New survey findings from SAP and analyst firm Ovum show a surging demand for cloud technology among retail banks and insurance companies. Software-as-a-service offerings are now being considered in almost all new IT investment projects, according to the report.

Banks and insurers face increasing pressure from new competitors, tighter regulatory requirements and highly sophisticated customers, the report says. They realize that the cloud can create efficiencies and protect their competitive position, especially in the case of SaaS.

"The findings reveal a new maturity for cloud computing in the financial services industry," Daniel Mayo, chief analyst of Ovum, said in a statement. "The cloud is now a growth driver for banks and insurers, rather than a medium just for bringing costs down. They are buying SaaS solutions to simplify operations, develop better products and quickly enter new markets. The industry has made it clear that SaaS will radically change the banking and insurance landscape."

Previously restricted to horizontal functions, SaaS is already supporting a majority of functions within the line of business, as evidenced by 42 percent of banks and 36 percent of insurers in the survey.

The survey shows that IT decision-makers in retail banks expect to see more investment in the cloud. In total, 42 percent expect SaaS spending will "increase significantly" over the next 18 months, compared with 33 percent among insurers.

SaaS is the preferred option for 27 percent of banks and insurers, with a further 42 percent considering it for every IT project.

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