For financial institutions, the cloud has moved beyond experimentation. It is now a strategic imperative, underpinning everything from digital banking to real-time analytics. Yet in today’s regulatory and risk-conscious environment, the question is no longer whether to move to the cloud, but how to do so responsibly.
Andrew Bennett, new business development manager, Routed says that hybrid models are becoming the default: “Financial institutions are discovering that not all workloads belong in the same environment. Legacy systems of record, compliance-heavy platforms, and core banking applications are best suited to hosted private cloud environments, where control, stability, and compliance can be guaranteed.” He says that by contrast, customer-facing digital services such as mobile apps, portals, and analytics benefit from the scalability and feature set of the public cloud.
“This deliberate workload placement is fast becoming the cornerstone of cloud strategy in the sector, enabling organisations to innovate while maintaining regulatory discipline,” says Bennett.
Compliance and sovereignty take precedence in the financial services sector which operates under some of the world’s strictest frameworks: PCI DSS for payments, ISO 27001 for information security, POPIA in South Africa, GDPR in Europe, and others. On top of this, Bennett says that legislation such as the US CLOUD Act has brought data sovereignty into sharp focus.
“Boards now demand clarity on where customer and transaction data is stored and under whose jurisdiction it falls. Increasingly, institutions are choosing to keep data hosted locally and governed by local law to protect client confidentiality and mitigate compliance risk,” explains Bennett.
But he says that cost transparency over complexity is key. While public cloud offers unmatched scalability, its variable usage-based pricing can be problematic. Complex billing structures, hidden fees such as egress charges, and multi-year spend commitments have left many institutions facing unexpected costs.
Bennett says that as a result, many CIOs and CFOs are prioritising predictable monthly billing, often available through hosted private or virtual private cloud solutions: “This approach enables accurate forecasting and reduces the risk of “bill shock”, he explains.
Building resilience through recovery is now viewed as a business-critical metric. Ransomware, cyberattacks, and infrastructure failures mean that disaster recovery and backup strategies are no longer optional.
Best practice follows the “3-2-1 principle”: three copies of data, stored on two different media, with one offsite in the cloud. Cloud-based Disaster Recovery as a Service (DRaaS) and Backup as a Service (BaaS) provide financial institutions with the ability to recover quickly, while aligning with governance, risk, and compliance (GRC) obligations.
“It is about shared responsibility in practice. A recurring misconception is that cloud providers assume full responsibility for security. While, in reality, it is the providers that safeguard infrastructure and the institution secures access, identities, and data.”
This means deploying layered defences across endpoint devices, access management systems, and backup environments, while also investing in employee awareness training. Bennett says that human error remains one of the greatest threats to data security, and regulators are increasingly holding boards accountable for lapses.
Avoiding vendor lock-in has become more achievable as vendor neutrality and exit strategies have moved to the top of the agenda. While hyperscalers offer powerful tools, these can create migration barriers and long-term dependencies. Institutions are now seeking platforms that offer portability, transparent terms, and the flexibility to adapt to evolving business strategies.
Cloud is no longer simply a technology platform; it is an operating model. For financial services organisations, success depends on making informed choices: matching workloads to the right environments, enforcing sovereignty and compliance, ensuring resilience through layered defences, and avoiding the traps of vendor lock-in.
“The institutions that strike this balance will be those that modernise with confidence, protect customer trust, and position themselves to thrive in a rapidly changing digital economy,” says Bennett.
