• Nadish Lad, Global Head of Product and Strategic Business at Volante Technologies


• 13.02.2026 02:15 pm
#HybridCloud #CloudBanking

The advent of cloud computing heralded a new era for banking. But the ‘all-in’ narrative that dominated early industry discourse, imagining a future of complete cloud migration, is still yet to materialise. Though as of 2023, more than 91% of banks and insurance companies have now initiated their cloud journey, the end goal seems to have shifted: complete cloud deployment is no longer the destination and building a strong hybrid infrastructure has become the aim.

This adjustment is not necessarily a bad thing. Hybrid cloud architectures are a compelling and pragmatic choice for many institutions, especially those in a sector where risks must be tightly controlled. The hybrid cloud approach enables financial institutions to manage risk while building the structures they need for the banking of tomorrow.

Hybrid cloud: the best of both worlds

The hybrid cloud has quickly become the ‘sweet spot’ for financial institutions. The popularity of this choice is illustrated by Volante’s recent Big Survey 2025, which found that the majority (58%) of banks have adopted a hybrid approach to cloud adoption for payments modernisation, while only 13% follow a fully cloud-native approach.

Many factors make this a powerful choice. Embracing cloud computing has become non-negotiable, especially due to its role facilitating AI adoption. With artificial intelligence revolutionising the sector and set to add significant value — it is estimated generative AI alone could bring $340 billion a year in additional value to the banking industry — consequently the cloud is not something institutions can ignore. Then there are the advantages it offers for stablecoin, facilitating frictionless on-and-off-ramps for smooth, compliant transactions.

But banks must also balance these benefits with their regulatory responsibilities. Cognisant of this, and the hefty fines that accompany non-compliance, many banks are reluctant to give up full control of their infrastructure and migrate completely to the cloud. A hybrid solution, combining both on-premises and cloud-based infrastructure, allows banks to maintain control over critical processes while still enjoying the advantages of the cloud. 

Bridging the gap

A hybrid cloud infrastructure is also uniquely suited to the evolved payments landscape. The new ISO 20022 messaging standard, in full force from the end of November 2025, revolves around the sending of rich data, and data is, by nature, cloud independent. Adopting a hybrid approach, therefore, allows banks to securely access and use this data, wherever it resides, with ISO serving as the common language for translation and deployment.

Real-time and instant payments are another area that benefits from hybrid cloud architecture. With SEPA ushering in instant payments in Europe and real-time payments accelerating across the United States, the ability to perform immediate transactions is pivotal. However, while real-time payment networks will allow for full cloud processing, they often require the switch to be in a known, physical location. A hybrid cloud architecture is the perfect mechanism for this, bridging the gap between on-premises infrastructure and a cloud environment.

A further advantage of a hybrid approach is the opportunity it provides to mitigate service issues. Recent public outages — such as the Amazon Web Services outage or the Cloudflare disruption — demonstrate the fallibility of even the biggest service providers. Rather than keeping everything on-premises, but a hybrid cloud approach helps distribute risk of service disruption and the costs this incurs. By spreading operations across multiple cloud environments, firms are still able to maintain some operational processes, in the event of an outage, or even avoid service loss altogether by temporarily switching clouds.

Regional differences

Hybrid cloud architecture offers benefits to every bank but contrasting adoption stories are emerging in different regions. For instance, the Big Survey 2025 revealed that banks in Southern Europe, particularly Spain, are investing heavily in payments modernisation, with Spanish banks planning to spend over $2.4 million on average across the coming year. Spanish banks are also leading in compliance and Platform-as-a-Service (PaaS) adoption, with almost half (48%) considering implementing a PaaS deployment model within their organisation.

On the other end of the spectrum, UK banks are approaching cloud adoption more cautiously and appear more worried about cost. Around one in six banks say they have no plans for cloud adoption in payments modernisation, and 14% said they had decreased their budget allocations for modernisation over the past year. In a strained financial climate, such concerns are understandable, but cloud cost-cutting is a false economy. Cloud migration does not have to carry a hefty price tag, but, more importantly, the cost of doing nothing is something no bank can afford. Not only do cloud environments offer efficiency gains and improved customer experiences, but they are also the foundation for banking innovation. If banks want a place in the future of finance, they need to embrace the cloud.

In the Nordic region, cybersecurity is a pressing question. More than two in five (43%) of Nordic banks say cybersecurity and fraud risks are among their top two concerns regarding payments modernisation, with this figure rising to almost two-thirds (64%) among Swedish banks. While hybrid cloud architecture gives banks the benefit of greater control and security, while enabling innovation, cloud safety is still a valid concern. Vendors who want to serve banks, both in the Nordics and further afield, must be able to prove their security credentials and demonstrate compliance with regional and international standards.

Making the right partner choice

The importance of the right cloud partner must not be overlooked. The vendor choice, and the options that come with it, will determine the winners and losers in the next chapter of banking. Trust, capability, and long-term scalability are crucial qualities for vendors, enabling banks to easily scale solutions, alongside their growth, and maintain compliance as new regulations roll in. Multi-cloud will likely be another factor. A strong relationship between the bank and vendor is also essential: a collaborative approach accelerates both innovation and resilience and enables banks to make the most of their new technology.

Switching focus from ‘all-in’ cloud computing to a hybrid model is proving highly advantageous for the finance industry. Hybrid cloud architecture allows banks to pursue innovation, without sacrificing data governance and compliance, and ensure their customers receive the highest levels of service. It is a smart choice for firms as they work to build the banking of tomorrow, while meeting the needs of today.