Global banking institutions are cautiously accelerating their shift to cloud-based Core Banking Systems (CBS) and Enterprise Resource Planning (ERP) solutions—but full-scale adoption remains limited due to regulatory constraints, data sovereignty concerns, and the complexities of legacy system migration.

While cloud-native CBS providers like Temenos, Mambu, and Thought Machine have successfully onboarded hundreds of institutions—particularly neo-banks and Tier-2 banks—only around 18–22% of Tier-1 and Tier-2 banks have moved their primary core systems fully to public cloud platforms, according to recent IDC and McKinsey data.

Capital One made headlines by becoming the first major U.S. bank to go fully cloud-native on AWS. Meanwhile, institutions like Santander International and Commerce Bank have adopted SaaS-based cores via Temenos, and European incumbents are increasingly piloting modern cloud-native architectures.

Still, most mission-critical banks prefer a hybrid approach: running application services in public cloud (Azure, AWS, GCP) while keeping sensitive data on-premises or in sovereign cloud environments. This strategy ensures compliance with local regulations and offers more control over encryption, key management, and latency-sensitive operations.

In the ERP space, Oracle Cloud ERP, SAP S/4HANA Cloud, and Microsoft Dynamics 365 Finance are seeing traction among financial institutions—but full financial suite migration remains slow. Banks often start with cloud-based procurement, HR, or analytics before moving general ledger and core finance modules.

Key Drivers of Caution:

• Regulatory scrutiny over data residency and vendor lock-in
• Performance requirements for real-time payments and compliance
• Complex migration from legacy systems
• Demand for exit strategies and substitutability of cloud vendors

Despite these challenges, cloud adoption in banking is expected to grow steadily. Analysts project a 13% CAGR in public cloud spending for financial services through 2028, with hybrid and confidential computing models bridging the transition toward full cloud-native cores.

Conclusion: Confidence is building, but banking’s cloud migration is happening in measured steps. The future of CBS and ERP in the sector is likely hybrid by design, cloud-enabled by strategy, and regulated by necessity.

News sources :: IDC, McKinsey, Barron’s, Reuters :: Tuesday, 8 July 2025