2020 Digital

Transformation &
Cloud Survey
Key Takeaways for Financial Institutions
Our Digital Transformation & Cloud Survey, conducted in August 2020, explores the links between digital transformation and the use of data and assesses the
importance of cloud computing within a digital transformation program.

The survey had respondents across six industry sectors, in the following we highlight the key takeaways for Financial Institutions. Click on the image below to read the
full survey results.
Key takeaways for Financial Institutions

Digital Transformation

 There is much evidence that the COVID-19  Yet not all industries are transforming at the same
 Digital transformation programs are moving
pandemic has had a major impact on the speed. Historically, regulated sectors such as
from planning to reality across all sectors.
speed of digital transformation. 58% of financial institutions and healthcare and life
Nearly 2/3 of survey respondents have embarked
respondents say that the pandemic has sciences have seen significant barriers to digital
on a digital transformation program. The need to
accelerated their plans toward digitalization transformation but this is not reflected in the
increase operational efficiencies and
across all sectors. survey results for financial institutions.
business agility (rather than a desire to seize
new business opportunities) are driving decisions
to invest in these digital transformation programs.

 Top 3 Benefits Plan to accelerate digital transformation projects as a result of

1. Improved business agility COVID-19 (by sector)

2. Better client communications

3. Faster time to market for new products and
services

 Top 3 Barriers
1. Integration of new and legacy systems
2. Lack of clarity on how Digital
Transformation can improve operations
3. Lack of staff expertise and skills
 Not all digital transformation projects are a
success. A quarter of the respondents said their
digital transformation program actually led to
confusion, and for many the apparent completion
of a program is only a staging post.
 Just 1 in 3 of those having conducted a digital
transformation program say it has improved
internal business processes.

Sector view on readiness to benefit from digital transformation

Telecoms, Media, Technology

Industrial, Manufacturing, Transportation

Healthcare

Financial
FinancialInstitutions
Institutions

Energy, Mining, Infrastructure

Consumer Goods & Retail

0 5 10 15 20 25 30 35 40

No of Respondents saying DT has caused confusion No of Respondents saying DT a success No of Respondents completing DT

 Cybersecurity & cloud are tech investment
priorities for digital transformation programs
across all sectors. Cybersecurity is
unsurprisingly front of mind given the real
possibility and dire consequences of a data
breach. Cybersecurity is also particularly
resonant as businesses think hard in the context
of global trade tensions about cross-border data
ownership complexities and how to protect data
sovereignty especially if their data centers are
based overseas.
Cloud
 Cloud remains on the top of the list of
essential technology for enterprises. Survey
results reveal a definite trend in companies
moving toward the use of private cloud,
highlighting an increase in concerns over data
security (which includes cyber security) and
disaster recovery. This has been further
accelerated by the adoption of remote working
among businesses due to COVID-19 lockdowns.

Percentage of respondents citing heavy investment

IoT & Smart Devices 18

Digital Transformation 26

Artificial Intelligence 14

Data Analytics 20

Cybersecurity 36

Cloud Computing 27

Automation & Sensors 9

0 5 10 15 20 25 30 35 40
Case A leading multi-national investment bank was looking
to expand its use of cloud-based web services
globally across business as usual and corporate
We drew on our close knowledge of the cloud service
providers concerned, including our familiarity with the
structure of their contractual documentation. The

Study
functions. The bank wanted to update existing Master review had to make special provision for countries
Services Agreements and move more critical with banking secrecy and special client confidentiality
activities to the cloud, thereby increasing the use of restrictions.
cloud-based SaaS (software as a service) at the
Our work helped the bank to ensure compliance with
same time.
its legal and regulatory obligations across each
Originally, the timescale for completion was over a jurisdiction over outsourcing, cloud services, data
few years. Due, however, to COVID-19 and its protection, client confidentiality/banking secrecy and
acceleration of digitalization, for example, with cybersecurity.
increased use of services such as remote banking
and staff working from home, the bank's C-suite
decided to both fast-track and expand the reach of
the project with completion now required within a
matter of months.

One of the challenges was to advise the bank on

compliance with legal and regulatory requirements in
not only its home country, but in scores of other
jurisdictions worldwide. Baker McKenzie was
appointed as legal partner and assembled a multi-
disciplinary / jurisdictional team experienced in
advising on cloud outsourcing and with a deep
understanding of financial institutions.
 Cloud adoption – notable trend towards  Greatest impact of cloud cited as operational
respondents being both a buyer and provider. efficiency (68%) and agility (56%). Given the
Key benefits of cloud use as reported by
Based on the results of prior surveys, the higher complex internal structure of many Financial Financial Institutions respondents
the number of respondents acting as both, the Institutions our survey highlights a key benefit of
more mature the market, because it tends to cloud being operational efficiency for the FI
mean that respondents are running applications sector. Communications, new revenue streams, 80
on the cloud (providing services) while also cost reduction, and customer engagement
70 68
sourcing cloud infrastructure. Of interest, FI is followed as perceived benefits in that order.
just as far along as TMT by this metric.
60 56
51 51
49
50 46
Percentage of respondents acting both as buyer and provider of cloud services

40
CG&R

30
EMI
20

FI 10

0
HLS FI

Business agility
IMT Communications
Cost reduction

TMT Customer engagement

Operation efficiencies
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% New revenue streams
 Cloud agreements – latest negotiation trends.
95% of respondents say that the cloud
agreements they sign are either the service
provider standard terms or standard terms with
some negotiated terms from the customer. The
single most negotiable term is fees. However,
there are considerable nuances between sectors
with companies in the FI sector most likely to see
choice of law/venue as most negotiable.
5%
Service provider
standard contract
terms
51%
Service provider
standard contract
terms with some
customer terms
44% Customer paper
 Data Residency – Trend to continue to watch.
Data Residency laws are still having an impact on
the cloud adoption of the majority of businesses
surveyed; over 50% saying that they have
changed or are considering changing their cloud
usage in response to data residency laws.
 Rise of Private Cloud. 80% of respondents use
private or a hybrid of private and public cloud. Type of Cloud in use
This reflects the importance of data security,
control of data and disaster recovery to 16%
respondents. From an industry perspective, the
38% Public
companies most likely to adopt private cloud are
Private
Financial Institutions and businesses from the
HLS and IMT sectors — all tend to have Combination
heightened concerns around data security and Do not know
sovereignty. 43%
 Concerns about cloud deployment. The
biggest concern around cloud adoption is data
privacy, just ahead of cyber-attacks and data
control. The survey’s findings on the biggest
concerns by sector highlight the need for cloud
agreements to be especially tight on issues such
as:
Confidentiality
Particularly for Financial Institutions and
Healthcare & Life Sciences companies
Data Sovereignty
Particularly for consumer services companies
Data Protection
Particularly for Industrial and Energy
businesses
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