1、CLOUD RADARBANKING INDUSTRY REPORT2|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Knowledge InstituteContentsKnowledge InstituteExecutive summary 5Smashing data centers and shifting systems to cloud 7 Cloud is for loans and payments systems.and Its working well 8 Bank clo

2、ud spending average now and projected to grow 10 A decade on,corporate cloud has changed 11 More sophisticated cloud leads to new challenges 12Appendix:Research approach 15 Quantifying unused cloud commitments 16Cloud Radar:Banking Industry Report|3External Document 2024 Infosys Limited Knowledge In

3、stitute4|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Banks,by their nature,are slow to change.For good reasons,bank executives generally advance cautiously rather than rushing to fully embrace the most promising innovations.Changing their technology is more involved tha

4、n in other industries due to regulatory,security,and customer privacy requirements.For example,banks generally started using cloud at about the same time as businesses in other industries about a decade ago but in more limited ways,executives say.Now,cloud has changed in the banking industry:Its use

5、s and capabilities have grown more complex.Across all industries,cloud has entered a new era of growth and innovation.Banks now are exiting longstanding data centers and shifting more of their data and workloads to cloud.This is doubly challenging for banks,given the sensitivity of their data,but it

6、 is also a critical and timely one.Banks are Executive summaryexpected to increase their cloud spending in the coming year,according to Infosyss Cloud Radar report.Cloud Radar surveyed more than 2,500 respondents from companies across nine industries in Australia,France,Germany,New Zealand,the UK,an

7、d the US,and in the Nordic countries,including Denmark,Finland,Iceland,Norway,and Sweden.The study surveyed 399 respondents from banks in those regions.The research found that banks depend on cloud for sophisticated solutions,growth,and transformation.They use cloud most frequently for loan originat

8、ion and underwriting,and for operating cards and payment systems.Banks are happy with the results delivered by cloud but also face challenges when it comes to cloud usage andcost.Knowledge InstituteCloud Radar:Banking Industry Report|5External Document 2024 Infosys Limited 6|Cloud Radar:Banking Indu

9、stry ReportExternal Document 2024 Infosys Limited Knowledge InstituteWith intense competition from nonbank financial technology companies,getting cloud right is critical for traditional financial institutions.This means going deeper with cloud than just upgrading customer-facing applications and usi

10、ng cloud to tap into new technologies more quickly.New technologies delivered via cloud,including applied artificial intelligence(AI),can enable banks to improve customer experiences,deliver better service,and develop new products.In the next six to 18 months,data and AI will be a key incentive for

11、banks to shift to cloud,says Dennis Gada,Infosys executive vice president and financial services segment head.The generative AI phenomenon of 2022 showed banks the potential to use AI to unlock value in their data.They conducted experiments and proofs of concept in the last year and in early 2024.Fi

12、nally,its time to put that potential to work.“Now everybody wants real scaling up of data and AI via cloud,”Gadasays.Infosys experts identified three domains where banks will focus data and AI efforts:1.Improve customer experience.2.Increase efficiency for knowledge workers and customer service spec

13、ialists.3.Innovate in product design.The big challenge and motivation for new cloud efforts is that bank data remains heavily in on-premises servers,which limits its usefulness.AI systems built on-site are expensive to establish and operate,so data must be migrated to cloud or efficiently linked to

14、cloud where AI tools can unlock their value.More critically,banks that cant meet customer demands for modern services where they are will face an existential crisis.Banks shouldnt expect customers to stay out of loyalty.“If their system cant cope with the way people want to consume banking services,

15、banks will quickly see customers depart,”Gadasays.Cloud Radar:Banking Industry Report|7External Document 2024 Infosys Limited Knowledge InstituteSmashing data centers and shifting systems to cloud examination of all those systems.So,progress happens slowly.But as the banking business evolves away fr

16、om vaults and notes and toward mobile apps and electronic payments,new technology delivered by cloud has becomecritical.Banks and related institutions,including credit unions,are in the business of trust,says Anurag Sharma,chief technology officer at VyStar Credit Union in Jacksonville,Florida.“Ther

17、es a huge amount of responsibility in managing their financial data,managing risk,ensuring regulatory compliance,”he said in an Infosys Knowledge Institute podcast interview.“The primary focus of technology in financial services is on delivering a seamless experience while doing it safely.”Knowledge

18、 InstituteIn 2022,Comerica Bank marked its shift to cloud with creativity and catharsis:Employees played hockey in a decommissioned on-premises data center and smashed outdated server racks and hardware.Comerica leaders removed batteries and storage media,so that nothing dangerous was spilled and no

19、 customer data was exposed before the smash party.But taking hockey sticks to equipment that the company had relied on for nearly three decades was symbolic of its latest work.Moving to the cloud required bold action and ambition.Banks must account for hundreds of security,regulatory,and access cont

20、rols and procedures.Changing fundamental,underlying technology requires a re-Cloud Radar:Banking Industry Report|7External Document 2024 Infosys Limited 8|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Knowledge InstituteCloud is for loans and payments systems and its work

21、ing wellWhile the industrys migration to advanced capabilities started late,cloud is working well for banks.Of 399 banking businesses surveyed by Infosys,75%say cloud migration efforts are very effective or extremely effective(Figure 1).Thats in line with most large companies in our survey.Bank exec

22、utives say they are currently moving to cloud for growth and transformation(Figure 2).More specifically,they turn to cloud to integrate acquisitions or subsidiaries,access new technologies,enable new revenue streams or products,and replace or update outdated systems.Companies think about cloud diffe

23、rently today,says John Wei,former chief technology officer at Comerica Bank.Where early cloud focused on replacing physical computer infrastructure with virtual boxes,the new era of cloud is centered on applications and capabilities.“Were still talking about cloud.But were no longer talking about bo

24、xes.Were no longer talking about servers,but were actually talking about capabilities,”he said in a podcast interview with the Infosys Knowledge Institute.High-level capabilities today require composable architecture that spans many clouds,prompting two big shifts,Wei says.First,the network and orch

25、estration of cloud applications and ecosystems is more important.Second,companies have begun to re-think how they procure cloud services.VyStars Sharma says he is focused on using technology to deepen customer or member relationships.That requires data,AI,cloud,and DevOps to create hyperpersonalized

26、 experiences and deploy new business capabilities quickly.Bank executives tell us they use cloud most frequently for loan origination and underwriting,and for managing card payments and payment systems.Banks are unlikely to use cloud for fraud prevention and risk management,survey results show.This

27、is a missed opportunity because cloud is an ideal way to bring an embarrassing volume of computing power to risk analysis,Figure 1.Cloud migration is meeting companies expectationsSource:Infosys Knowledge Institute(N=399)Percentage of respondents75%25%Extremely efective or very efectiveModerately ef

28、ective or lowerCloud migrationefectivenessCloud Radar:Banking Industry Report|9External Document 2024 Infosys Limited Knowledge InstituteKnowledge Institutesays Ramesh Maran,Infosys associate vice president and global cloud head for financialservices.The fine-grained risk insights this can produce i

29、nclude real-time calculations of value-at-risk,complex risk calculations like composite risk ratings,and counterparty credit valuation adjustments.“If you think about the complexity of a modern bank,especially a large American bank,and you think of all the different components that make up what coul

30、d be at risk,you need a huge amount of computer power and data analytics,”he says.Figure 2.Banks want growth and transformation from cloudSource:Infosys Knowledge InstituteUse cases will continue to evolve,especially with the growth of AI and generative AI,delivered via cloud,Infosyss Gada says.“Tur

31、ning to cloud to modernize legacy systems is a critical step for banks,”Gada says.“Modern cloud will enable banks to deliver better customer experience and bring innovation into their strategy.”One impact of transformation and innovation is cost savings,notes Andrew Groth,Infosys executive vice pres

32、ident and industry head for the Asia-Pacific region.“It gives them the ability to do things faster,more accurately,with less money or less We asked:Why has your company moved to cloud?100 points allocated across all choicesIntegrate business subsidiaries or acquisitions,17Access indus-try-specifc ca

33、pabilities,13Connect to external data sources,collaboration tools,and partners,10Reduce costs,6Reduce greenhouse gas emissions,3Access new technolo-gy or software development capabilities,17Enable a new revenue stream or product,17Replace or update systems,17Growth and transformation motivesOther mo

34、tivesEach of these four motives is 3x more important than reducing costs10|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Knowledge Instituteoperation cost,”Groth says.“In a roundabout way,it boils down to making things more operationally efficient.”Bank cloud spending ave

35、rage now and projected to growOur research found that banks spend on average$33 million annually for cloud services,in line with our global average(Figure 3).Bank executives tell us they have increased cloud spending,and this trend will continue in the year ahead(Figure 4).In fact,when compared to o

36、ther industries,banks were more likely to have increased spending on cloud last year,and they are also more likely to increase spending on cloud in this next year.As cloud systems develop additional capabilities,companies increasingly turn to cloud to replace outdated technologies and add new functi

37、onality,survey results show.Figure 3.Banks spending on cloud is about averageFigure 4.Cloud spending continues to increase for banksSource:Infosys Knowledge InstituteSource:Infosys Knowledge InstituteAverage cloud spend(USD m)HealthcareEnergyTelecommunicationsBankingHigh techAutomotive and manufactu

38、ringRetail and CPGIndustry$33$38$37$32$29$30$31BankingAll industriesDecreasedStay aboutthe sameIncreased1%0%23%19%76%80%How will your cloud spend changefrom next year?DecreasedStayed aboutthe sameIncreased3%3%26%29%71%68%How did your cloud spend changefrom last year?Cloud Radar:Banking Industry Repo

39、rt|11External Document 2024 Infosys Limited Knowledge InstituteWhile banks are ready to spend on new cloud capabilities,many arent using all the cloud that they have already committed to.Our survey found that banks have consumed only 49%of the cloud they have committed to(Figure 5).“Cloud can become

40、 very expensive very quickly,”says VyStars Sharma.His technology organization has regular cloud spending reviews and established spending thresholds that prompt extra scrutiny.“We actively monitor and manage cloud spend as it is crucial to ensure that teams are optimizing costs and staying within bu

41、dget,”he says.A decade on,corporate cloud has changedThe nature of corporate cloud has changed.Most companies,including banks,began their cloud journey a decade ago.The prime era of initial cloud migration was 2012 to 2014(Figure 6).Those first steps were typically about adding storage and replacing

42、 outdated tech infrastructure.Figure 5.A majority of cloud commitments are unusedSource:Infosys Knowledge Institute(N=399)Source:Infosys Knowledge InstituteUnutilized cloudcommitments51%Cloudconsumed49%We asked:“What percentage of the cloud services your company has contracted for have been consumed

43、?Amazon Web ServicesMicrosoft AzureGoogle Cloud Platform200620072008200920102011201220132014201520162017201820192020202120222023Prime era of cloud migration1%1%1%1%9%11%17%15%14%10%7%5%3%3%3%1%We asked:When did you begin using each of these cloud service providers?Figure 6.The prime era of initial c

44、loud migration began more than 10 years ago12|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Knowledge InstituteToday,cloud is not about infrastructure or storage,and its a singular noun.Cloud is multicloud,and most often hybrid multicloud.Further,the way customers use clo

45、ud today has changed,says Anant Adya,executive vice president and head of Americas delivery.As cloud capabilities have grown and companies use cloud for more tasks,it becomes increasingly important to develop standards and reference architectures,he says.“Everything is new in cloud,”he says.“When yo

46、u use reference architectures,business blueprints,and you actually do not reinvent the wheel every time you do it,it becomes much easier.”Most banks employ three to four cloud providers today.In 2021,Infosys found that most companies used two or three cloud providers,and 21%lived in a monocloud worl

47、d.In 2023,the monocloud community for banks is down to 9%(Figure 7).More sophisticated cloud leads to new challengesCloud works well and delivers on increasingly sophisticated tasks.But as cloud systems have advanced,additional complexities areemerging.Our research reveals that retail cloud managers

48、 are generally confident in their ability to run their systems.However,they are least confident in monitoring,predicting,and optimizing cloud costs(Figure 8).As banks continue down the multicloud route,cost awareness and control become more and more important because the complexity has gone up expon

49、entially.Figure 7.Banks most frequently use three or four cloud service providersFigure 8.Banks often struggle to manage cloud costsSource:Infosys Knowledge InstituteSource:Infosys Knowledge Institute54%50%49%0102030405060Monitor costsPredict costsOptimize costsBankingOur research reveals cloud exec

50、utives are least confdent in their ability to manage these three things:1.Monitor costsMy organization has a complete view of all of its costs associated with cloud services.2.Optimize costsMy organization actively optimizes its costs associated with cloud services.3.Predict costsMy organization acc

51、urately predicts future costs associated with cloud services.Banking4%More than threeOne,9%Two,11%Three,30%Five,12%Four,34%Cloud Radar:Banking Industry Report|13External Document 2024 Infosys Limited Knowledge InstituteFigure 9.42%of banks allow any department head to provision new cloudSource:Infos

52、ys Knowledge Institute“Its not one system they have to manage its actually 22 complete parallel sets of systems and maybe even touching things they have on-premises,”says Groth.“It gets incredibly complex,so being able to put a single pane of glass over your overall IT spend is the nirvana state.”Wh

53、ile that state of nirvana is not quite attainable,systems integration firms are working toward it.Wei notes that upcoming cloud innovations will also accelerate progress toward better cost clarity around cloud.“As we move higher and higher in the value chain,the notion of pricing by transaction will

54、 become more tangible and real,”he says.“I do think that the conversation in five years is going to be quite different.”In addition to managing cost,sophisticated cloud systems can open up new security challenges.Our research found that 42%of banking respondents allow any department head or IT manag

55、er to deploy new cloud infrastructure,software,or applications(Figure 9).This might be too lax from a security perspective but must also be balanced against dynamic,changing businessdemands.VyStars Sharma says an updated cloud architecture,featuring microservices and modern APIs,is critical for prop

56、erly managing complex hybrid multicloud systems.“So,these will need to work together now,and more importantly,in the future as the workload shifts between different clouds and different platforms,”he says.Cloud today is a domain where business and IT must operate in unison.Modern cloud requires many

57、 things to work together smoothly,demanding both technical and strategic thinking.The trouble is,when we asked about a range of critical cloud decisions,44%are made in isolation(Figure 10).Consider this new era of cloud cloud saturates every corner of the corporate enterprise.Decisions about cloud n

58、eed to involve leaders,technologists,andusers.IT and business must collaborate to ensure that cloud initiatives are successful and meet business objectives and mitigate risks.Cloud Any department head or IT manager can add new cloud infrastructure,software,or applicationYes,42%No,52%BankingN=399.42%

59、of respondents indicated that their company may allow more people than is necessary access to provisioning of new cloud services.Not sure 6%14|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Knowledge InstituteFigure 10.44%of key cloud decisions are made in isolationSource:

60、Infosys Knowledge InstituteCloud decisions44%of cloud decisions are made in isolation30%14%56%Responsible partyIT aloneBusiness aloneIT and business jointlyNote.N=399.Percentages do not total to 100 due to rounding.We asked who was responsible for four major tasks(cloud decisions):1.Compliance:Manag

61、ing compliance in your cloud services2.Deploy/retire:Deploying,retiring and terminating cloud services3.Purchasing:Cloud purchasing decisions4.Security:Security in your cloud servicesOptions included the IT department and CIO ofce,CISO ofce,CFO ofce,COO ofce,head of cloud or similar position,and out

62、sourced cloud management vendor.started as a solution that primarily required IT,but modern cloud touches every function of a business and its customers.“I think the hardest part of cloud is getting the organization mobilized and marching toward a shared mission,”Wei says.VyStars Sharma says engagem

63、ent early and often between business and IT leaders will foster that sense of a shared mission.As a result,business execs will see technical leaders as more of a partner than an implementer or order taker.“Another important thing is to deliver value quickly and build credibility,”Sharma says.“So ins

64、tead of long-running projects,delivering new capabilities that function every few months in an incremental manner builds the confidence in technology.”Due to that time pressure,a lot of major banks are shunning larger mainframe transformations because they are time-consuming,cost a lot of money,and

65、carry big risks,says Jay Nair,Infosys executive vice president and financial services segment head for Europe,the Middle East,and Africa.“The larger banking organizations are trying to build APIs on top of mainframe systems so that they can extract the information and use it,”he says.That will be th

66、e status quo until AI tools advance and can automate data migration from mainframes.“I think there will be some surrounding work of APIs and all to make the best use of data,”he says,“but beyond that I dont think its going to happen immediately.”Cloud Radar:Banking Industry Report|15External Documen

67、t 2024 Infosys Limited Knowledge InstituteSource:Infosys Knowledge InstituteSource:Infosys Knowledge InstituteAppendix:Research approachQualitative interviewsTo enrich insight,we conducted phone interview with more than 50 industry practitioners,executives,and subject matter experts.Quantitative sur

68、veyRespondents by regionRespondents by industryUS34%Australia andNew Zealand11%UK20%France5%Germany20%Nordic countries(Norway,Sweden,Finland,Denmark,and Iceland)10%412403401400399203305Automotive and manufacturingHealthcareTelecommunicationsRetail and CPGBankingEnergy and utilitiesHigh tech16|Cloud

69、Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Knowledge InstituteQuantifying unused cloud commitmentsThe unrealized revenue figure of$300 billion is based on the declarations made by cloud service providers in their latest 10-K(or 20-F filing in case of foreign listed companies

70、)to the Securities and Exchange Commission(SEC).To arrive at the unrealized revenue value,we searched for the following declarations in the liability section of the SEC filings of the companys balance sheet:unearned revenue,deferred revenue,or backlog revenue.Most of the cloud provider companies hav

71、e declared these values as a part of a short-term or long-term liability on their balance sheets depending upon the status of the contracts involved.For the estimation,we recorded and then added the unrealized revenues for the cloud services providers covered in our study based on their SEC filings.

72、We only included B2B unearned,deferred,or backlog revenue,and excluded any declared unrealized revenue listed as a liability due to B2C subscriptions or services.For example,Microsoft Xbox and other personal subscriptions was recorded under personal cloud subscription services was not included in ou

73、r data analysis.Our research indicates that this$300 billion represents 53%of currently contracted cloud services.From this we estimate that the total amount of currently contracted cloud services exceeds$600 billion.Companies and their providers estimate the remaining$300 billion in unused cloud co

74、mmitments will be consumed in the next three to five years but will likely be renegotiated and blended into a larger figure for longer contract terms.Cloud Radar:Banking Industry Report|17External Document 2024 Infosys Limited Knowledge InstituteRespondents by firmographicsCloud role738834426525Stra

75、tegy:I set thevision anddirectionfor cloudinitiatives Evaluation:I plan,design,or evaluatecloudinitiativesManagement:I managecloudenvironmentsImplementation:I implementcloud initiativesSource:Infosys Knowledge InstituteSource:Infosys Knowledge InstituteSource:Infosys Knowledge InstituteSource:Infosy

76、s Knowledge InstituteJob levelMid-levelmanagement,847C-level(CXO),549Executive level(XVP),1,12789Before 19801980-19891990-19992000-20092010 topresent1531,035907339Company ageCompany annual revenue range231$5bn52651259066418|Cloud Radar:Banking Industry ReportExternal Document 2024 Infosys Limited Kn

77、owledge InstituteAuthor Chad Watt|Infosys Knowledge Institute,DallasAnalysis and productionIsaac LaBauve|Infosys Knowledge Institute,DallasPramath Kant|Infosys Knowledge Institute,BengaluruIndranil Chakrabarti|Infosys Financial Services,RaleighVijay Rathore|Infosys Financial Services,LondonDivyanshu

78、 Tiwari|Infosys Financial Services,DallasAbout Infosys Knowledge InstituteThe Infosys Knowledge Institute helps industry leaders develop a deeper understanding of business and technology trends through compelling thought leadership.Our researchers and subject matter experts provide a fact base that

79、aids decision making on critical business and technology issues.To view our research,visit Infosys Knowledge Institute at or email us at .Cloud Radar:Banking Industry Report|19External Document 2024 Infosys Limited Knowledge InstituteKnowledge Institute 2024 Infosys Limited,Bengaluru,India.All Right

80、s Reserved.Infosys believes the information in this document is accurate as of its publication date;such information is subject to change without notice.Infosys acknowledges the proprietary rights of other companies to the trademarks,product names and such other intellectual property rights mentione

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