Cloud is one area of innovation that holds huge potential for the financial sector and that can offer significant cost savings if used effectively.
By Tom Schröder, Director International Partners and Strategic Alliances, Serviceware
According to McKinsey’s Consumer Pulse Survey, digital engagement levels among European customers have increased by 20% since the beginning of the pandemic. However, despite the need to innovate, many financial organisations are yet to fully recover from the full impacts of Covid-19. Whilst vaccine roll-out has signalled fresh hope for some, recovery will be by no means immediate. With further economic turbulence on the horizon, it is crucial that financial services businesses leverage strategic cost measures to not only mitigate the impact of short-term pandemic fallout, but most importantly recover and succeed in the long-term.
Balancing cost and innovation
Many financial institutions already use cloud-based software for business processes such as customer relationship management, HR and financial accounting. However, the opportunity for cloud within core activities such as consumer payments, credit scoring, statements and billing is endless. In fact, from 2016 to 2018, Deloitte Global saw a threefold increase in the number of financial organisations adopting cloud to promote innovation.
Cloud-based services can reduce internal costs and optimise business growth by offering a much more scalable and reliable IT infrastructure that is specifically designed to streamline performance and support development and expansion. Cloud technology gives financial institutions the opportunity to continuously refine and improve services, according to changing customer demand and business need, whilst enabling them to assess how much is being used versus how much is being spent. For many organisations, cloud also provides the opportunity to achieve better value for money, as businesses only pay for what is being used.
With cloud now being seen as the digital backbone of many financial businesses, cloud solutions will continue to evolve. However, with this change will come increasing complexities – both in terms of the services available and also the variety of operating models. It is therefore essential that financial institutions have the right tools to continually monitor and analyse cloud spend (on average, 23% of IT expenses), in real-time, and with accuracy. Those who do will effectively pave the way towards growth.
Managing legacy spend
In today’s current economic landscape, optimising budgets is an absolute necessity. However, traditional ways of managing IT spend are simply not working. This is where maintaining a complete view across the whole organisation is required. The ability to manage cloud costs will be unlocked by reliable financial management tools, which can empower the financial industry to truly understand and evaluate cloud spend. By gathering real-time operational, project and vendor cost data, financial institutions will be well-equipped to make fact-based decisions to drive down costs – both now and in the future. From our experience, we’ve seen our clients easily shrink their running costs by 5% and reallocate these resources to more appealing and business-driving growth initiatives.
In light of these changes, financial companies must now take advantage of the tools that will enable them to evaluate the implementation and operational costs of technology to help stabilise business – including cloud, on-premise and even shadow IT. Whilst in theory, all software and IT assets within a business should fall under one centralised IT department, providing the CIO with ultimate visibility, the reality is often very different. Shadow IT, incurred in part by bring-your-own-device increase and the explosion of remote working, has seen a rapid rise and Gartner predicts it now accounts for 30-40% of IT spend in large organisations. As such, this is causing an ongoing headache for the people that are in charge of technology, security, and compliance, who need transparency across all applications to ensure cost transparency against value, not to mention security.
As we look to the year ahead, and competition within the industry continues to rise, it is vital that financial institutions free up budget to invest in digital programmes and secure growth. To achieve this, it is imperative to gain total transparency over business costs. This will be essential for companies to not only stay afloat, but also build for a successful future.
For many businesses, an integrated, high-performance and, above all, flexible solution is needed to create a holistic overview of business spend, on which decisions (about cost, process, operations and more) can be based. If that means an initial investment to analyse the value of legacy systems vs cloud-based solutions, then it’s a cost easily justified. Put simply, financial institutions that maintain an end-to-end view across their entire IT portfolio will be able to take back control of their running costs and streamline their budgets towards future growth – this year and beyond.