UK banks frustrated by cloudwashing in core banking adoption
Research has found that the majority of UK banking innovation leaders are frustrated by misleading claims around cloud technology adoption in core banking systems.
The survey data, provided by core banking provider SaaScada, show that 57% of senior figures in the banking sector believe they are 'sick of cloudwashing' - a term describing situations where legacy banking technology is simply hosted in the cloud yet marketed as truly cloud-native.
Widespread cloud adoption
The findings indicate that cloud migration is nearly universal among UK banks, with 95% having moved or planning to move core banking workloads to cloud environments. Interviewed leaders cited scalability, increased control over product development, and cost reduction as the most important drivers behind cloud initiatives.
Despite the promise of these benefits, substantial challenges remain. While most banks have made steps towards the cloud, many have discovered that not all offerings deliver the genuine advantages of a true cloud-native system.
Prevalence of cloudwashing
According to the survey of 150 UK banking leaders responsible for product innovation, 39% of banks admitted to having purchased core banking systems described as 'cloud', which ultimately provided no authentic cloud capabilities. A further 23% of respondents found it difficult to determine if the core banking solution under consideration was genuinely cloud-native.
This leaves only 38% of banking leaders expressing satisfaction that the solution they procured genuinely matched the cloud capabilities described by vendors.
"Adopting just any 'cloud' core banking system won't instantly solve your core banking headaches, especially if that core isn't truly cloud native. With cloudwashing obscuring the picture, banking heads must ensure they do their research and don't fall for the marketing! It's vital to understand what makes a core system cloud-native: born in the cloud, providing access to real-time data and architectural flexibility to drive innovation," said Nelson Wootton, CEO and Co-Founder, SaaScada.
Motivations and missed benefits
Scalability and reliability were the main reasons given by banks for investing in cloud-based core systems. Other significant motivations included the ability to rapidly develop and launch new products, as well as the expectation of reduced operational costs. According to the research, however, many institutions are not seeing the anticipated benefits of their investments because the systems obtained were not truly built for the cloud.
With traditional banks often struggling to respond as quickly as newer entrants, this issue may have implications for competition and innovation in the sector.
Characteristics of cloud-native systems
SaaScada outlined five characteristics that banks should seek when evaluating cloud-native core banking platforms. These include low setup costs, flexibility for product design and launch in line with customer demand, no mandatory downtime for upgrades, access to real-time customer data, and unlimited scalability.
Industry experts suggest that both technical and procurement teams must interrogate vendor claims and understand the underlying architecture to ensure the core system's capabilities truly align with digital transformation goals.
The survey was conducted in March 2025, gathering responses from 150 UK-based Heads of Digital Transformation, Chief Technology Officers, Chief Innovation Officers, and other C-suite leaders at retail and business banks, representing institutions with balance sheets ranging from GBP £0.5 billion to GBP £100 billion.
