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Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016

Gartner released its IT predictions for vertical industries yesterday, which included forecasts on the growth of cloud in banking and changes in consumer behavior.

More than 60% of banks worldwide will process most of their transactions in the cloud by 2016, Gartner predicted in a new report released yesterday. That growth in cloud adoption will be driven by a poor return on equity, Gartner said in the report, titled “Top Industries Predicts 2014: The Pressure for Fundamental Transformation Continues to Accelerate.”

[See Related: How Lack of Expertise Is Hampering Cloud Adoption]

The report also predicted growth in the consumer use of personalized “context-aware” offers and coupons. The report forecasted that 15% of consumers would respond to such offers based on their demographic and shopping profile by 2017.

Providing such personalized offers have been a hot topic in banking as both a use case for data and analytics and as a means for furthering the adoption of mobile payments by tracking shopping patterns and geographic location.

“Many industries will face intense challenges in 2014 and beyond, and will have no choice but to radically change their established business models,” Kimberly Harris-Ferrante, the vice president and analyst for Gartner who wrote the report, said. “Last year saw many industry decision-makers focusing on adopting new technologies to improve business operations… Today, by contrast, leaders are significantly shifting their business models and processes.”

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Becca L
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Becca L,
User Rank: Author
11/7/2013 | 4:24:38 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
Excellent point. Other financial industries are jumping on board, banks may be late to the party but they'll get there, even if it requires some arm twisting by shareholders.
MikeM963
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MikeM963,
User Rank: Apprentice
11/6/2013 | 11:37:51 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
I think he is on the money. In fact, it extends beyond consumer transactions to credit underwriting, and even collection of financial data from business clients. Here is an example of cloud technology banks are already starting to adopt. http://vimeo.com/finagraph/int...
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/31/2013 | 1:53:53 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
TechGuy1313 that's a great video! Well done and it has a lot of great information. Thanks for sharing.
TechGuy1313
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TechGuy1313,
User Rank: Apprentice
10/29/2013 | 8:02:04 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
Hi Jonathan, this is a nice report on Gartner's release, but here some more IT industry projections based on IT leader surveys concerning 2014:
https://www.youtube.com/watch?...
Byurcan
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Byurcan,
User Rank: Author
10/18/2013 | 1:43:44 AM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
Yes the "economics of cloud" so to speak will be too attractive and will eventually overcome security fears, in my opinion.
KBurger
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KBurger,
User Rank: Author
10/17/2013 | 7:02:31 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
Insurance companies certainly are no strangers to hosted models and my sense is that as the options and economics become clearer CIOs are steadily overcoming their previous concerns & objections. I know at least 1 Elite 8 honoree is pretty aggressively pursuing cloud-based systems as a way to help drive growth & speed to market.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/17/2013 | 11:58:25 AM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
Insurers did a little better than banks during and after the crisis, so there isn't as much pressure on insurance CIOs to cut costs. Yes, i know there is always pressure, but bank budgets are being squeezed, and squeezed, and squeezed some more. They really have no choice to turn to the cloud if it offers lower cost alternatives.
Nathan Golia
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Nathan Golia,
User Rank: Author
10/17/2013 | 12:22:19 AM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
Ha, it surprises me a lot. I can't imagine insurers turning over policy processing en masse to the cloud in less than three years. Will have to catch up with Kim and see if she checked in with insurers as well...
KBurger
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KBurger,
User Rank: Author
10/16/2013 | 6:55:55 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
This doesn't surprise me at all, the need to adopt variable expense models and pare costs while at the same time differentiating on service, product development, etc. will give banks no choice but to adopt cloud to support transactions. I guess there could be a question around what kinds of transactions -- payments isn't the same as account opening isn't the same as mortgage origination, etc., each with their own particulars around security, volume, complexity, compliance, etc.
Zarna Patel
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Zarna Patel,
User Rank: Apprentice
10/16/2013 | 6:25:46 PM
re: Gartner: Majority of Banks Will Turn to Cloud for Processing Transactions By 2016
I was thinking along the same lines, but if cloud cuts operational costs enough to give shareholders a nice return, more banks might jump at the opportunity despite concerns.
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