Banks boost cloud outsourcing to cut costs, meet new rules: report
LONDON, UNITED KINGDOM — Banks worldwide are increasingly moving their data from traditional on-premises facilities to cloud service providers (CSPs), a shift driven by cost savings, operational resilience, and stricter regulatory requirements, according to a Norton Rose Fulbright report.
The European Central Bank reported that banks in the EU spent 13.5 percent more on cloud outsourcing in 2024 than they did in 2023, underscoring the accelerating trend of adoption.
Cost savings and scalability drive cloud migration
The economic case for cloud migration is one of the strongest drivers of this shift. Traditional data centers require substantial capital investment in property, hardware, and maintenance, while cloud solutions spread costs into predictable monthly fees.
As the report notes, “Depreciating assets are removed from the balance sheet and are replaced with an expense line item (the CSP’s fees) on the bank’s profit and loss statement.”
Beyond cost, banks are also drawn to the cloud for its superior resilience. CSPs offer advanced redundancy and load-balancing capabilities that can exceed what a single in-house facility could provide. This resilience is particularly crucial under the EU’s Digital Operational Resilience Act (DORA), which mandates improved ICT risk management.
The report explains that outsourcing, when done right, “may go some way to improving a bank’s technical operational resilience, as well as delivering on wider commercial imperatives (such as supporting long-term customer trust).”
Navigating regulatory complexities
While the cloud offers clear benefits, regulatory compliance remains a hurdle. Banks must ensure that contracts with CSPs align with frameworks such as DORA, the EU’s NIS2 directive, and the general data protection regulation (GDPR). For example, GDPR requires strict safeguards for personal data transfers, particularly when data may cross borders.
The report emphasizes that these obligations “cannot be outsourced,” thereby placing the ultimate responsibility on banks to maintain data security and ensure regulatory compliance. Failure to do so can expose banks to fines, reputational risks, and heightened scrutiny from regulators.
Banks lead shift toward strategic cloud outsourcing
The move by the financial sector to cloud outsourcing is in line with an international trend across various industries to increase outsourcing levels. With corporations needing agility, scalability, and creativity, outsourcing is less about economies and more about long-term robustness.
While financial institutions today factor CSP partnerships into their strategies to compete and keep pace with regulations, other industries are reframing outsourcing as a strategic enabler for digital transformation. The bank’s use of cloud services here demonstrates how outsourcing continues to redefine industries well beyond financial services.
