More than two thirds of financial institutions intend to adopt the public cloud over the next five years as it becomes a major part of the industry’s digital transformation.

Chirag Shah, who leads the fintech practice for consultancy  Sapient Global Markets, said in a blog yesterday that emerging technologies are becoming more important as financial institutions redefine their data strategies.

“Streaming data platforms, artificial intelligence and data visualization are just some of the tools helping firms gain greater insight and drive revenue,” said Shah. “A crucial enabler of these emerging technologies is the public cloud.”

Over the next three years, 42% of financial institutions planning to adopt public cloud, and 67% over five years. Sapient Consulting and WBR surveyed 99 senior financial industry executives.

The report said: “Taking advantage of public cloud services presents potential advantages in terms of costs and scalability, and respondents are moving to integrate cloud solutions into their data practices over the next several years.”

However, the majority of respondents are still in the midst of researching or evaluating cloud solutions to ensure they are secure, cost effective and scalable. Currently 40% of respondents are still researching cloud implementation and 38% have entered the evaluation phase.

The report said: “64% of respondents allocate less than 20% of their IT budgets to cloud solutions, indicating some interest and adoption, but leaving a large amount of room for expansion.”

The European Banking Authority said in a recent discussion paper on the regulator’s approach to fintech that cloud services are growing in importance as a driver of innovation. In addition,  the increasing interest in the use of cloud outsourcing within the banking industry led the EBA to launch a consultation in May on developing recommendations on the use of cloud services by credit institutions and investment firms. The consultation runs until 18 August 2017.

The EBA said: “The recommendations address five key areas: the security of data and systems, the location of data and data processing, access and audit rights, chain outsourcing, and contingency plans and exit strategies.”

The full Sapient survey can be read here.