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10 Key Considerations in Cloud Solution Selection for Financial Institutions

by Johnny Smit
Senior Consultant

Johnny Smit, Senior Consultant at Elgin White

The global financial services industry has undergone substantial transformation, driven by the advent and adoption of cutting-edge technology. Among these technologies, cloud computing has emerged as a key enabler, providing financial institutions such as asset managers, asset owners, banks, and private wealth firms with many benefits. These include cost savings, scalability, enhanced security, agility, and innovation.

Top 10 Considerations in cloud solution selection

According to Elgin White research, 43% of financial services companies plan to increase their investment in cloud technologies over the next three years.

Selecting a cloud solution, partner, vendor, or consulting firm is a multifaceted decision that requires careful analysis. As these buy-side firms start looking at cloud service providers for migration of their data center to the Cloud we explore some of the best practices and key considerations.

1. Security and Compliance

Reason for consideration

According to the World Bank, financial institutions manage over $5.1 trillion worth of assets daily. These institutions must ensure data protection and regulatory compliance to avoid financial, reputational, and legal consequences.

Examples include:

  • Equifax: In 2019, Equifax agreed to pay at least $575 million, and potentially up to $700 million, as part of a global settlement with the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB), and 50 U.S. states and territories. This fine was due to a 2017 breach that exposed the personal information of 147 million people.
  • Capital One: In 2020, the Office of the Comptroller of the Currency (OCC) fined Capital One $80 million for a data breach that exposed the personal information of 106 million card customers and applicants.
  • Morgan Stanley: In 2021, the financial institution was fined $60 million by the OCC for failing to properly decommission two wealth management data centers in 2016, leaving customer data at risk.
  • Desjardins Group: In 2019, this Canadian financial institution faced a potential fine of up to CAD$1 billion for a breach that affected 2.7 million individuals and 173,000 businesses.

Challenge and opportunity

Ensuring the chosen cloud solution meets all security and compliance requirements is challenging. However, cloud vendors often provide advanced security features like data encryption and intrusion detection, which reduces security incidents. Storing sensitive data in cloud-based services is more secure, leading to a competitive advantage among financial services organizations.

2. Scalability and Flexibility

Reason for consideration

According to Deloitte, 52% of financial institutions cite the need for flexible capacity as a critical reason for cloud adoption. They must adjust their computing resources based on market conditions, so a lack of flexibility can hinder growth and scalability.

Challenge and opportunity

Accurate prediction of future needs is challenging. However, the scalability of cloud solutions allows institutions to adapt and scale resources as needed, improving efficiency and cost-effectiveness. This helps small businesses and can often be seen as a partnership when the banking industry takes up this vital role of business growth partner rather than a money mover.

3. Cost Efficiency

Reason for consideration

While IDC reports cloud solutions can reduce IT costs by up to 50%, the total cost of ownership must be considered, including direct and indirect costs.

Challenge and opportunity

Accurately determining all associated costs is complex. However, cloud solutions can offer significant savings over time due to reduced infrastructure, maintenance, and personnel costs. These key factors in high-cost reduction can help banks focus on helping and providing banking services to customers, rather than becoming technology support organizations. This allows public cloud providers to offer public cloud services while still playing a vital role in supporting financial services organizations.

4. Integration Capability

Reason for consideration

Financial institutions often operate complex legacy systems. Integration with new platforms and systems must be seamless to ensure uninterrupted operations and service delivery.

Challenge and opportunity

Managing the integration process effectively is challenging. However, successful integration can lead to improved data management and streamlined processes. Cloud providers encourage open standards around cloud environments, which can lead to greater flexibility for banks.

5. Vendor Reputation and Support

Reason for consideration

The reputation and support of the cloud vendor or partner play a vital role in the success of a cloud strategy. According to Gartner, 23% of companies view vendor reputation as a top criterion for cloud service selection.

Challenge and opportunity

Thoroughly vetting potential vendors is a challenge as you need to trawl though all relevant standards and ensure that certifications such as ISO and SOC cover some of the regulatory and internal regulation interpretations. However, building a strategic partnership provides an opportunity for ongoing support and long-term success.

 6. Data Sovereignty

Reason for consideration

The IBM Institute for Business Value reports that 77% of businesses have adopted at least one cloud application where data sovereignty compliance is critical. Global financial institutions must ensure compliance with local data sovereignty laws to protect their customers, operations, and reputations.

Challenge and opportunity

Complying with varying data sovereignty laws can be complex. However, many cloud vendors offer region-specific data centers, which can help institutions meet these requirements. For example, Microsoft Azure operates data centers in over 60 regions, assisting global institutions in complying with local laws. This helps address one major concern the in-country regulators have about personal data and banking services.

7. Disaster Recovery and Business Continuity

Reason for consideration

A report by PwC shows that 70% of firms that experience a major data loss go out of business within a year. Financial institutions need robust disaster recovery and business continuity plans to protect against such eventualities.

Challenge and opportunity

Creating and implementing disaster recovery plans can be difficult. However, cloud services often include robust disaster recovery features. For instance, Goldman Sachs utilized Google Cloud’s disaster recovery capabilities to achieve a four-hour recovery time objective (RTO), a significant improvement on their previous 24-hour RTO.

8. Innovation and Digital Transformation

Reason for consideration

According to a study by Capgemini 40% of financial institutions view cloud solutions as a catalyst for innovation. Cloud technology enables institutions to innovate and improve service delivery.

Challenge and opportunity

Driving innovation can be challenging, but cloud technologies can offer substantial benefits. For example, ING Bank leveraged cloud technology to develop a new customer service platform, reducing service response time from days to minutes.

9. Multi-Cloud Strategy

Reason for consideration

Key research predictions by Gartner indicate that by 2023 more than 75% of large organizations will have adopted a multi-cloud or hybrid IT strategy. A multi-cloud approach can help avoid vendor lock-in, ensure continuity if one vendor experiences issues, and mitigate third party risk.

Challenge and opportunity

Managing multiple vendors can be complex, costly, and time-consuming. However, a multi-cloud strategy can offer increased resilience and flexibility. Deutsche Bank, for example, utilizes a multi-cloud strategy to leverage the best services from different vendors, improving their operational efficiency and resiliency using a hybrid cloud approach. This paves the way for the best cloud business case – enhancing your business processes while providing improved user experience with systems that deliver higher availability and lower downtime.

10. Environmental Impact

Reason for consideration

Greenpeace reports that IT sector electricity consumption is expected to increase by approximately 21% by 2030. The energy efficiency of cloud solutions can contribute to environmental sustainability efforts.

Challenge and opportunity

Finding energy-efficient cloud solutions can be challenging. However, cloud transition can significantly reduce an institution’s carbon footprint. Amazon Web Services (AWS), for instance, has reported that their customers have seen an average of 88% reduction in their carbon footprint compared to on-premise data centers.


Selecting a cloud solution, partner, vendor, or consulting firm involves a myriad of considerations. By addressing these ten key considerations and understanding the statistics and benefits behind them, financial institutions can more effectively navigate the complexities of cloud adoption and fully harness its potential.

Elgin White is experienced in advising buy-side firms including asset managers, asset owners, banks, and private wealth firms on best practice approaches to planning and implementing cloud solutions.

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Jeremy Hurwitz

Managing Director - North America

Based in Los Angeles, California, Jeremy founded InvestTech Systems Consulting LLC in 1990. As President and Director the Enterprise Data Management and Architecture Practice for more than 25 years he managed over 50 large investment technology, strategy, and implementation projects for many of the largest global investment management firms. Following the acquisition of his firm by Accenture in 2017, Jeremy remained as Managing Director, Asset Management Lead.

Jeremy joined Elgin White in 2022 to lead the firm’s launch into North America. He is recognized throughout the North America asset management community as a thought leader and innovation architect in the design of enterprise data, analytics, and reporting platforms. His deep knowledge, broad buy-side network, and extensive experience deploying business-outcome-focused technology solutions successfully has accelerated the growth of Elgin White in North America.

Stanley Drasky

Managing Director

Stan joined Elgin White in 2020 following an impressive 30-year career working predominantly for world-class buy-side financial services firms in North America and Europe. He is a renowned buy-side technology leader with a reputation for designing and delivering large-scale transformation initiatives at scale and pace. Currently, Stan is especially active leading infrastructure (cloud and managed services) transformation projects.

His most recent roles prior to Elgin White include Chief Information Officer (EMEA) at State Street and various senior positions during his eight-year tenure at Northern Trust Corporation, including Head of IT & EMEA/Global Director of Fund Administration Technology, Global Director of Asset Management Technology, and Director of Trade Execution Technologies. Stan has also held senior Operational and Technology roles at Nuveen Investments and BNY Mellon.

Throughout his career Stan has been a strategic client or partner of every major front-to-back office technology vendor including SimCorp and Charles River Development.

Erik Schutte

Managing Director

Erik founded Elgin White’s consultancy practice in 2019, which transitioned the firm into a full-service buy-side consultancy and resourcing business. He is an experienced front-to-back business transformation professional and has held several senior management positions during his more than 30-year career in the UK and his native Netherlands, as well as Asia Pacific.

Previous roles include Head of Professional Services at SimCorp, Director at PwC UK, and Managing Director for Wealth & Asset Management Services at Accenture UK & Ireland.