By Rajsri Rengan, Head of Product Development, Infosys Finacle and Ram Devanarayanan, Head of Business Consulting, Infosys Finacle
The financial services landscape is in the midst of a digital revolution, where the ability to adapt and innovate is paramount to stay relevant tomorrow. In such an environment where tomorrow’s functionality is expected yesterday, banks require the edge of next-generation technology with a solid track record in the market—delivered today. Here, banks find that cloud stands as a proven enabler of agility, scalability, and resilience in core banking. According to a McKinsey analysis, Fortune 500 financial institutions could achieve between $60 billion and $80 billion in annual EBITDA by 2030 by fully leveraging cost-optimization strategies and business applications enabled by cloud technology.1 In another 2022 survey by Mckinsey, 54% respondents said they expect to shift at least half of their workloads to the public cloud over the next five years.2
While banks are looking to accelerate their journey to cloud adoption they are seeking answers to some key questions: What challenges are encountered in the journey to cloud and how to best address them? How can banks leverage cloud in addressing security and compliance more effectively? What strategic approaches and best practices will ensure success in accelerating core transformation on cloud? We look to address some of these questions here.

The Cloud’s Transformative Potential
Cloud technology is revolutionizing the way banks operate and compete in the evolving banking ecosystem, enabling them to deliver seamless digital experiences, leverage innovative business models, and secure transactions. According to a Capgemini report, the financial industry has accelerated cloud adoption initiatives in recent years: the percentage of firms which have embarked on their cloud journey rose from 37% in August 2020 to 91% in August 2023.3 This is a paradigm shift in how banks are operating their core banking operations.
Key Priorities Driving Cloud Adoption
Let’s look at how cloud can empower banks in succeeding with their priorities and amplify outcomes.
We’re in an era where digital growth is redefining the pace of business. Consider this: in India, UPI processed a staggering 13.44 billion transactions in March 2024 alone 4—a benchmark for the scalability all regions will soon demand. Legacy systems can’t compete in this environment. The cloud, with its elastic design, lets banks scale resources up or down instantly, a critical advantage in today’s fast-paced digital world where transaction volumes and customer needs fluctuate rapidly. During peak times, it manages immense transaction volumes, while in quieter periods, it allows for efficient resource management. This adaptability to shifting market conditions ensures performance at its peak.

A recent study from Juniper Research projects BaaS (Banking-as-a-Service) platform revenue to surpass $38 billion by 2027, climbing from $11 billion in 20225. Banks today are keen to scale up on these new business models. Cloud-based core systems support this shift, enabling seamless integration with fintech partners and external platforms through APIs and microservices. This flexibility allows banks to dive into business models like embedded finance and open banking, extending their reach, introducing innovative services, and creating fresh revenue streams.
Regulations like DORA, Prudential Standard CPS 230, and the UK’s Operational Resilience are setting strict standards for resilience. The average cost of a U.S. data breach is estimated at $9.36 million in 20246. Cloud platforms are rising to meet these demands with enhanced security, regulatory compliance, and disaster recovery capabilities. These measures not only guarantee business continuity but also safeguard sensitive customer data against potential disruptions. With built-in security, compliance certifications, and redundancy, banks gain peace of mind that their operations remain secure and resilient.
Goldman Sachs Research predicts AI investment to reach $100 billion in the U.S. and $200 billion globally by 20257. With cloud infrastructure, banks are ready to leverage automation, artificial intelligence (AI), and advanced data analytics. This shift speeds up processes like loan origination and customer onboarding, reduces manual errors, and frees up valuable human resources to focus on strategic, higher-value work.
Common Challenges Encountered in Embracing Cloud
While the cloud offers numerous benefits, the journey to cloud adoption is not without its challenges:
Data security and regulatory compliance are paramount in the financial services industry. Banks handle sensitive customer data, and any breach can have severe consequences. When migrating to the cloud, banks must ensure stringent security measures are in place and adhere to evolving regulations, such as GDPR and other data protection laws.
Integrating legacy systems with the cloud can be complex and requires careful planning. Many banks still rely on outdated core banking systems that were not designed to work with cloud technologies. Banks need to adopt strategies like the “strangler pattern” to gradually phase out legacy applications and introduce cloud-native services, ensuring a smooth transition without disrupting critical operations.
Cloud adoption demands new skill sets. As banks move to the cloud, they need to ensure their workforce is equipped with the knowledge and expertise to operate in a cloud-first environment. This may require investing in training and development programs to upskill existing staff or hiring new talent with cloud expertise.
While the cloud can deliver long-term cost savings, the initial migration investment can be significant. Banks must strategize for a cost-effective transition, considering factors such as data migration, application re-architecting, and ongoing cloud infrastructure optimization. It’s essential to have a clear understanding of cloud pricing models and implement cost management tools to monitor and control cloud spending.
Strategies for a Successful Cloud Transformation
Successful cloud adoption in core banking requires a strategic and multifaceted approach:
- Multifaceted Transformation: Not all applications are created equal. Banks should choose the right application migration approach (rehosting, refactoring, re-platforming) based on individual application needs and strategic objectives. This ensures that each application is optimized for the cloud and delivers the desired benefits.
- Multi-Cloud Strategy: Leverage multiple cloud providers for flexibility, avoiding vendor lock-in and optimizing costs by selecting the best-fit provider for each specific function. A multi-cloud strategy also provides redundancy and ensures business continuity in case of any issues with a single cloud provider. According to a survey published in Infosys Cloud Radar Report 2023, three to four cloud vendors is the norm, using one is rarely done.8
- Hybrid Cloud Model: Strike the right balance between on-premises, private, and public cloud options, aligning with data residency, compliance requirements, and the need for innovation. A hybrid cloud model allows banks to leverage the benefits of both on-premises and cloud environments, providing the flexibility to choose the best deployment model for each workload.
- Comprehensive Value Realization: Focus on continuous optimization, adopting cloud-native practices, and fostering a cloud-centric culture to maximize the benefits of cloud adoption. This includes regularly reviewing and optimizing cloud infrastructure, leveraging containerization and microservices architectures, and promoting a culture of innovation and experimentation within the organization. Banks have a long way to go here, less than 14% banks have achieved critical mass in cloud adoption by moving 60% of applications to cloud9.
Conclusion
In an era defined by speed and innovation, cloud technology isn’t just an operational upgrade; it’s a strategic advantage reshaping the banking industry. The cloud empowers banks to scale seamlessly, innovate rapidly, and adapt with unmatched resilience—qualities that are essential to meeting the demands of a fast-evolving market. As banks navigate the challenges of migration, compliance, and integration with legacy systems, a well-orchestrated cloud strategy becomes crucial. This is not just about modernizing systems; it’s about future-proofing the entire business model.
As financial institutions embark on their cloud journeys, they’re not simply adopting technology—they’re unlocking new paths to value and setting a foundation for sustained growth. With cloud as a core enabler, banks can redefine customer experiences, transform operations, and tap into emerging revenue streams at a pace that keeps them ahead of the curve. For those ready to harness its full potential, cloud is more than a platform; it’s the engine driving banking’s next evolution.