The financial industry’s tolerance of poor cloud connectivity is costly

BSO, a global infrastructure and connectivity provider, has revealed new research revealing a “resilience paradox”, suggesting that financial institutions have come to tolerate poor cloud connectivity experiences.

Almost all IT decision makers rated their connectivity as extremely or very resilient, but all experienced outages to some degree, with nearly half experiencing outages at least once a month. The slow transition to more reliable cloud options costs financial institutions 21-50% of their revenue on average, but only 2% of financial institutions plan to switch cloud providers in the near term.

The results are a surprising contradiction given the availability of cloud solutions on the market that guarantee 99.99% availability and 100% data durability for object storage.

The report, Cloud Connectivity and the Future of Financial Markets, is based on a survey of 600 IT decision makers across financial services industries, including banking, trading, brokerage, financial exchanges, and crypto exchanges. Companies from around the world were surveyed, including France, Germany, UK, USA, Hong Kong, Singapore and Brazil.

Key findings include:

  • Performance
    Across all industries and countries, average losses for financial services firms due to poor network performance exceeded $67 million in the past 12 months.
  • Data Security
    The most pronounced impact of security breaches on businesses is lost or misdirected payments, with more than half of businesses (52%) falling victim to them, followed closely by the inability to access suspended accounts or accounts (47%) and inability to use the full, promised functionality of cloud-based applications (41%).
  • Global scale
    2 in 5 respondents (38%) said poor cloud connectivity prevented them from expanding into a new geographic market. Almost half (48%) said it stopped them from launching a new product or service. More than 2 in 10 (22%) said it had stopped them from expanding into a new industry.
  • Top Considerations for Selecting a New Cloud Connectivity Provider
    Amount of cloud on-ramps (51%), technologies and services that match business needs (49%), low number of transactions requiring repairs or returns (48%), ability to exit without risk of vendor dependency (39%) and better currency choices (39%) were the top five considerations for businesses when selecting a new vendor.
  • The pandemic effect
    Contrary to popular belief, the pandemic has not been a major driver of cloud investment, as most enterprises (99%) had already started using the cloud to access applications before the pandemic.

The research also found a “north-south cloud divide” when comparing markets across multiple cloud performance metrics. French, UK and US companies have consistently estimated significantly higher impacts of poor cloud performance compared to their counterparts in the southern hemisphere, Hong Kong, Singapore and Brazil. Cumulative losses topped $442.67 million for French, British and US firms, eclipsing losses of $64.71 million for firms in Hong Kong, Singapore and Brazil.

Key findings from the north-south cloud split include:

  • Low latency
    On average, businesses have lost $14 million to lost transactions over the past 12 months due to failure to meet their low latency goals, US businesses ($64.45 million), UK businesses (16 .18 million dollars) and French (15.97 million dollars) having suffered the most significant losses.
  • Resource scaling
    Over $25 million in revenue was lost in the last 12 months on average due to the inability to scale resources effectively. The United States recorded shockingly higher losses ($142.83 million) than the rest of the world and eclipsed British companies ($15.43 million) in second place.
  • Source real-time market data
    The inability to source real-time market data has cost banks an average of $18 million. US banks lost $44.72 million, followed by UK banks ($14.63 million) and French banks ($12.69 million).

“The importance of cloud technologies is well established among financial services institutions, but this is the first report of its kind to reveal the impact of poor cloud connectivity on companies’ business success. The losses suffered by financial services institutions last year due to poor cloud connectivity should be a wake-up call for the industry,” said Michael Ourabah, CEO of BSO. “

The results raise an important question: why are institutions reluctant to change their cloud connectivity when solutions are already available? Whatever the answer, the most successful institutions will be those that take a proactive approach to their cloud strategy. »

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