From Cloud Migration to Cloud Transformation: What Banks Are Missing

Contents

• The Cloud Satisfaction Gap
• What’s Going Wrong?
• What True Cloud Transformation Requires
• The Path Forward for Financial Institutions
• Cloud is Just the Starting Line

Moving technology infrastructure from legacy mainframes to the cloud was supposed to transform banking through faster innovation, lower costs, and better customer experiences. But for most financial institutions, the reality is more sobering: massive cloud investments have produced only marginal gains.

Why?

Because being on the cloud is not the same as being born in the cloud. Hosting legacy systems on modern infrastructure doesn’t fix legacy constraints—it simply shifts them. In many cases, it adds complexity without delivering agility.

The Cloud Satisfaction Gap

Despite years of cloud-first strategies, satisfaction remains stubbornly low. In a 2024 global survey, fewer than 40% of financial services firms reported strong outcomes from their cloud initiatives¹:

• Only 33% were satisfied with reduced operational costs
• Just 27% saw improved scalability
• Only 26% reported faster innovation
• And a mere 21% saw gains in security and compliance

Yet, McKinsey estimates that Fortune 500 financial institutions could unlock $60–80 billion in run-rate EBITDA by 2030 through full cloud enablement² – the value is real, but the execution is broken.

What’s Going Wrong?

Here’s why just “being on the cloud” falls short, and what banks must do instead. 

Lift-and-shift is a Mirage

Most banks – while relying on their legacy providers and partners – take the path of least resistance by adopting a “lift and shift” approach, moving old monoliths to the cloud.

These systems weren’t built for elasticity, automation, or real-time updates. So, the bank ends up running 1980s technology on 2020s infrastructure and paying a premium to do so – like installing Nokia 3310 software on an iPhone. This is the opposite of being born in the cloud.

Legacy systems still consume 70% of IT budgets³ , and COBOL-based architectures persist. Cloud, in this form, only increases operating costs.

Cloud Transformation ≠ Business Transformation

The cloud transformation delivers elasticity, scalability, and near-infinite compute. But those are raw materials, not outcomes. Without re-architecting how value is delivered across platforms, processes, and governance, cloud becomes just a more dynamic data center running the same constraints at higher speeds.

Most banks don’t suffer from a lack of cloud capacity, but a mismatch between that capacity and their legacy-first institutional design, unlike firms born in the cloud.

They have cloud-scale infrastructure, but project-based funding that still locks priorities in advance.

Environments can be spun up in minutes, but releases are delayed by vendor bandwidth and legacy approval chains.

APIs exist, but workflows remain hardwired into batch-based, siloed systems.

This is why the delta between capability and realized value remains so wide. In a Capgemini survey, only 26% of banks reported faster innovation post-migration⁴.

Infrastructure can’t outrun institutional structure – until banks modernize the way decisions are made, products are delivered, and risk is governed, cloud will remain underutilized potential, not transformation.

Legacy Culture is a Bottleneck

Cloud infrastructure is fast. Banks are not.

Most have retained waterfall-era cadences, manual approvals, functionally siloed teams, and release cycles governed by static risk policies. Even agile teams remain bound by governance that treats change as exception, not norm.

The real drag isn’t infrastructure, it’s operating inertia. Security and compliance remain adjacent, not embedded. Developers lack automated guardrails. Risk teams lack real-time visibility. Trust gaps persist between platform teams and control functions.

As a result, cloud environments inherit the bureaucracy of the past, just with faster provisioning and a bigger bill.

As many as 72% of financial services leaders cite organizational complexity and talent gaps⁵ – not cost or infrastructure – as the primary blockers to cloud value realization. Until governance, culture, and delivery models are re-architected alongside technology, agility will remain aspirational.

Cloud Without Composability Locks You In

Cloud should be the foundation for composable banking – modular, API-driven services that can be assembled and reassembled. But most banks haven’t made that leap. Without that shift, they’re still trapped in monoliths. Only now, they’re renting the hardware by the hour.

Just 12% of FS institutions qualify as cloud innovators⁶ —those born in the cloud or fully re-architected for it—with mature modular strategies and ecosystem partnerships. The rest are still running legacy cores wrapped in modern wrappers.

Innovation is Still Stuck in Pilot Mode

Cloud should be a launchpad for AI, real-time personalization, and customer-centric design. But banks are struggling to scale these initiatives – blocked by fragmented data, governance gaps, vendor bandwidth and timelines, and integration debt.

While 81% of banks recognize AI as critical to their future, only 15% say they have mature capabilities in place⁷ .

Compliance and Security Still Lag

Moving to the cloud doesn’t mean you’re secure, or compliant. Banks still face rising scrutiny around data sovereignty, regional regulations, and operational resilience.

And the risks are real: in 2023, 97% of US banks reported at least one third-party breach⁸ . Yet only 21% say their security and compliance posture has improved meaningfully through cloud adoption.

Public clouds offer tools, but trust must be architected in, not assumed.

What True Cloud Transformation Requires

If being on the cloud isn’t enough, what is?

Real transformation demands a rethinking of how banks build, deploy, and operate their systems:

• Cloud-Native Architecture
  • Legacy applications don’t belong in dynamic, elastic cloud ecosystems. Banks must refactor monoliths into microservices, adopt container orchestration (e.g., Kubernetes), and shift toward serverless, event-driven designs.
• Composability
  • A composable banking stack enables plug-and-play capability across onboarding, payments, lending, and compliance. Composable systems shorten time to market, reduce vendor lock-in, and turn cloud from an infrastructure play into a true product delivery platform.
• Data Strategy
  • Without an intentional data architecture, cloud-native capabilities fall flat. Cloud success requires a unified layer for real-time data ingestion, transformation, governance, and activation. Until banks break down silos and build shared, governed data platforms, cloud will continue to amplify fragmentation, not solve it.
• New Ways of Working
  • Technology transformation demands operating model transformation. Agile delivery, DevOps pipelines, and FinOps controls are essential. Banks must shift from centralized command to empowered product teams; from audit-after-release to embedded risk and compliance; from annual funding cycles to dynamic, outcome-based investment.
• Security and Resilience
  • Cloud security isn’t automatic; it’s something banks must deliberately architect. That means building on zero-trust principles, where access is tightly controlled and verified at every layer. It means embedding automated guardrails that catch misconfigurations before they become exposures, and means designing for continuity from the start, with multi-region failover and real-time monitoring built in. Regulators are raising the bar on transparency and operational resilience, and meeting those expectations requires more than just moving workloads to the cloud.

The Path Forward for Financial Institutions

Cloud migration isn’t the end of transformation, it’s the beginning.

What comes next is what delivers value:

• Transformation Vision
  • Go beyond lift-and-shift. Architect for scale, change, and speed.
• Ecosystem Partnerships
  • Collaborate with the right partners who reduce dependency and help banks move faster and go further.
• Customer Experience Reinvention
  • Use the cloud to personalize journeys, unify data, and deliver on-demand, omnichannel engagement.
• Tech Modernization
  • Deploy AI, ML, and predictive analytics to elevate both operations and experiences.

Cloud is Just the Starting Line

Cloud adoption is no longer a competitive advantage, it’s table stakes. But for banks, the real transformation begins only once cloud becomes more than infrastructure. It must become the foundation for a fundamentally different kind of organization: one that is architected for change, governed by agility, and powered by intelligence.

That requires more than migration. It means re-platforming legacy cores, breaking operational silos, and retooling delivery models around product teams, not projects. It means building systems that don’t just scale, but learn, adapt, and evolve in real time.

The institutions that win won’t be those with the largest cloud footprint, they’ll be the ones that operate like they were born in the cloud: combining cloud-native technology with cloud-native thinking: composable by design, data-intelligent by default, and secure by architecture.

The opportunity is real: banks could unlock $60–80 billion in run-rate EBITDA by 2030 by doing this right. But it won’t be captured through infrastructure upgrades alone. It will be claimed by those willing to modernize the enterprise as a system.

References:

1. Capgemini | World Report Series: Cloud in Financial Services | 2025
2. McKinsey | Three big moves that can decide a financial institution’s future in the cloud | 2022
3. The Fintech Times | RS2 Urges Banks to Invest in Innovation as 70% of IT Budgets are Spent on Legacy Systems | 2025
4. Capgemini | World Report Series: Cloud in Financial Services | 2025
5. Capgemini | World Report Series: Cloud in Financial Services | 2025
6. Capgemini | World Report Series: Cloud in Financial Services | 2025
7. Capgemini | World Report Series: Cloud in Financial Services | 2025
8. SecurityScorecard | 97% of leading U.S. banks impacted by third-party data breaches in 2024 | 2024