46% of financial organisations operating traditional data centres
Much has been said of its future prominence, but in no other industry is hybrid IT more prevalent now than in the financial services industry.
Nutanix has released findings from its Enterprise Cloud Index Report for the financial services sector that measures company plans adopting private, public, and hybrid clouds.
The research is based on a survey conducted by Vanson Bourne of more than 2,300 IT decision makers - including 333 worldwide financial organisations – within multiple industries, business sizes, and geographies in the Americas, Europe, the Middle East and Africa (EMEA), and Asia Pacific and Japan (APJ).
According to the research, the financial sector is outpacing other industries in hybrid cloud adoption with deployment penetration reaching 21% today, as opposed to the global average of 18.5%.
The cause of this, Nutanix suggests, is financial services firms today are facing mounting competitive pressure to streamline operations while delivering a differentiated experience to their customers, including leveraging new technologies such as blockchain.
This FinTech revolution, combined with the growing burdens of regulatory compliance, data privacy, and security issues are pushing CIOs to fundamentally transform the technological underpinnings of their institutions and address these needs.
Despite this, the report reveals many financial organisations are still struggling with modernising their outdated legacy IT architectures and processes, resulting in inefficient operations and potential vulnerability to data breaches.
In fact, the report revealed financial services run more traditional data centres than other industries, with 46% penetration. Despite their progressiveness on the hybrid cloud front, financial organisations have lower usage levels of private clouds than any other industry, at 29% penetration compared to the average of 33%.
Security and compliance are top of mind for financial organisations when deciding where to run their workloads, with performance, management, and TCO also scoring highly in this regard.
However, more than 25% cited these same factors as challenges with adopting public cloud. In other words, as is often the case with new IT solutions, the most important criteria are also the most difficult to achieve.
Other key findings of the report include:
- The financial sector values application mobility across clouds - both financial companies and other industries chose application mobility between clouds second most often as the number one perk to hybrid cloud, and the financial sector chose it 3% more often than the average. 63% of financial industry respondents said they considered inter-cloud application mobility “essential.”
- Financial services companies control cloud spend better. Another motivation for deploying hybrid clouds is likely enterprises’ need to gain control over their IT spend. More than a third (36%) of organisations using public clouds said their public cloud spending exceeded budgets. In comparison, 33% of financial respondents reported being over budget, revealing that they are doing marginally better than others at managing public cloud expenses.
- IT skills are a barrier to adopting hybrid cloud in the financial industry. While 88% of respondents said that they expect hybrid cloud to positively impact their businesses, hybrid cloud skills are scarce in today’s IT organisations. These skills ranked second in scarcity only to those in artificial intelligence and machine learning (AI/ML). Financial services respondents generally reportedly slightly greater deficits in skillsets across all categories except for AI/ML.
Almost all of financial services organisations (91%) believe hybrid cloud is the ideal IT model, yet conversely, the data shows a lower adoption of private clouds than the global average across industries. This might be explained by the fact that portions of the financial services space have been change-averse and also an indication of the overall complexity of modernising existing legacy infrastructures.
“Increased competitive pressure combined with higher security risks and new regulations will require all of the industry to look at modernising their IT infrastructure,” says Nutanix Global marketing senior vice president Chris Kozup.
“The current relatively high adoption of hybrid cloud in the financial services industry shows that financial firms recognise the benefits of a hybrid cloud infrastructure for increased agility, security, and performance. However, the reality is that financial services firms still struggle to enable IT transformation, even though it is critical for their future.”