Many banks agree that a hybrid cloud infrastructure can facilitate innovation and digitalization. But achieving this can prove challenging. In addition to security and compliance concerns, a lack of expertise can be a major roadblock when pursuing a transformation, according to one report.

The Enterprise Cloud Index Report, published today by software company Nutanix, shows that while 91% of FIs agree that a hybrid cloud (combination of public and private cloud) is an ideal IT model, those bank executives also cited lack of skills as a significant barrier. And about 54% cited difficulty in retaining existing expertise as only adding to the issue.

The report shows that skills in cloud ranked second in scarcity to those in artificial intelligence (AI) and machine learning (ML), two other technologies crucial to a bank’s digital transformation.

In a statement released to Bank Innovation, Chris Kozup, SVP of Global Marketing at Nutanix, said:

The current relatively high adoption of hybrid cloud in the financial services industry shows that financial firms recognize the benefits of a hybrid cloud infrastructure for increased agility, security, and performance. However, the reality is that financial services firms still struggle to enable IT transformation, even though it is critical for their future.

The report shows that while 88% of FIs believe hybrid cloud could have a positive impact on their institution’s business, the penetration rate across the financial services sector worldwide is only 21%.

A modern core is essential to support the many digital transformations brought on by technologies like AI, ML and automation. “The innovation we are seeing now — balance checking apps, PFMs, etc. — they are great,” Paul Taylor, CEO and co-founder of the core-as-a-platform company Thought Machine, previously told Bank Innovation. “But this is going to run out of steam after a while.” The only way to create an environment conducive to deep, root-level digital transformation is by modernizing the FI’s core system, he said.

Also Read: Why Lloyds Bank Is Moving Its Core to the Cloud in 2019

And indeed, most FIs agree with Taylor’s statement. The Nutanix report shows that 88% of bank executives believe that a modern core will have a positive impact on their institution’s business.

In ranking desirable qualities of the hybrid cloud, application mobility ranked number one, according to the report. Application mobility is the ability to move apps seamlessly across private and public cloud infrastructures while maintaining unified management and operations. About 63% of financial industry respondents said they considered inter-cloud application mobility as an “essential” feature. 

Nutanix commissioned Vanson Bourne, a technology-focused research firm, to survey more than 2,300 IT decision makers, including 333 FIs across the Americas, Asia, Europe and the Middle East, Africa (EMEA) region. Respondents were asked where they are running their business applications today, where they plan to run them in the future, what their cloud challenges are and how their cloud initiatives stack up against other IT projects and priorities.

See the full report here.

Based in New York, Nutanix is a cloud software and hyper-converged infrastructure provider to the financial services industry and other sectors.