The Finance Industry Is Embracing The Cloud Faster Than Expected

Financial management applications are moving to the cloud more quickly than expected, according to a recent report from Gartner. The move to the cloud is taking place across organizations of all sizes, and includes financial service providers and internal financial applications and services for large companies.

Historically, financial applications have been slow to move to the cloud. Social and technical issues contributed to the tardiness of cloud adoption. Critical financial management applications running on legacy in-house platforms have been slow to migrate because businesses fear disruption to essential services, but adoption is increasing as cloud skeptics acknowledge that the clear and proven benefits of the cloud should not be ignored.

According to Gartner, senior financial executives report that by 2020, almost 40% of enterprises will use the cloud to support in excess of half of transactional systems of record. Adoption is likely to be fastest among smaller businesses, with 44% of small organizations and 38% of midsize organizations intending to move to the cloud in the next three years.

An in-depth report from the Cloud Security Alliance forshadowed the likelihood of greater cloud adoption by the financial industry a couple of years ago. In part, the report examines which qualities of the cloud the finance industry was excited by. The results show that finance executives are interested in the cloud for the same reason as executives at other organizations: flexible infrastructure capacity, faster provisioning, reduced time to market, and reduction in in-house technical and human resources.

For businesses reliant on legacy infrastructure, public and private cloud platforms represent a clear improvement. Outsourcing infrastructure management to a cloud vendor relieves financial services companies of the burden of building and maintaining their own data centers or colocated hardware. Cloud platforms massively reduce capital expenditure, and operational expenditure on infrastructure scales in-line with the real needs of the company. If anyone can understand why the cloud is the right infrastructure solution in many scenarios, it’s financial professionals.

But the same report also examined why — in spite of the recognition of the benefits of the cloud — finance was slow to make the move. Concerns included security, regulatory compliance, and loss of control over data. The accelerating adoption of cloud platforms suggests that those concerns have be addressed by modern cloud providers who are prepared to work with the financial industry and other businesses to provide a level of security and control that is deemed acceptable.

As cloud platforms and their security controls have matured, there’s little reason for the financial services industry and financial executives to maintain a groundless resistance to the cloud.

Today, the cloud doesn’t just mean public cloud platforms. In fact, many businesses choose a mixed approach that combines public clouds, private clouds, and dedicated hardware. Hybrid clouds offer optimal flexibility, allowing companies to mix and match the cost, performance, security, privacy, and control characteristics of their infrastructure depending on the needs of each application.