A report from Nutanix shows 43% of financial services companies globally plan to increase their investment in private cloud over the next year.
Nutanix, a leader in private cloud, hybrid and multi-cloud computing, has announced the financial services industry findings of its third annual Enterprise Cloud Index Report, measuring organizations’ plans for adopting private, hybrid and public clouds.
The findings point to a Digital Transformation within the industry, with half of respondents (50%) reporting that COVID-19 caused them to increase their investment in hybrid cloud.
In the industry’s five-year outlook, hybrid cloud is the only IT model showing positive growth among financial company respondents and it is expected to increase by 39% in that timeframe. In addition, 43% of financial services companies plan to increase their investment in private cloud over the next year, 10% higher than the global average (33%) – pinpointing that private cloud adoption is crucial to creating a modern hybrid cloud.
Other key findings of this year’s report include:
- Security concerns are driving private cloud adoption: Financial services organizations ranked security, privacy and compliance issues as the most concerning when running applications within public cloud solutions (62%). Respondents were less concerned with public cloud capacity (30%), showing that while public cloud has the capabilities to support IT infrastructures, the security of sensitive data is non-negotiable and organizations are looking for alternative solutions.
- Investment in hyperconverged infrastructure shows the industry’s confidence in private cloud: Nearly 50% of financial sector respondents say they’ve either fully deployed HCI or are in the process of doing so, while 38% report they will be deploying HCI within the next 12 to 24 months. This investment is directly aligned with increased private cloud adoption, as HCI reduces the time it takes to build the software-defined, scalable infrastructure necessary to support private cloud.
- Financial services organizations are looking to optimize their cloud usage: The sector’s top motivations for modernizing its IT infrastructure is to gain greater control of IT resource usage (59%) and to gain the speed (58%) and flexibility needed (55%) to meet business requirements.
- The industry must invest in talent to support a hybrid cloud environment: More than a third of financial services respondents (36%) said they were short on skills needed to manage mixed private/public cloud environments, while 34% said they lacked expertise in cloud-native technologies and containers, including Kubernetes. These issues have contributed to organizational struggles to fully adopt hybrid cloud.
“Historically, financial services organizations have explored public cloud offerings when decommissioning legacy data centers,” said Tapan Mehta, Director, Industries Solution Marketing at Nutanix.
“However, as the industry continues to place greater interest in data privacy and compliance issues, organizations are turning to the private cloud.
“This rapid increase in private cloud adoption serves as the basis for a hybrid cloud model, which is expected to become the industry norm over the next few years.”
The 2020 respondent base spanned multiple industries, business sizes and the following geographies: the Americas, Europe, the Middle East and Africa and the Asia-Pacific region.
Further financial services findings include:
The majority (86%) of financial services respondents identified hybrid cloud (private and public) as the ideal IT operating model for their organization.
They’re evolving their infrastructures to get there, with reported plans to reduce reliance on traditional, non-cloud-enabled data centers from 14% to 4% within one year. The sector plans to increase its deployment of hybrid cloud to about 54% penetration within five years, up from just under 15% penetration this year.
Financial services companies are running more applications in private clouds than most other industries polled.
Their reported usage of private cloud (39%) outpaces all other industries except for IT, tech and telecoms (40%) and is slightly higher than its own reported usage in 2019 (36%). In the coming year, 43% of financial services respondents said they will likely run more applications in private cloud compared to 33% of global respondents.
Financial services firms are looking to get the most out of their infrastructure
The financial services sector’s top motivations for modernizing its IT infrastructure is to gain greater control of IT resource usage (59%) and to gain the speed (58%) and flexibility needed (55%) to meet business requirements. While cost is less of a factor, more respondents in the financial services sector rated cost savings (31%) as a higher driver for cloud compared with the global average (27%).
The global pandemic has raised IT’s profile and fuelled cloud adoption
More than three quarters (78%) of financial services respondents said COVID-19 has caused IT to be viewed more strategically in their organizations. In addition, 50% of financial services respondents said they increased their investment in hybrid cloud as a direct result of the pandemic.
In conclusion, the report finds that financial services organizations, like other sectors, favor a hybrid cloud infrastructure and they’ve embarked on a journey to achieve it with an uptake in private clouds, enabled by HCI adoption and rapid decommissioning of legacy data center architecture.
They have a clear preference for running applications on a private cloud (39%) and plan to run more applications that way in the future (43%).
The full report can be read here.