Government snooping agencies and criminals are giving banks the jitters when it comes to using cloud computing, a survey shows.

Keeping data out of the prying eyes of criminals – and allegedly rogue government agencies – is the biggest reason why banks are nervous about the benefits of cloud computing solutions, while product innovation is the top investment priority, a survey by Temenos has found.

The Switzerland-listed financial technology firm said that its annual customer survey, conducted among 198 senior bankers, found that 38 per cent of respondents said data security was the biggest barrier to more widespread adoption. This response is a big jump from the results of last year and may have been influenced by allegations that the US National Security Agency has been spying on its own citizens.

Survey findings show that 86 per cent of institutions run at least one application in the cloud, an increase from 57 per cent in 2009.

Product innovation is the top priority of investment spending, cited by 24 per cent of respondents. Among retail banks, the number was even higher, at 26 per cent. Other key priorities, in turn, are digital channels, complying with new regulation and IT modernisation.

In terms of industry concerns - regulation, new competition and changing customer behaviour emerged as the biggest challenges. As in 2013, maintaining customer loyalty was the single biggest concern, cited by 30 per cent of respondents, with bankers concerned that more empowered and better informed customers may begin to switch providers in greater numbers.

The survey found that competitive pressures from outside the industry, that is, from non-banks, are considered at least as serious as competition from within the industry and with technology vendors, with Apple and Google seen as the greatest threats (cited by 23 per cent of respondents).