Cloud for financial services: An Industry Report on the Opportunities and Challenges

By Pinsent Masons & the Financial Regulation Innovation Lab (FRIL)

A decade ago, the “cloud in financial services” conversation was framed by caution, with the sector focused on navigating a series of hurdles to adoption. Today, the cloud is no longer a novel proposition cautiously assessed, but rather an indispensable component of the operational fabric and strategic future of financial services. The hurdles have, in many respects, become pathways, enabling unprecedented speed and innovation.

This report by Pinsent Masons, published in partnership with the Financial Regulation Innovation Lab (FRIL), revisits the cloud journey for financial services with a focus on the nuanced and complex reality facing financial institutions. Drawing on a series of candid “Chatham House” interviews with senior leaders across major financial institutions, technology providers and advisory firms, it explores the current dynamics of the market. The report is also supported by survey data sourced from more than 30 businesses operating within the financial services sector.

The interviews and the data reveal that the old hurdles have not disappeared, and some, like data residency, persist as challenges despite the context evolving. The primary drivers for moving to the cloud are now strategic – (1) the continuing need to escape the drag of legacy systems, (2) demand for pace and agility in segments being reshaped by AI, and (3) the realisation that the cloud can be a powerful tool for enhancing, rather than diminishing, operational resilience.

New and complex challenges have also surfaced. The initial promise of cost savings has proved elusive for some; governance and the maturity of shared responsibility models have struggled to keep pace with adoption; and regulators are focused on what they see as a continuing key concern – concentration of risk among a handful of hyperscale providers. As the sector stands on the cusp of an AI-powered technological wave – a wave that is dependent on the cloud – the lessons from the past decade are more critical than ever.

 

 

About FRIL

FRIL is part of the larger Glasgow City Region Innovation Accelerator programme with Glasgow, one of three pilot regions’ – including West Midlands – sharing a £100m investment aimed at transforming R&D within the UK. Led by Innovate UK, and delivered by Fintech Scotland in partnership with the University of Strathclyde and the University of Glasgow, this programme supports the UK Government’s levelling-up agenda by empowering local regions to drive economic growth through innovation. This approach not only supports regional development but also positions the UK as a leader in the global innovation landscape.

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