• by Laurie Sullivan , Staff Writer @lauriesullivan, August 12, 2021

Financial services executives understand opportunities in cloud technology to improve performance, but the industry has much to learn when it comes to specific issues related to banking.

On the heels of TransUnion’s Q2 2021 report calling out rising fraud in the financial sector, a Google cloud study released Thursday shows financial institutions are increasing their use of cloud services, but regulators need to provide more guidance.

Many companies are considering a multicloud strategy, rather than a single strategy -- mainly because it would allow a bank to switch to an alternative provider if there is an outage to avoid an interruption of services for customers.

Google, together with the Harris Poll, surveyed about 1,363 financial services leaders in a survey fielded between December 7, 2020 and January 4, 2021.

The findings suggest that in the United States, Canada, France, Germany, Britain, Hong Kong, Japan, Singapore and Australia, about 83% use cloud services as part of their primary computing infrastructure.

Most agree on the following:

• 91% -- cloud can help financial services institutions adapt to changing customer behaviors and expectations
• 91% -- cloud can enhance financial services institutions’ operational resilience
• 90% -- cloud can support the creation of innovative new products and services for financial services institutions
• 89% -- cloud can enhance financial services institutions’ data-security capabilities
• 88% -- cloud can help connect “siloed” or “walled garden” legacy software infrastructure within financial services institutions

The top reasons for not using cloud services include:

• 38% -- large investment of resources for the regulatory approval process
• 36% -- concerns about the cost of moving to the cloud
• 33% -- concerns about being overcharged for cloud fees
• 23% -- too much time for regulatory approvals
• 22% -- lack of clarity on regulatory requirement 

Regulatory priorities among organizations include:

• 88% want clear guidance from regulators on cloud adoption, standards and best practices
• 87% want developed regulatory or liability “safe harbors” based on standards and best practices to further facilitate technology adoption, including public cloud
• 84% want a regulatory technology/compliance “sandbox” for testing new automated or machine learning-based compliance tools 

North America financial services lead in cloud adoption, with 54% in the U.S., and 52% in Canada. Germany at 43% and Japan at 42% reported the lowest level of cloud adoption.

Of those financial services companies today using a majority cloud strategy in the U.S., 54% of their workloads are fully deployed in the cloud.

The activities managed using cloud technology vary. About 54% use cloud for data and IT security, 48% for regulatory compliance, 46% for fraud detection and prevention, 45% for transition monitoring, 45% for retail banking activities, 42% for data reconciliation, 42% for regulatory reporting, and 38% for core underwriting.