Financial Services ‘all in’ on Multi-Cloud Adoption as Industry Accelerates Digital Transformation

Research1 from F5 reveals that the financial services industry is accelerating its shift to the cloud, as it presses forward with digital transformation in the face of security concerns.

According to the Financial Services edition of the 2020 State of Application Services (SOAS) report, 60% of surveyed organisations in the industry believe public cloud platforms will be strategically important for them in the next two to five years, up sharply from 49% in 2019. That places adoption of the public cloud as the industry’s most important strategic priority.

It comes as 84% of financial services organisations execute on digital transformation plans, with three quarters saying the key driver is to increase the speed of new product and service deployment.

Cloud adoption is increasing even as security concerns remain widespread. While two-thirds of organisations are confident in their ability to withstand an application attack on premises, only 40% said the same when it comes to the public cloud.

“The idea that financial services applications would be the slowest to move into the cloud has been clearly disproven,” said Lori MacVittie, Principal Technical Evangelist, Office of the CTO at F5.

“Instead we are seeing the industry go ‘all in’ on multi-cloud adoption as organisations seek to increase the pace of their digital transformation and more quickly deploy the applications that will deliver a high-quality customer experience. Ultimately, financial services organisations that face growing competition from digital challengers are turning to the cloud to meet the needs of customers who now expect a seamless fintech service.”

 

Balancing innovation and security

As cloud adoption increases, financial services organisations are seeking to balance the innovation imperative with security needs.

Many are looking to open banking, which 47% of surveyed organisations (among the two-thirds of respondents who provide banking services) have either implemented or plan to do so. Within this subset, 68% are deploying API gateways to deliver innovation, allowing them to securely share data with partners and open APIs to public developer networks.

82% of organisations with open banking initiatives have published APIs to third parties, compared to 62% of those not engaged in open banking.

In this context security remains a pressing concern, especially with 87% of organisations embracing multi-cloud environments, and 41% determining the type of cloud to support an application on a case-by-case basis.

Asked about the biggest challenges of managing applications in a multi-cloud environment, 59% of respondents highlighted the need to apply consistent security policies across all company applications, well ahead of migrating apps among clouds/data centers (32%), gaining visibility into application health, or optimising the performance of the application (both 26%).

Security clearly resonates as a priority for the entire industry. Over half of respondents named it as the most important characteristic of an application service, while financial services leaders ranked real-time threat analytics as their number two strategic trend, compared to number six across all industries. Three quarters of respondents said it is important to enforce the same security policies on premises and in the cloud.

Nevertheless, the industry fears that it lacks the capacity to effectively respond to threats, with 72% of respondents reporting that they face a security skills gap.

 

Application deployment: now and next

The importance of security is further underlined by the applications financial services organisations choose to prioritise. Among the industry’s top five app services deployed today, four are security-focused: common security services and SSL VPN (both deployed by 86%), WAF (81%, up from 77% in 2019) and DDoS protection (80%).

That is balanced by a focus on application services that underpin the effort to drive high-quality customer experiences: 80% of financial services respondents said they are deploying services such as load balancing, global server load balancing and DNS, compared to 75% globally.

Looking forward, the industry is planning to deploy application services that will support greater adoption of public cloud and modern (cloud- or container-native) architectures. 42% expect to deploy SDN gateways or SDN WAN in 2020 (up from 34% in 2019) while 39% will deploy API gateways (up from 27%) and 35% Ingress control (up from 21%).

46% of financial services respondents identified Software-defined networking (SDN) as a strategically important trend for them in the next 2-5 years, up from 42% last year.

“Financial services organisations are increasingly in the business of digital trust,” added MacVittie.

“They need to move as fast as other industries to deliver new products and services, while meeting a higher bar on security and customer trust.

“By moving into the cloud and modernising their infrastructure, these organisations are positioning themselves to benefit from a new generation of security-focused applications that leverage machine learning and real-time threat analytics. These application services will ensure that the financial services industry can succeed in its twin priorities of security and innovation that transforms the customer experience.”

 

1The report reflects input from nearly 2,600 respondents globally (488 in financial services) across a range of industries, company sizes, and roles. Participants were asked about the challenges and opportunities presented by the ongoing process of digital transformation. Their responses provide a unique view of the trends shaping the application landscape—and how organisations around the world are transforming to meet the ever-changing demands of the digital economy.