Capgemini: Insurers Struggle to Extract Value From Cloud
Financial institutions worldwide invested billions in cloud computing technology during the Covid-19 pandemic to enable remote operations. Yet three years later, these investments have failed to deliver expected returns, according to research published by Capgemini, the global technology consulting firm.
The shift toward cloud computing – which allows organisations to access computing resources over the internet rather than maintaining their own data centres – represented one of the largest technology transformations in banking history. Major institutions moved core banking operations, customer data and trading systems to cloud platforms provided by technology companies including Amazon Web Services, Microsoft Azure and Google Cloud.
The World Cloud Report for Financial Services 2025, produced by Capgemini's research division, indicates that fewer than 40% of financial services executives express satisfaction with their cloud computing outcomes. The study examined cloud adoption across 600 financial institutions in 13 markets.
Technology adoption challenges
Traditional banks and insurers implement cloud solutions primarily to reduce operational costs, with 84% citing this as their main objective. In contrast, financial technology companies and insurance technology firms focus on using cloud computing to increase sales, with 62% pursuing this goal.
The research reveals that only 12% of financial institutions qualify as ‘cloud innovators’ – organisations that implement cloud technology through defined strategies and mature technical ecosystems.
The transition to cloud services has accelerated, evidenced by a 26% increase in cloud-related terms appearing in annual reports of the top 40 tier-one banking and insurance firms between 2020 and 2023.
Ravi Khokhar, Global Head of Cloud for Financial Services at Capgemini, says: “Cloud adoption should be viewed as the start of a transformative journey that fuels long-term business growth, rather than the end game or destination.”
Regulatory pressure intensifies
The report emerges as financial institutions prepare for new regulatory requirements. The European Union's Digital Operational Resilience Act takes effect in January 2025, introducing stricter rules for technology platform usage. In the United States, recent rulings from the Consumer Financial Protection Bureau on open banking will require institutions to facilitate customer data sharing.
While the technology is seen by financial institutions as a building block, some firms still consider cloud a cost-saving measure.
Traditional financial institutions face three primary obstacles in managing customer data. The research shows 71% struggle with integrating information across older computer systems, 70% encounter difficulties protecting customer data and maintaining privacy, and 69% face challenges with data quality.
These limitations affect business performance. The research indicates that cloud innovators achieve superior results, with 32% exceeding targets for selling additional services to existing customers, compared to 12% of other institutions. Similarly, 32% of cloud innovators succeed in generating revenue from their data, versus 10% of their competitors.
Technology skills gap
The report identifies significant gaps in technology capabilities among traditional financial institutions. Only 15% demonstrate maturity in artificial intelligence implementation, while 30% show capability in predictive analytics – technology that uses historical data to forecast future outcomes. Additionally, 22% display competence in robotic process automation, which automates repetitive manual tasks.
- Cloud mentions in top 40 banks' annual reports increased 26% between 2020-2023
- Only 12% of financial institutions classified as "cloud innovators"
- 15% of traditional institutions show AI capability maturity, 30% in predictive analytics
- 32% of cloud innovators exceed cross-sell targets vs 12% of other institutions
The research draws from surveys conducted between June and August 2024, covering 600 financial services executives across 13 markets including the United Kingdom, United States, France and Germany. The study also incorporates insights from 120 financial technology and insurance technology executives.
“What's clear from our research is that while the technology is seen by financial institutions as a building block, some firms still consider cloud a cost-saving measure, whereas innovative disruptors leverage it to redefine their operations,” Ravi says.
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