ecosystem, ecosystem of partnerships and ISVs. Some of them announced the cloud centric business outcome goal as well, and few of them actually have even achieved a tech maturity. So somewhere, if you were to put these things as the mile markers along the journey, they have crossed one or many of these mile markers. It’s just that they have not crossed the finish line,” Khokhar said. “That does not mean that they have not started. Obviously, we are calling it out in the report that they have all started. It's also a function of larger organizations take a little bit of runway to be able to cross that finish line.”

What can the cloud ecosystem do to help financial institutions? The Capgemini survey also found most financial executives perplexed by new technology options.

For instance, 81% of executives surveyed claimed a lack of “appropriate technology impedes their business goals.” These crucial technologies include AI, predictive analytics, and robotic process automation.

However, those financial executives also noted their organizations lack the internal skills to take advantage of those crucial technologies. Only 30% said they had the crucial skills necessary to take advantage of cloud-based predictive analytics data; 22% were able to take advantage of robotic process automation; and just 15% display AI capability maturity.

Khokhar explained that this delta is impacting top-line opportunities for financial institutions.

“Ecosystem is and has been the biggest catalyst of customers differentiating the top line,” Khokhar said. “I always associate ecosystem with top line and for an organization to become innovative. For example, people who source diverse data, and this could be reference data, people who integrate with the diversity of API ecosystem, whether it's for monetization or cross selling and up selling, are able to use this technology to make a significant difference. They are able to drive a very different product and service integration ecosystem through a diverse set of ecosystem players. … For us, it is an enabler for a very differentiated top-line outcome as compared to just for being in the business.”