Cloud as an opportunity: Banks balance tradition and transformation

Banks are using cloud technology to make their IT infrastructure more flexible and efficient. The cloud is particularly useful in risk management, compliance, and process optimization, as it can efficiently process and scale large volumes of data and respond dynamically to changes. It also helps banks to implement artificial intelligence and machine learning. These models will increasingly be used in fraud prevention, risk modeling, and other data-driven processes such as customer interaction. However, banks are not relying on the cloud alone. Hybrid cloud models that combine private and public cloud infrastructures are now standard. They offer a robust platform for operating both data-intensive and businesscritical applications securely and flexibly. These models make it possible to manage sensitive data in protected environments while benefiting from the scalability for innovative business processes – in other words, data sovereignty and scale. Organizations that continuously optimize their cloud strategy put themselves in a good position and create the foundation for a resilient IT future.

However, cloud migration also poses major challenges. In addition to maintaining the highest security standards and observing strict compliance requirements, there are some applications that are not suitable for the cloud. These so-called “legacy applications” are often deeply integrated into the existing core applications and cannot be easily migrated due to technical dependencies or special hardware requirements. It is therefore necessary to either redevelop these applications (rearchitecture/ refactoring), continue to operate them in the existing on-premises infrastructure, or host them with a colocation provider, while other cloud-enabled workloads are migrated step by step.

To realize the full potential of hybrid models, banks need to ensure their strategies are flexible and future-proof. Protecting sensitive data, using AI, and managing applications that are not yet cloud-ready all require precise coordination. Continuously optimizing these strategies will not only enable efficiency gains, but also ensure that increasing security and compliance requirements are met and that new customer needs can be continuously integrated into long-term planning. The focus should always be on a clear, future-oriented IT strategy that both covers current needs and integrates future innovations and technological developments. Only then can banks hold their own in a highly competitive market over the long term.

Banks were hesitant to adopt cloud solutions for a long time, particularly due to strict compliance requirements. Since the major cloud providers opened Swiss data centers in 2019 and data sovereignty and data protection were addressed even more stringently and effectively, cloud use has also become established for highly regulated financial institutions. Even though AI and ML will continue to increase the proportion of cloud-based workloads, the hybrid model will remain indispensable due to data sovereignty, compliance, and legacy requirements. This approach allows banks to manage sensitive data securely in their own environments while also implementing innovations quickly.

Automated compliance checks, real-time monitoring, and state-of-the-art encryption technologies ensure that data is also protected in the cloud. Zero-trust architectures minimize potential risks and ensure that sensitive financial data remains optimally secured. These measures enable banks to retain full control over their data while also meeting strict regulatory requirements.

Although many banks still rely on their own data centers, the trend towards outsourcing is unmistakable. Switching to external providers is increasingly seen as a strategic decision – not only for economic and regulatory reasons (sale & leaseback / CapEx & OpEx), but also to be able to react flexibly to technological developments. Modern data centers such as those from Green offer access to the latest innovations, guarantee the highest security standards, and meet strict compliance requirements. Sustainability and environmental responsibility are also playing an increasingly important role. By outsourcing to energy-efficient data center providers, banks can significantly reduce their environmental footprint and more easily meet increasingly stringent sustainability targets. Optimization through outsourcing offers many advantages: Banks not only reduce their internal resource costs, but also benefit from data center operations with highly qualified specialists and state-of-the-art technology. Another advantage is that banks can avoid having to maintain and continuously modernize their own data center infrastructures or even entire platforms. In addition, the effort required to meet security and compliance requirements is significantly reduced, as these requirements are fully covered by external partners. This externalization enables banks to focus their resources even more specifically on innovations and strategic initiatives that boost business and strengthen their core competencies in the long term. The question is no longer whether banks will outsource their data centers and use the cloud, but when. The speed of technological progress, regulatory requirements, and the shortage of skilled workers leave them no other choice. Doing everything in-house is more of a hindrance than a real advantage.

The cloud has established itself as a means of quickly accessing new technologies and testing trends. It also offers security and resilience. However, with the widespread availability of AI solutions, it is becoming clear that the demands on data and the provision and learning processes of powerful platforms require cloud or cloud-like infrastructures. The decision as to which infrastructure is the right one will remain complex and to some extent individual in the future. It is therefore helpful to choose the location so that as many options as possible remain open. Banks need to weigh up when to rely on their own IT systems, outsource their data centers, or source cloud and AI-based technologies. Finding the right balance is increasingly becoming a competitive factor. Flexibility, security, scalability, and the right trusted partners are crucial to be able to react to new market requirements and remain successful in the future.