Cloud-First Banking: Avoiding the Pitfalls of 'Lift-and-Shift' Migration
Unlocking the True Value of Cloud in Banking
The banking sector stands at a pivotal crossroads. As digital disruptors and fintechs redefine customer expectations, traditional banks are under immense pressure to accelerate their digital transformation. Cloud technology is at the heart of this evolution, promising agility, scalability, and innovation. Yet, many banks are falling into a common trap: treating cloud migration as a simple 'lift-and-shift' exercise—moving legacy systems to the cloud without rethinking their operating models or culture. This approach risks missing out on the transformative potential of cloud and can even entrench old inefficiencies in a new environment.
To truly unlock the value of cloud, banks must go beyond infrastructure migration. They need to embrace a cloud-native mindset, reimagine their operating models, and foster a culture of innovation and empowerment. Here’s how CTOs and CIOs can lead their organizations to cloud success—and avoid the pitfalls of a lift-and-shift approach.
The Limitations of 'Lift-and-Shift'
Many banks, eager to modernize, have moved their existing software and platforms onto the cloud with minimal changes. While this can deliver short-term cost savings and operational efficiencies, it rarely delivers the agility, speed, or innovation that cloud promises. The reason? Legacy processes, siloed teams, and outdated approval structures are simply replicated in the cloud, creating new bottlenecks and failing to leverage the cloud’s full capabilities.
As one industry leader put it, “If it ain’t broke, don’t fix it” is not a sufficient mentality for the challenge before us. The cloud is not just a new hosting environment—it’s a new way of thinking about technology, operations, and value creation. Without a fundamental shift in mindset and operating model, banks risk solving only small parts of the problem, while missing out on the agility and innovation that digital-native competitors enjoy.
Four Truths for Cloud Success in Banking
To avoid the pitfalls of lift-and-shift and realize the full potential of cloud, banks must accept four fundamental truths:
1. Culture Needs to Change
Traditional command-and-control leadership structures are ill-suited to the pace and flexibility that cloud enables. Banks must empower cross-functional teams, foster a culture of experimentation, and embrace a 'fail fast, learn fast' mentality. In a psychologically safe environment, teams can iterate quickly, recover from mistakes, and drive continuous improvement. This shift from hierarchical to federated, empowered teams is essential for cloud-native transformation.
2. Cloud Is an Enabler, Not Just Storage
Cloud should not be seen merely as a distributed storage and compute solution. It is an engine for digital transformation, enabling rapid development of new capabilities through ready-to-use services and integration with rich ecosystems of SaaS providers. Cloud-native banks can innovate faster, deliver better customer experiences, and scale efficiently. The real value comes from leveraging cloud to automate, modernize, and differentiate—not just to save costs.
3. Learn from Digital Challengers
Banks are no longer competing solely with each other. Digital-first fintechs and technology companies are setting new standards for speed, personalization, and customer experience. These challengers build on cloud-native architectures, use APIs and microservices, and organize around capabilities rather than products. Traditional banks must look beyond their own industry, learn from these disruptors, and be willing to leave behind cumbersome legacy systems and processes.
4. Prepare for Cloud-Native Future
Cloud adoption is not a one-time project—it’s a journey toward pervasive cloud nativity. Industry research shows that by 2024, the vast majority of trade finance and treasury workloads will run on SaaS or platform-as-a-service architectures. Banks must set their sights on this future, modernizing their core systems and operating models to stay relevant and competitive. This means embracing modular, flexible architectures and building for continuous change.
Rethinking the Operating Model
A successful cloud transformation requires more than technology. It demands a reimagining of the bank’s operating model:
- Empowerment over Centralization: Instead of large, centralized IT teams manually executing cloud requests, banks should establish small central teams to enforce automated guardrails, while empowering business and technology teams to innovate within secure parameters.
- Agile, Cross-Functional Teams: Organize around capabilities and customer needs, not products or legacy processes. Cross-functional teams can deliver end-to-end value, iterate rapidly, and respond to market changes.
- Data as a Strategic Asset: Cloud enables banks to break down data silos, unify customer insights, and deliver hyper-personalized experiences. Modern data architectures—such as data mesh—allow for both autonomy and connectivity across the organization.
- Continuous Learning and Experimentation: Cloud makes it safe and inexpensive to experiment. Banks should encourage a culture where teams can test, learn, and scale new ideas quickly.
Actionable Steps for CTOs and CIOs
- Assess Your Cloud Maturity: Identify where your organization is on the cloud journey. Are you simply hosting legacy systems, or are you leveraging cloud-native services and architectures?
- Redesign Your Operating Model: Move from centralized, hierarchical structures to empowered, cross-functional teams. Automate governance and enable self-service within secure boundaries.
- Modernize Your Core: Invest in modular, API-driven architectures and microservices. Consider journey-led progressive modernization or greenfield cloud-native stacks for new products and services.
- Foster a Cloud-First Culture: Lead by example—champion experimentation, transparency, and learning. Recognize and reward teams for innovation and agility.
- Leverage Ecosystem Partnerships: Collaborate with fintechs, SaaS providers, and technology partners to accelerate innovation and fill capability gaps.
Publicis Sapient: Your Partner in Cloud-Native Transformation
At Publicis Sapient, we help banks move beyond lift-and-shift to realize the full promise of cloud. Our approach combines deep industry expertise, proven methodologies, and partnerships with leading technology providers. We work with banks to modernize their core, redesign operating models, and foster cultures of innovation—delivering business-wide change at speed.
The future of banking is cloud-native, agile, and customer-centric. Avoid the pitfalls of lift-and-shift. Rethink your operating model, embrace a new culture, and unlock the true value of cloud.
Ready to accelerate your cloud journey? Let’s connect.