Most financial institutions have a cloud presence today, but implementation in the financial-services sector is still in its early stages. Only 13% of financial-services executives polled in a recent McKinsey survey had half or more of their IT footprint in the cloud.
However, cloud adoption is gaining traction. Over the next five years, more than half of survey respondents (54%) expect to migrate at least half of their workloads to the public cloud.
Given the value at stake, this sense of urgency is hardly surprising. A McKinsey analysis found that Fortune 500 financial institutions alone could generate as much as $60 billion to $80 billion in run-rate EBITDA in 2030 by making the most of the cost-optimization levers and business use cases unlocked by cloud.
Some early adopters are already making inroads into this pool of value. One European bank was able to deliver the same output with 20 to 30 percent smaller teams, after onboarding them on DevSecOps and cloud. Another bank in Asia that migrated more than half of its workloads to the cloud can now develop and launch multiple new products rapidly and at scale in international markets. And another European bank has partnered with a leading cloud service provider (CSP) to develop AI-based cyber-defense capabilities to improve security for its customers.
These examples are still outliers in the financial sector, where most companies have been tentative about moving to cloud at scale. There is good reason for this hesitancy, since cloud migration is uniquely complex for financial institutions. Furthermore, the IT landscape at financial institutions is particularly varied, with 40-year-old applications running alongside more modern systems.
These challenges and others have led financial institutions to move in a more incremental fashion when it comes to cloud, running limited experiments, for example, or targeting a subset of applications based on the ease of migrating them, or phasing their efforts to coincide with a planned exit from a particular data center. Focusing on a few of these kinds of high-impact “lighthouses” can be effective in creating early momentum. However, institutions that do not define an overall aspiration and put in place the right success factors to achieve it often fail to capture value from the cloud.