Financial institutions have a “resilience paradox” that is costing them up to 50% of their revenue, according to a study from global infrastructure and connectivity provider BSO.
The report claims that nearly all IT decision makers interviewed rated their connectivity as being extremely or very resilient, despite them all also saying they have experienced outages. Of these, nearly half experience outages each month.
It claims the sluggishness to move to a more reliable cloud option is costing financial institutions between 21% and 50% of their revenue on average. Worryingly, only 2% of financial institutions plan to change cloud providers in the near future.
BSO claims the reluctance is strange when there are cloud solutions in the market that guarantee 99.99% uptime and 100% data durability.
The report found that in all sectors and countries, the average losses for financial service firms due to poor network performance topped $67m for the past 12 months.
It also found that the biggest impact security breaches had on businesses was lost or misdirected payments, with 52% experiencing them. This was followed by inability to access accounts or accounts suspended (47%) and inability to use the full, promised functionality of cloud-based applications (41%).
BSO also found that 38% of respondents said poor cloud connectivity stopped them from expanding into a new geographic market and 48% said it stopped them from launching a new product or service. Over 2 in 10 (22%) said it stopped them from expanding into a new sector.
When looking for a new cloud connectivity provider, the quantity of cloud on-ramps (51%) was the most popular aspect to look for. This was followed by technology and services that align with business needs (49%), low number of transactions needing repairs or returns (48%), the ability to exit with no risk of vendor lock-in (39%) and better choices of currencies (39%).
BSO CEO Michael Ourabah said, “The importance of cloud technologies is well-established among financial service institutions, but this is the first report of its kind to uncover the impact of poor cloud connectivity on the commercial success of businesses. The losses financial service institutions have witnessed in the last year due to poor cloud connectivity should be a wake up call to the industry.
“The findings raise an important question – why are institutions hesitating to make changes to their cloud connectivity when solutions are readily available? Whatever the answer, the most successful institutions will be those that take a proactive approach to their cloud strategy.”
The north-south cloud divide
The report also compares the “north-south cloud divide” when comparing markets across several cloud performance metrics. It said firms in the US, UK and France are consistently estimated with considerably higher impacts from poor cloud performance when compared to their southern hemisphere counterparts, Hong Kong, Singapore and Brazil.
It said that cumulative losses topped $442.67m for France, UK and US firms, compared to losses of $64.71m from Hong Kong, Singapore, Brazil firms.
The ‘Cloud connectivity and the future of financial markets’ report surveyed 600 IT decision makers in financial service sectors including banking, trading, brokerage, financial exchanges and crypto exchanges. It includes companies from France, Germany, the UK, the US, Hong Kong, Singapore and Brazil.
Find the full survey here.
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