Banking on Cloud: Prospects and Challenges

Abstract

This research investigated the prospects and challenges of cloud computing adoption in the Kenyan banking sector. The key objectives were to assess the current level of cloud adoption, identify perceived benefits such as cost savings and scalability, examine barriers like compliance risks, security threats, and dependence on third-party service providers, and explore the mitigations for the identified risks and challenges. This was a census study, and it employed a mixed-methods approach, combining quantitative surveys with qualitative interviews with ICT staff and leaders across commercial banks in Kenya. This research contributed to the existing literature by providing empirical insights specific to the Kenyan context and proposing actionable strategies for mitigating risks associated with cloud adoption. The findings showed that About 95% of Kenyan banks are currently using cloud computing services, with the highest usage seen in Software as a Service (SaaS), followed by IaaS and PaaS. Over 70% of the banks reported significant cost savings on IT infrastructure and maintenance after moving to the cloud. The study found that Major challenges include regulatory compliance issues, data security risks (such as breaches and cyberattacks), high upfront costs, lack of skilled personnel, and organizational resistance to change. The study recommends that Banks should strengthen Cloud Security measures by investing in advanced security practices, such as multi-factor authentication, data encryption, regular security audits, and continuous monitoring, to address growing concerns around data breaches and cyber threats. Future research could compare how public and private sector organizations in Kenya adopt cloud computing, what problems they face, and what benefits they see, in order to find trends and best practices that are specific to each sector.