2022 Cloud Trends in Financial Services

  • Brian Adler, Senior director at Flexera

  • 11.03.2022 12:30 pm
  • #cloud

How are financial services organizations using cloud in 2022? Findings from the Flexera 2022 State of the Cloud Report shed light on cloud usage as the post-pandemic world comes into view. 

This eleventh annual report highlights trends through insights shared by global cloud decision-makers and users via a survey conducted in late 2021 with representatives of organizations ranging in size from 100 employees to more than 10,000. Highlights from the survey shed light on trends impacting the fintech decisions of financial institutions (FIs) and organizations in fields including banking, capital markets, insurance, wealth management, and risk and compliance. 

Trends from the 2022 research include: 

Financial services organizations are migrating more workloads and data to the cloud.

The trend to migrate workloads to the cloud is prevalent across sectors. In financial services, that’s especially the case, where it is the top cloud initiative for 2022. Of the 154 survey respondents from financial services organizations, 62% indicated plans to make progress on this measure in the coming year. 

This migration of workloads may be an indication of increasing confidence in the security tools and processes of cloud providers to implement adequate protection. A third (33%) of financial services organizations anticipate using a mix of on-prem and cloud/software-as-a-service (SaaS) for corporate financial data. Even more (35%) anticipate using a mix of on-prem and cloud/SaaS for consumer data, such as personally identifiable information (PII) and protected health information (PHI). Today, 44% of financial services organizations’ data is in the clouds, a number expected to grow to 52% in the coming year.

To successfully execute this initiative, financial services will need to address their top challenge in migrating workloads to the cloud: assessing the technical feasibility of migrating an application. More than half (58%) of financial services organizations cited this as a challenge. Other top challenges include: understanding all the components and dependencies that make up an application; rightsizing/selecting the best instance/VM types/sizes in the cloud; and knowing the implications of the move on software licenses.

Amazon Web Services (AWS) and Microsoft Azure are the most relied-on public clouds for financial services. 

Seventy-eight percent of financial services organizations are running workloads on AWS and 76% of them are running workloads on Azure, putting these two public clouds nearly on par with one another. Google Cloud Platform comes in at a distant third place, with 43% of financial services organizations running workloads there.

When it comes to where the instances are running, 46% of financial services organizations are running more than 100 instances in AWS; 51% of financial services organizations are running more than 100 instances in Azure. Twenty-two percent of financial services organizations are spending more than $6 million/year on AWS; 18% are spending more than $6 million a year on Azure.

Financial services organizations are increasing their usage of public cloud platform-as-a-service (PaaS) services. 

The top PaaS services being used by financial services organizations are data warehousing, reported by 51%; DBaaS (relational), reported by 50%; DBaaS (NoSQL), reported by 44%; and container-as-a-service, reported by 43%. The next wave of PaaS services usage is likely to come from those services that these financial organizations are currently experimenting with: container-as-a-service, reported by 31%; artificial intelligence and machine learning (AI/ML), reported by 29%; disaster recovery-a-service (DRaaS), reported by 28%; and serverless (function-as-a-service), reported by 27%.

Concurrently, more financial services organizations are using containers, which are moving into the mainstream for organizations across industries. Nearly a third (31%) of financial services organizations plan to experiment with containers (software packages that bundle the application’s code, configuration files, libraries and dependencies). This is another area where training is necessary, as the lack of internal staff with expertise is the top container-related challenge for all organizations and an even greater challenge for financial services organizations, with 47% citing it as “very much of a challenge.”

The need to control cloud costs persists.

The amount of public cloud spend estimated to be wasted, such as through inefficient use of resources (those that are unused, idle, over-provisioned, etc.), is 32%. At this time when organizations expect their cloud speed to further increase by 29% in the coming twelve months, getting a handle on cloud cost forecasting and cost optimization is more critical than ever.                            

Centralization of cloud responsibilities can help control costs by governing cloud use and setting policies. Perhaps unsurprisingly, financial services organizations are more likely to take this approach than are organizations overall. Cloud centers of excellence (CCOEs) are present at 38% of financial services organizations; an additional 36% have central cloud teams and 10% are planning to have a central cloud team or CCOE within the coming year. Responsibilities for CCOEs at financial services organizations include deciding or advising on which applications are appropriate to migrate to cloud; planning for cloud migrations; and setting policies for how/when cloud can be used.

FinOps teams, focused on cloud financial management, can also help organizations analyze and reduce their cloud costs by relying on manual and automated policies. Policies can be used, for example, to identify underutilized discounts from cloud providers, rightsize instances, shut down workloads after hours, and strengthen software license compliance initiatives.

Brian Adler is senior director of cloud market strategy at Flexera and was previously a senior director analyst at Gartner.

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