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Industry estimates suggest that enterprise workloads double every five years. Not surprisingly then, cloud with its benefits of scalability and elasticity is outpacing dedicated infrastructure steadily. 1The Cisco Global Cloud Index estimates that by 2021, 94% of all workloads will run in some form of cloud environment, private or public.

In our 2018 prediction for cloud, we indicated a growing adoption of public cloud in the enterprise. The stark contrast that most enterprises today engage with not one but multiple public cloud providers, as opposed to only 25% enterprises just over a couple of years back, points towards an accelerated adoption of public cloud over the next twelve months and beyond. This accelerated adoption is as much a result of the explosion of workloads as it is of the growing maturity of cloud services. Enterprises are progressively opening up to the idea of moving critical workloads to the public cloud. There is an increasing realization that workloads in public clouds by leading providers such as AWS, Azure and Google are less likely to be exposed to security threats as compared to those in traditional data centers.

In financial services, a large number of tier 2 and tier 3 banks are turning to the public cloud to expand their operations beyond their home presence to international markets.

These banks are typically inclined to start small with limited branch operations in these new geographies but to start fast. Cloud is a natural fit for their requirements since it provides them the agility to establish quick setups with rollouts spanning no more than five to seven months. An end-to-end solution from a cloud service provider and an ISV instead of evaluating and negotiating with data center providers has invariably emerged as the preferred path in all our conversations with these banks. What’s more, engaging with leading public cloud providers helps these banks navigate the complexities of meeting compliance requirements in new geographies. Limited scale also makes these geographies the perfect test-bed before these banks go down the public cloud path on their home turf where they operate at a reasonably large scale. We see a similar trend at play at large tier 1 banks exploring multi-country roll-outs in new geographies.

Two big developments accelerating cloud adoption in banking are the emergence of new channels for consumption of banking services and the coming of age of the API economy. Besides, governments in many countries have opened the market to new players. Globally, self-service with digital-only banking is on the rise enhancing the adoption of SaaS and cloud-based end-user applications. The demand for quick provisioning and elasticity in the digital future will continue to be a primary driver of adoption in banking for some time to come.

In 2018, we saw progressive banks adopting cloud for functions and applications beyond the fringes of the bank. Leading banks such as DBS in Singapore and Capital One are pioneering the trend of embracing the cloud for core banking. While we see some more progressive banks joining these early adopters, it will be interesting to see if core-on-cloud becomes the norm for all and sundry over the course of the next five years.

Next, FinTechs and TechFins, players from outside of banking who have been at the center of innovation in the industry for a few years now, are inherently cloudfirst. These players have gained critical mass especially in areas such as payments and lending. In ecosystem-driven banking, banks will need to ensure their applications can integrate with those in the cloud environments of these partners seamlessly, for benefits of business agility and digital innovation.

Lastly, open banking is setting new innovative business models in motion, and consequently fueling the uptake of collaborative consortia-led business and operating models. In 2019, banks will continue to test, explore and take into production more collaborative use cases for open banking. The flexibility of public cloud will come in handy to accelerate these innovation efforts.

2019 will be the year of public cloud in banking.

“Cloud computing is often far more secure than traditional computing, because companies like Google and Amazon can attract and retain cybersecurity personnel of a higher quality than many governmental agencies.”
– Vivek Kundra, Former Federal CIO of the United States.




  1. Cisco – Global Cloud Index

 Banking Trends 2019

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