Financial services institutions (FSI) across the Asia Pacific region are under immense pressure to increase agility, improve efficiency, and embrace digital transformation, according to a study by Forrester Consulting.

However, many organisations in the sector still lack thorough understanding of cloud-related banking regulations in order to completely embrace and take advantage of cloud computing.

The study commissioned by Microsoft, ‘Cloud is Critical to Digital Transformation in the Asia Pacific Financial Sector’, evaluated cloud adoption trends among FSI in Asia Pacific and gauged their knowledge and perceptions of cloud-related financial regulations. It analysed the impact of regulatory compliance, security and privacy, and reliability concerns on current and future cloud initiatives.

According to the study, in order to thrive, FSI in Asia Pacific will (and must) increasingly embrace cloud computing - both public and hybrid - and must therefore understand cloud-related banking regulations, formalise internal cloud policies, and implement best practices for engaging with cloud providers and banking regulators.”

One key finding from the study was that leading FSI in the region are actually using regulations to help steer public cloud initiatives, and not as an excuse to stop them. The better the firms’ understanding of regulations, the more likely they are to embrace public cloud services. In most instances, these initiatives are directly tied to customer-facing, digital banking capabilities like new customer acquisition and on-boarding.

“Today the attitudes towards implementing cloud and the related internal policies among FSI in Asia Pacific is clearly maturing as it is increasingly seen as an enabler of the organisation’s journey to digital transformation. But it is important to realise that a cloud strategy can only be successful if there is a clear understanding of cloud-related regulations. As organisations’ understanding of regulations increases, so too does their understanding of how and when to engage regulators and, then in turn, their readiness to adopt cloud solutions,” said Jeff Bullwinkel, associate general counsel and director of the Corporate, External, and Legal Affairs at Microsoft Asia Pacific and Japan.

The study was conducted from November 2015 to February 2016, and involved in-depth interviews with 34 senior IT decision-makers in the Asia Pacific financial services sector from nine markets including Australia, Korea, Malaysia, New Zealand, Indonesia, Singapore and the Philippines. Forrester found that these organisations are at vastly different levels of maturity in cloud understanding and adoption.