The financial services sector is increasingly turning toward multi-cloud and hybrid cloud strategies for their computing and digital service needs. These strategies involve using multiple cloud providers and combining public and private cloud environments. They offer institutions the ability to optimize their IT infrastructure, balancing cost efficiency with the need for secure, scalable solutions tailored to specific operational requirements.
According to research by the Cloud Security Alliance, 57% of financial services organizations used multi-cloud strategies for their Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) needs in 2024, while 98% are using at least some type of cloud computing.
Here, we’ll explore why multi-cloud and hybrid cloud are now critical for both security and agility in financial services, as well as how organizations can embrace these strategies as part of their digital transformation efforts.
Adoption Trends and Key Drivers of Hybrid Cloud and Multi-Cloud Strategies
Hybrid cloud and multi-cloud strategies are distinct cloud computing strategies, each with its own characteristics and use cases.
Hybrid Cloud Strategies
For example, a hybrid cloud combines at least one private cloud or on-premises data center with one public cloud. Its key features include:
- Integration: Different components work together to run a single IT solution, allowing data and processes to interact seamlessly.
- Central management: Offers unified management of identity, logging, monitoring, alerting, and networking1.
- Workload flexibility: Enables organizations to run sensitive workloads on private infrastructure while leveraging public cloud for scalability and cost-efficiency.
According to a report by Gartner, hybrid cloud deployments will soon become the norm, with 90% of organizations utilizing them by 2027. All cloud segments will record “double-digit growth” in 2025.
Multi-Cloud Strategies
Multi-cloud strategies involve using multiple cloud services from different providers, typically focusing on public clouds. Its key features include:
- Multiple providers: Uses services from two or more cloud vendors, which can be public or private.
- Independent operation: Cloud environments often work independently to manage separate tasks and processes.
- Vendor diversity: Allows organizations to leverage the capabilities of various providers and avoid vendor lock-in.
Both models offer unique benefits, but organizations are adopting them for similar reasons. Here are some of the key drivers for financial services firms to adopt hybrid- or multi-cloud solutions.
Operational Agility and Flexibility
The rapid adoption of hybrid and multi-cloud strategies is being driven by the need for operational flexibility. Integrating private infrastructure with public cloud platforms not only ensures seamless data management and scalability but also reduces the risks of vendor lock-in. Private clouds allow organizations to have direct control over their infrastructure, while public clouds can be scaled and adapted to suit evolving business needs.
Robust Security
Another key driver behind this shift includes the demand for robust security measures to counter rising cyber threats. Financial institutions are now primary targets for threat actors.
Organizations can store sensitive and highly regulated data in private infrastructure under their control, while keeping fewer sensitive data sets in public clouds, allowing for better management of security risks. By distributing data across multiple clouds, the risk of losing all data to a single ransomware or malware attack is significantly reduced.
Hybrid cloud environments, especially those that are part of multi-cloud strategies, enable organizations to more easily comply with privacy and data sovereignty regulations. Zero trust security solutions in hybrid environments allow for direct, policy-governed access to resources without exposing them to the internet.
Cost Optimization and Innovation
Finally, firms can achieve cost optimization through flexible billing models, and AI integration for innovation in areas like risk management and customer experience. Leading players in the finance cloud market—such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud, IBM, and Oracle—are fueling this transformation by offering tailored solutions that enhance agility and compliance.
These vendors dominate the market through strategic partnerships, product innovations, and investments in advanced technologies like Kubernetes and edge computing. They are also easy to use and access, making them go-to options for businesses.
According to an article by Visual Capitalist, AWS already controls 31% of the cloud computing market, while Microsoft Azure controls 24% and Google Cloud controls 11%.
The Challenges of Adopting Hybrid Cloud and Multi-Cloud Strategies
Despite the many benefits of multi-cloud and hybrid cloud environments, financial firms have historically faced challenges in adopting them.
One of the most common challenges is managing the complexity of integrating these environments, especially with legacy systems and infrastructure. Integrating multiple cloud environments with on-premises infrastructure requires a specific set of skills and tools, and may require the organization to temporarily suspend some of its capabilities.
External Challenges
Some of the other most common external challenges firms might face when adopting multi-cloud and hybrid cloud environments include the following:
- Third-party security and compliance: Firms must ensure consistent security measures across diverse cloud platforms, including in third-party cloud environments. This must be accomplished while adhering to stringent financial regulations like GDPR and PCI-DSS.
- Vendor selection: Some organizations may struggle to identify appropriate vendors to work with, especially if they must safeguard sensitive data. Firms must also be cognizant of becoming too dependent on a vendor’s services (“vendor lock-in”) if they choose to migrate a significant portion of their resources to a single vendor.
- Skills gaps: The shortage of professionals with expertise in managing hybrid and multi-cloud strategies poses a significant hurdle for many financial institutions. This is why it is critical to work with cloud services experts when creating a new environment.
Internal Challenges
Many firms must also address internal challenges that can only be resolved through careful planning:
- Performance consistency: Maintaining uniform performance levels across different cloud platforms and on-premises systems can be challenging, potentially impacting critical financial operations.
- Data governance and sovereignty: Ensuring proper data management and compliance with local data residency laws across multiple cloud environments adds complexity to cloud strategies.
- Integration and interoperability: Seamlessly connecting legacy systems with modern cloud services and ensuring smooth data flow between different cloud platforms remains a technical challenge.
- Cultural resistance: Many financial institutions face internal resistance to cloud adoption, particularly concerning data security and loss of control over IT infrastructure.
Thankfully, some strategies can help financial institutions address these challenges and ensure a seamless implementation of their cloud environment.
Steps for Adopting Hybrid Cloud and Multi-Cloud Strategies in Financial Services
Adopting hybrid cloud and multi-cloud strategies requires new tools, but also a strategic timeline, a designated team, and organizational change management.
To successfully adopt one of these cloud environments financial services, firms should follow these steps:
- Assess current infrastructure and needs:
- Conduct a thorough inventory of existing IT assets and applications
- Identify workloads suitable for cloud migration
- Determine regulatory compliance requirements
- Evaluate data sensitivity and security needs
- Develop a comprehensive cloud strategy:
- Define clear business objectives and expected outcomes
- Establish governance frameworks and policies
- Create a roadmap for phased migration
- Set key performance indicators (KPIs) to measure success
- Choose appropriate cloud service providers:
- Evaluate providers based on security, compliance, and performance
- Consider industry-specific solutions and expertise
- Assess interoperability with existing systems
- Negotiate flexible contracts to avoid vendor lock-in
- Design the cloud architecture:
- Determine optimal workload placement (public vs. private cloud)
- Plan for data integration and management across environments
- Implement robust network connectivity and security measures
- Ensure scalability and flexibility to accommodate future growth
- Implement strong security measures:
- Adopt a zero-trust security model
- Implement end-to-end encryption for data in transit and at rest
- Use multi-factor authentication and role-based access controls
- Regularly conduct security audits and penetration testing
- Ensure regulatory compliance:
- Map data flows and storage locations to comply with data residency laws
- Implement automated compliance monitoring and reporting tools
- Maintain detailed audit trails for all cloud activities
- Regularly review and update compliance strategies as regulations evolve
- Optimize for cost and performance:
- Implement FinOps practices for cloud cost management
- Use auto-scaling and load balancing to optimize resource utilization
- Leverage cloud-native services for improved efficiency
- Continuously monitor and optimize cloud spending
- Develop cloud expertise and culture:
- Train internal staff to use cloud solutions
- Foster a cloud-first mindset across the organization
- Encourage collaboration between IT, business units, and third parties
- Consider partnering with cloud consulting firms for specialized expertise
- Implement robust data management:
- Develop a comprehensive data governance strategy
- Implement data classification and tagging for efficient management
- Use data virtualization to create a unified view across environments
- Implement automated data backup and disaster recovery solutions
- Implement continuous monitoring and optimization:
- Use cloud management platforms for centralized visibility
- Implement automated performance monitoring and alerting
- Regularly review and optimize cloud resource allocation
- Conduct periodic cloud strategy reviews and adjustments
With this approach, financial institutions can effectively adopt hybrid and multi-cloud strategies, enhancing their operational agility, security, and compliance while driving innovation and cost efficiency.
AI-Driven Cloud Solutions Are the Next Frontier for Financial Services
The implementation of these hybrid and multi-cloud environments is reshaping the operational landscape of financial services, delivering improved flexibility and resilience to meet evolving market demands and regulatory requirements. In the next few years, the financial services sector is expected to witness significant advancements in cloud computing, with AI and machine learning playing pivotal roles in cloud management and optimization.
“AI significantly enhances forecasting and scenario planning, which were traditionally manual processes,” says a report by ERP Today.
“With AI-based cloud solutions, finance professionals can now forecast scenarios in real time, whether they are related to customer behavior, market trends or tracking inaccuracies.”
To learn more about how your firm can implement hybrid and multi-cloud strategies, contact us at OptionOne Technologies today.
