The Decline of Traditional Core Banking: What Comes Next
Why 70% of core banking transformation programmes fail, and practical approaches to improve delivery success and value realisation.
The banking sector's cloud journey has moved well beyond the initial migration wave. With most large banks now running significant workloads in public or hybrid cloud environments, the focus has shifted decisively from getting to the cloud to getting value from it. This 71-page report examines how banks are tackling cloud cost optimisation, architectural maturity, and the operational challenges of running regulated workloads at scale.
The report benchmarks cloud maturity across 45 institutions and identifies the practices that distinguish banks extracting genuine business value from their cloud investments versus those experiencing cost overruns and architectural sprawl.
Key Findings
- Cloud cost overruns are endemic - over 60% of banks surveyed report cloud spending above initial projections, with the primary drivers being poor workload placement decisions, underutilised reserved capacity, and insufficient FinOps discipline during the migration phase.
- Architecture decisions made during migration are creating long-term constraints - banks that prioritised lift-and-shift to meet migration timelines are now facing expensive refactoring programmes, while those that invested in cloud-native redesign from the outset are seeing materially lower run costs.
- Multi-cloud strategies are adding complexity without clear returns - the majority of banks pursuing multi-cloud do so for risk mitigation or regulatory reasons, but few have developed the abstraction layers and operational tooling needed to manage multiple providers efficiently.
- Security and compliance in cloud environments are maturing rapidly - cloud security posture management tools, automated compliance checking, and zero-trust architectures are closing the gap between cloud and on-premise security standards, though skills shortages remain a constraint.
- FinOps maturity correlates directly with cloud ROI - banks with dedicated FinOps teams and engineering-integrated cost management are spending 25-35% less on equivalent workloads than peers without structured cost governance, making financial operations a critical capability.
What the Report Covers
- Executive Summary - Why traditional core banking is reaching its limits
- Limitations of Core Systems - Legacy constraints and technical debt
- New Architectures - Composable banking and modular approaches
- Platform Ecosystems - Integration models and API-first strategies
- Case Studies - Emerging approaches from banks and challengers
- Strategic Implications - Planning for the post-core banking era
Who Should Read This
This report is targeted at CIOs, CTOs, and heads of infrastructure overseeing cloud strategy and optimisation programmes. It is also essential reading for FinOps leads, enterprise architects making workload placement decisions, CISOs responsible for cloud security posture, and CFOs seeking to understand why cloud costs are diverging from business cases. Regulators assessing cloud concentration risk will find the benchmarking data particularly relevant.
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