Accenture Research Finds Four in Five Banks Planning to or Already Migrating Mainframes to the Cloud Are Doing So Quickly

Rhea-AI Summary

Banks are shifting from legacy mainframes to cloud solutions, as highlighted in Accenture's recent report. The survey of 150 banking executives indicates 82% plan to migrate over half their mainframe workloads to the cloud within the next 2-5 years, citing benefits like speed and security. Most banks still rely on outdated mainframe systems for core operations, which hampers innovation. However, 62% expect over 10% internal return on their migration investments, with 77% anticipating recovery within 18 months. Key challenges include talent retention and compliance risks.

Positive

• 82% of banks plan to migrate over half their mainframe workloads to the cloud.
• 62% of executives expect an internal rate of return greater than 10% from migration investments.
• 77% anticipate recovering their migration investment within 18 months.
• 91% of banks reported increasing costs of maintaining mainframes, indicating a need for migration.

Negative

• Many banks still rely on older mainframe technology for core business functions.
• Retention of technology talent poses a significant challenge.
• Risks of business disruption during migration are a concern.

Mainframe migration is an important digital transformation step, but tackling talent retention and operational complexity will be key

NEW YORK--(BUSINESS WIRE)-- Banks are reducing their decades-long reliance on legacy mainframe technology and planning to move a significant portion of their core business functions to the cloud to launch new products quickly and remain competitive, according to a new research report from Accenture (NYSE: ACN).

Titled “The great cloud mainframe migration: what banks need to know,” the research is based on a global survey of 150 banking executives whose institutions are planning to or have already started to migrate their mainframes to the cloud.

The research found that about four in five respondents (82%) plan to move more than half of their mainframe workloads to the cloud — including nearly one in four (22%) who aim to move more than three-quarters — and the vast majority plan to do so in the next two to five years.

Most banks have started moving certain applications to the cloud, but they still rely on older mainframe technology for most core business functions, including customer records, payments, investments, risk and compliance.

“While many banks have embraced cloud for customer-facing systems like mobile and online banking and employee tools like email and video conferencing, they still rely on older mainframe technology for their core business functions,” said Michael Abbott, who leads Accenture’s Banking industry practice globally. “As a result, most basic banking products like checking and savings accounts are powered by a spaghetti tangle of code written decades ago. Faced with rising interest rates, competition from fintechs and increased competition for deposits, banks are looking to the cloud to help them quickly drive core banking product innovation.”

The report notes that these banks see a strong business case for mainframe migration, with speed and agility; security; and the ability to add new capabilities as strong motivators for migrating (cited by 43%, 41% and 37% of the respondents, respectively). Three in five executives (62%) expect an internal rate of return on their migration investments greater than 10%, and more than three-quarters (77%) expect to recover their mainframe migration investment within 18 months.

Among the main challenges or barriers related to mainframe cloud migration are the risk of business disruption; a lack of understanding of how the code works; the ability to attract and retain the right technology talent; and regulation of security and compliance risks.

“Banks do well at recruiting and investing in young talent, but retention is a struggle,” said Abbott. “Successful banks are reshaping their cultures by creating roadmaps for the skills they need in the future and developing strategies for hiring from new talent pools and reskilling their workforce. Some are also dramatically increasing their use of external talent pools and embracing remote and hybrid workforces. Tackling talent challenges will be crucial for banks in achieving their mainframe migration goals over the next few years.”

Among other key findings:

• Banks see the cloud as an opportunity for efficiency as mainframe costs rise. The vast majority (91%) of banks surveyed reported that the cost to maintain mainframes has increased over the past few years.
• Talent needs are specific. The banking executives surveyed see the greatest demand for cybersecurity skills (47%) and cloud solutions skills (46%), including being able to design cloud-based virtual infrastructure, platforms, and applications for speed and agility.
• Most legacy mainframes are between five and 20 years old. 58% of those surveyed said their mainframe systems are 5-10 years old; 27% are 11-20 years old; and 9% are 21-30 years old.
• Public cloud is the preferred option for core system migration. Nearly two-thirds (63%) of banks plan to move their mainframe workloads to public cloud environments, which can provide added cost-efficiency, flexibility and ease of regulatory compliance; about one-third (31%) plan to use a hybrid cloud model; and just 6% plan to use private cloud.

About the research

The report, titled “The great cloud mainframe migration: what banks need to know,” is the fourth volume of Accenture’s Banking Cloud Altimeter digital magazine series. It is based on a survey of 150 information technology and innovation executives representing banks in 16 countries across five continents. These banks, which all have more than US$100 billion in assets (33% have more than $1 trillion in assets; 33% have $500 billion to $1 trillion in assets; and 33% have $100 billion to $500 billion in assets), either plan to or are in the process of migrating their core functions to the cloud. Countries represented include Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Saudi Arabia, Singapore, Spain, Sweden, the United Kingdom and the United States. The survey was conducted online in December 2021.

About Accenture

Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialized skills across more than 40 industries, we offer Strategy and Consulting, Interactive, Technology and Operations services — all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 699,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at accenture.com.

Copyright ©2022 Accenture. All rights reserved. Accenture and its logo are registered trademarks of Accenture.

This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors. This document refers to marks owned by third parties. All such third-party marks are the property of their respective owners. No sponsorship, endorsement or approval of this content by the owners of such marks is intended, expressed or implied.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220428005523/en/

Susan Kirwin

Accenture

+1 416-641-5148

susan.kirwin@accenture.com

Michael McGinn

Accenture

+1 312 693 5707

m.mcginn@accenture.com

Source: Accenture

FAQ

What does Accenture's research report on banks and mainframe migration focus on?

Accenture's report focuses on how banks are migrating from legacy mainframe technology to cloud solutions, aiming for increased efficiency and competitiveness.

How many banks plan to migrate their mainframes to the cloud according to Accenture's report?

According to the report, 82% of banks plan to move more than half of their mainframe workloads to the cloud.

What return on investment do banks expect from mainframe migration?

62% of banking executives expect an internal rate of return greater than 10% on their migration investments.

What are the main challenges banks face in migrating to the cloud?

Key challenges include talent retention, business disruption risk, and compliance with security regulations.

What is the preferred cloud model for banks migrating their systems?

Nearly two-thirds (63%) of banks plan to migrate their mainframe workloads to public cloud environments.