The obstacles to software-as-a-service adoption in banking

Security is seen as a top obstacle to using software-as-a-service (SaaS) products for three-quarters of business technology decision makers at banks, according to a global survey.

Banks have adopted cloud relatively slowly in comparison with firms of similar sizes in other sectors, and Forrester’s latest research reveals why.

The study of senior technology decision makers at banks revealed that 73% consider security as a major obstacle to adopting cloud, while privacy (63%), risk (59%) and regulation (56%) make up the top four. 

When it comes to the technology itself, 43% said its level of maturity is an obstacle to adoption. Some 42% said integration is a problem, while the same proportion pointed to a lack of acceptable banking-specific offerings as an obstacle.

In its Software as a service in banking report, Forrester said banks have shown an interest in cloud-based capabilities for years, with private clouds, managed private clouds, or public cloud infrastructure-as-a-service (IaaS) used, as well as SaaS offerings for things such as customer relationship management (CRM), which are cross-industry. But it added that the concerns have prevented broader adoption.

Forrester said these concerns should be placed firmly in the past. “Concerns regarding the security, privacy and risk of SaaS deployments for financial services should be a thing of the past. The new, state-of-the-art SaaS solutions are just as capable of protecting customer information, corporate intellectual property and other business secrets as traditional hosted solutions,” said the report.

“To accelerate their firm’s digital business transformation and provide the necessary levels of flexibility for banking of the future, application development and delivery teams at financial services firms will need to use SaaS,” it added.

But Forrester warned that unless regulators change rules to enable the broader use of SaaS, suppliers will not develop things such as core banking or omni-channel banking as services. The research firm said that banks are missing out on more than just cost savings because “banking-specific SaaS capabilities can offer banks a direct path toward digital banking".

A survey of US banks in December 2014 revealed that banks are already using cloud services but underestimate the scale of cloud use on their networks.

Research by Skyhigh Networks revealed that, in the US, an average of 844 cloud services are being used by bank employees on the corporate network but management doesn’t understand what is actually being used by workers at banks.