By Rob DeDominicis (pictured), Group CEO, GBST
Cloud adoption across pensions and wealth providers is accelerating. It brings scale, security and flexibility, but recent events remind us that resilience still depends on engineering, investment and sensible design choices. The industry cannot afford to confuse modernisation with durability.
There is no question that cloud has transformed financial services. Twenty years ago, most of us were still worrying about server rooms, capacity planning and whether systems would survive peak periods. Today, cloud gives us scale, global engineering support and security capability that is almost impossible to match on premises.
The direction of travel is right. What concerns me is a growing assumption that moving to cloud automatically delivers resilience. It does not. Cloud is a foundation. You still have to build the house properly on top of it.
We saw that last year, when AWS experienced an outage that disrupted services across industries. Although Amazon resolved it relatively quickly, it reminded everyone that even the biggest global providers are not immune to disruption. In critical financial infrastructure, you need a plan for the day something goes wrong, not an assumption that it never will.
Modernisation and resilience must be treated together
In the UK, the Prudential Regulation Authority and the FCA have been clear that operational resilience is a supervisory priority. In Australia, APRA has gone further, recently calling out technology concentration in the superannuation industry. The message is consistent across markets: resilience matters, and it is now a board-level topic, not just an IT one.
That is a positive development. Retirement platforms carry enormous responsibility. Members trust that their money and data are protected, and that they will be able to transact when they need to. If a core administration platform fails, the consequences ripple well beyond a single firm.
Cloud can help reduce that risk. It provides redundancy, flexibility and the ability to scale without over-investing in infrastructure that sits idle most of the year. Anyone who ran a major platform before cloud remembers how painful that was. The difference cloud has made is real.
However, if the architecture on top of the cloud is brittle, the model is unsustainable or there is a single point of failure in the technology stack, the risk simply moves rather than disappears.
Shortcuts show up later
One theme that regulators are starting to recognise is the link between pricing and resilience. Financial infrastructure takes sustained investment to run well. If a core platform is priced aggressively without the economic headroom to fund engineering, capacity, testing and security, weaknesses will emerge later.
You cannot run critical pensions infrastructure on a shoestring and expect it to scale safely. If price looks too good to be true, there is usually a reason. Cheap technology can become very expensive when something breaks. That is as true today as it was during the early days of wrap platforms and before cloud existed at all.
The real question is architectural design and operating discipline. Cloud does not remove the need for disciplined engineering. Firms still need to:
- design for failure, not perfection
- test and rehearse disaster recovery
- monitor and manage critical dependencies
- ensure data is portable, not trapped
- give clients flexibility rather than locking them in.
If you build with those principles, cloud amplifies your resilience. If you do not, cloud simply masks fragility until a stress event occurs.
When our industry talks about modernising, we often focus on features, speed and user experience. Those matter. However, in pensions and wealth, durability matters just as much. Members need confidence that the system will be there tomorrow, next year and long into retirement.
A global conversation, a common challenge
One thing that has struck me over the years is how similar the challenges are across markets. The UK, Australia and other retirement systems face the same pressures. There are different products and different regulatory frameworks, but the underlying reality is the same. This is long-term money. That requires long-term technology thinking.
You cannot build it once and walk away. You need to keep investing. You need to modernise in cycles. You need to make sure architecture evolves with the market. I have lived through several of those cycles, from on-premise systems, to private cloud, to the scale of public cloud today. The firms that succeed are the ones that build for the long haul.
What the industry needs next
The debate is moving to the right place. Regulators are asking sensible questions. Firms are modernising. Cloud adoption is accelerating. The opportunity now is to combine the benefits of cloud with the engineering discipline financial infrastructure demands.
That means:
- investing consistently, even when it is not glamorous
- avoiding overly tight coupling to a single commercial or technology path
- designing systems that remain portable, modular and open as can be
- recognising that value and sustainability go hand-in-hand
Modern technology gives us incredible capability. The responsibility is to use it wisely and build platforms that earn trust over decades, not just quarters.
Critical financial systems do not get points for speed alone. They get points for being there, working, every single day.
The industry has made huge progress. The next step is ensuring progress and resilience move at the same pace.