Eighty-six percent of financial services respondents said hybrid cloud is the ideal IT operating model for their organization, according to a newly-released study by cloud provider Nutanix. But as they evolve their infrastructures to get there many in the financial services sector are running more applications in private cloud than other industries polled, the Nutanix Enterprise Cloud Index Report found.
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%), according to the third annual report. In the coming year, 43% of financial services respondents said they will likely run more applications in private cloud compared with 33% of global respondents, the report stated.
The financial services sector also reported plans to reduce reliance on traditional, non-cloud-enabled data centers from 14% to 4% within one year, according to the report. Respondents said they plan to increase their deployment of hybrid cloud to about 54% penetration within five years, up from just under 15% penetration this year.
Spurred by COVID-19 and other factors
The findings point to a digital transformation within the industry, with half of respondents reporting that COVID-19 caused them to increase their investment in hybrid cloud, Nutanix said.
The financial services sector’s top motivations for modernizing its IT infrastructure are to gain greater control of IT resource usage (59%) and to gain the speed (58%) and flexibility needed (55%) to meet business requirements, according to the report.
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, the report said.
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 report said.
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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.
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.
The shift to cloud is not a surprise. “Historically, financial services organizations have explored public cloud offerings when decommissioning legacy data centers,” said Tapan Mehta, global head, industry strategy and solutions at Nutanix, in a statement.
But Mehta added, “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 in the Americas, Europe, the Middle East, Africa (EMEA), and the Asia-Pacific region.