Banks can save up to $246 billion over five years if they adopt cloud-native infrastructure, a new study by Mambu and Celent shows.
The paper titled ‘The Tipping Point for Core Migration’ details all of the sectors that financial institutions can expect to save from if cloud-based services are implemented.
Mambu benchmarks show that a total of 76% in core spend can be achieved over a five-year period, 15% less in IT spending, a 50% reduction in up-front costs, as well as 18% less in recurring costs such as maintenance and usage-based licensing.
Celent analysis then fills in that cloud migration will also result in a 30 to 40 percent cost reduction in maintenance by removing outdated legacy systems out of the equation.
Werner Knoblich, Chief Revenue Officer at Mambu, said: “Competing in banking over the next decade will require banks to firmly step foot into the cloud. Our research with Celent should serve as a catalyst for financial institutions to fully consider this modern alternative to legacy cores.
“Aside from the cost reduction, these next-generation, cloud-based banking platforms support a businesses’ ability to adapt to market changes and shifting consumer demands.
“Each financial institution will modernise in their own way, but Celent’s analysis demonstrates beyond doubt that now is the time for financial evolvers to kickstart changes if they want to remain competitive in the years ahead.”
Remaining competitive seems to be a recurring focus of the study, as it points out that a cloud infrastructure can significantly increase new product launch capabilities, with speed to market rates potentially rising by 85%.
Craig Focardi, Principal Analyst at Celent, commented: “The modernisation of all banks is no longer an ’if’ but a ‘when’. Although not all banks will be modernising in the same way, financial institutions should be taking notice of the shift to a cloud core.
“In addition to being more affordable to integrate and operate than legacy systems, moving to the cloud enables banks to adapt fast, whether it is through product offers or system modifications.
“Our analysis with Mambu really highlights that the need for a cloud-native approach has never been greater – for both banks and their consumers.”