Market Trends of UK Cloud Computing Industry
Strong Government Support for Promoting Cloud Adoption
- The UK government has rolled out the G-Cloud framework, creating a digital marketplace where public sector organizations can easily procure cloud services from a roster of pre-approved suppliers. This setup allows public-sector entities to swiftly compare and acquire services without an exhaustive review process. As a result, the initiative has significantly accelerated the adoption of cloud services, simplifying the transition to cloud technologies for public sector entities.
- In February 2024, the UK government unveiled two tenders for cloud services, with potential expenditures reaching up to EUR 7.5 billion (USD 9.5 billion) under the established framework agreements. The Crown Commercial Service, acting as the purchasing arm of the Cabinet Office, initiated the competition for G-Cloud 14 Lots 1-3. This framework deal, primarily focused on cloud hosting, is accessible to a diverse array of local public sector bodies and holds a potential value of up to EUR 6.5 billion (~USD 7.03 billion).
- Through initiatives like the "Cloud First" policy, the UK government is steering public sector organizations toward prioritizing cloud-based solutions for their IT projects. This push has catalyzed substantial investments in cloud infrastructure and services throughout the United Kingdom.
- The UK government is channeling funds into digital infrastructure projects, notably 5G networks and high-speed internet. These enhancements bolster the reach and efficiency of cloud computing services, ensuring that both businesses and public services can harness the full potential of cloud technologies.
- As per GSMA Intelligence, in 2022, 4G (or LTE) technology dominated mobile data connections in the United Kingdom. However, this landscape is poised for a shift, with projections indicating that by 2030, a staggering 93% of all connections will be powered by faster 5G technology.
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BFSI is Expected to Hold a Major Share of the Market
- In the United Kingdom, the BFSI sector faces stringent regulatory requirements, including GDPR and FCA guidelines, demanding robust data management and security solutions. Cloud service providers, equipped with necessary compliance frameworks, make cloud computing an appealing choice for financial institutions.
- Cloud computing provides BFSI firms with cost-effective solutions by minimizing the reliance on physical infrastructure and enabling flexible scaling of IT resources. This cost efficiency is paramount in the competitive financial market, where agility can yield a significant edge.
- For instance, in November 2023, Aldermore Bank, a UK retail bank and lender, formed a strategic alliance with Mambu, a cloud banking platform. Aldermore Bank caters to homeowners, landlords, and business owners with financing solutions, alongside offering savings accounts and motor finance. Through this collaboration, Aldermore aims to modernize its technological approach, enhancing its clientele's unique experience. Mambu, a rapidly expanding SaaS cloud banking platform in the United Kingdom, accelerates the design and development of diverse financial offerings for a wide range of clients, including banks, lenders, fintechs, retailers, and telcos.
- The UK's rapid surge of FinTech companies, often dubbed Europe's FinTech capital, has further propelled the BFSI sector's embrace of cloud computing. With cloud technology, these firms can swiftly innovate, scale, and deliver competitive digital financial services.
- For instance, as reported by Innovate Finance, the United Kingdom witnessed a significant decline in fintech investments in 2023, reversing a trend of consistent growth. Investments plummeted to USD 5.12 billion in 2023, a steep drop from the USD 14.62 billion recorded the previous year.
