Cloud computing has become a major lever for transformation in the banking and insurance sectors. Lower infrastructure costs, greater flexibility, improved service continuity: the benefits are numerous. But in environments where downtime is simply not an option, a cloud migration requires careful planning.
Cloud-related risks for banks and insurers must be anticipated from the earliest stages of the project in order to guarantee the resilience of information systems.
To better understand these challenges, we spoke with Jonathan Courteix, a Production Engineer specializing in cloud infrastructure at Digital Novva Partners. He shares his hands-on experience and the best practices to put in place to secure a cloud migration in critical environments.
Why are banks and insurers adopting the cloud?
Banks and insurance companies are evolving their IT infrastructures to meet ever-increasing demands for availability, security, and performance. In this context, the cloud is becoming an increasingly important solution capable of supporting these new requirements.
Reducing infrastructure costs
Maintaining an in-house IT infrastructure represents a significant investment. It requires purchasing, maintaining and renewing servers and network equipment, as well as the teams needed to operate them.
Cloud providers pool infrastructure across multiple customers. Costs are shared, which reduces hardware investment while still providing access to high-performance infrastructure.
“When properly managed, the cloud ends up costing much less than maintaining the entire infrastructure in-house. Providers achieve economies of scale because they serve a large number of customers.”
For banks and insurers, this approach also makes it possible to focus investment on high value-added projects rather than on managing physical infrastructure.
Gaining flexibility and scalability
IT needs are constantly evolving. A marketing campaign, a spike in transaction volume, or the launch of a new service can require additional resources for a limited period.
The cloud offers a high degree of adaptability. Resources can be scaled up or down according to needs, without replacing existing infrastructure. Companies pay only for the resources they actually use.
This flexibility is especially valuable in banking and insurance environments, where applications must remain high-performing despite significant fluctuations in load.
Refocusing on core business activities through the shared responsibility model
Migrating to the cloud is not just about outsourcing servers. It is also an opportunity to redistribute responsibilities between the cloud provider and internal teams:
- The provider takes on part of the physical infrastructure and its security.
- IT teams can then devote more time to applications, data, service performance, and transformation projects.
This division of responsibilities allows banks and insurers to concentrate on their core business challenges, while relying on infrastructure designed to meet high standards of availability and security.
The main cloud-related risks in the banking and insurance sector
Migrating to the cloud offers many advantages. However, it does not eliminate risk. Banks and insurers handle sensitive data and operate critical applications whose availability is essential to the smooth running of their business.
Poor risk management can lead to service outages, data loss, or compliance difficulties. Identifying these points of vigilance is therefore an essential step before any migration.
Strong dependence on the cloud provider
One of the main risks is dependence on a single cloud provider, also known as vendor lock-in. When a company builds its entire infrastructure around a single provider, it becomes harder to switch solutions later on.
“If a provider decides to shut down tomorrow, there is no easy way back. That would mean having to halt operations while the infrastructure is rebuilt. And dependence also means pricing pressure: if Microsoft decides to raise its prices tomorrow, we will have to adapt”.
This dependence is not limited to a service shutdown. It can also have financial, technical, or strategic consequences. A price increase, a change in the services offered, or migration difficulties can all limit a company's ability to modernize its IT infrastructure.
For sectors where service continuity is essential, this dependence must be taken into account from the very design of the cloud architecture.
Cybersecurity and data breach risks
The cloud is often perceived as less secure than an in-house infrastructure. In reality, this is not the case.
Major cloud providers invest heavily in the physical security of their data centers, the protection of their infrastructure, and cyber threat detection. Their level of security is often higher than what a company could achieve on its own.
That said, migrating to the cloud does not eliminate cybersecurity risks. A misconfiguration, poorly managed access rights, or human error can be enough to expose sensitive data.
In the banking and insurance sectors, where data is particularly sensitive, the consequences of a breach exten far beyond the technical issues. They can affect the company's operations, its regulatory compliance, and customer trust.
Among the most common impacts are:
- The obligation to notify affected customers;
- Costs related to investigation and remediation;
- Investigations by regulatory authorities;
- Legal fees and compliance actions;
- Damage to the company's reputation.
In the longer term, other consequences may appear:
- Loss of customer trust;
- Higher cyber insurance premiums;
- Business interruption during remediation operations;
- A decline in revenue linked to reputational damage.
“Today, we know just how important data is. A breach isn’t just a technical problem: it’s a business-wide issue, from customer relationships all the way to the balance sheet.”
In other words, migrating to the cloud does not mean transferring all security responsibilities to the provider. Part of that responsibility remains with the company. Understanding this division of responsibilities is essential to effectively securing a cloud environment.
How can these risks be limited?
Cloud-related risks are not inevitable. When anticipated from the design stage of a project, their impact can be significantly reduced.
The security of a cloud environment relies first and foremost on an appropriate strategy, a clear division of responsibilities, and the implementation of sound technical practices.
Understanding and applying the shared responsibility model
The first step is understanding that the security of a cloud environment does not rest solely with the provider.
Cloud security is based on a shared responsibility model:
- The provider secures the physical infrastructure and the services it provides.
- The company, for its part, remains responsible for configuring its environments, managing access, and protecting its data.
For example, if a company mistakenly makes a storage space accessible to everyone, the data leak results from a misconfiguration for which the company is responsible, not a flaw on the provider's part.
“We hand over a large share of security to the cloud provider, but we are the ones responsible for securing our application and our data. It's a partnership, not a full delegation”.
Understanding this division of responsibilities makes it possible to identify the real points of vigilance and avoid treating the cloud as a plug-and-play security solution.
Strengthening service availability through geo-redundancy and load balancing
In the banking and insurance sectors, service continuity is a major concern. Even a brief interruption can have significant consequences for operations and the user experience.
To limit this risk, cloud providers offer several resilience mechanisms:
- Geo-redundancy involves replicating data across several distinct geographic sites, for example in Dublin and Amsterdam. If one data center becomes unavailable, another can take over to ensure service continuity.
- Load balancing complements this approach. It automatically distributes traffic across multiple servers to prevent any single one from becoming overloaded or unavailable. If a server fails, users are redirected to another one with no perceptible interruption.
These mechanisms help improve application availability and limit the impact of a technical incident.
Keeping systems up to date through continuous monitoring
Cloud security is constantly evolving. New vulnerabilities emerge regularly, and attack methods keep improving.
IT teams must therefore:
- Maintain continuous technology monitoring;
- Apply security patches as soon as they become available;
- Adapt their practices to new threats.
“Security changes enormously. You have to do a lot of monitoring. And even with all these measures, it's impossible today to have a completely unbreakable system”.
The goal is not to eliminate risk entirely, but to reduce the attack surface and improve the company's ability to respond quickly in the event of an incident.
Limiting dependence through multi-cloud or hybrid clou
To reduce the risk of dependence on a single provider, some companies opt for a multi-cloud or hybrid architecture:
- Multi-cloud involves distributing services across several providers, such as Azure, AWS, or Google Cloud. This approach limits the consequences of downtime or a pricing change at any one provider.
- Hybrid cloud, meanwhile, combines an on-premises infrastructure with one or more public clouds. Companies can thus keep certain sensitive applications or data in-house while still benefiting from the cloud's flexibility for other uses.
The choice between these architectures depends on each organization's technical, regulatory, and budgetary constraints. In any case, diversifying environments strengthens the resilience of the IT environment and limits the risks tied to excessive dependence on a single provider.
What the regulations require
In the banking and insurance sectors, migrating to the cloud is not just a matter of technical considerations. It must also comply with a demanding regulatory framework designed to protect sensitive data and guarantee the resilience of IT environment.
DORA: strengthening the operational resilience of financial institutions
Effective since January 2025, the DORA regulation (Digital Operational Resilience Act) requires financial institutions to better manage their digital risks.
It sets out requirements for managing risks associated with IT service providers, including cloud providers. Banks and insurers must be able to identify their dependencies, assess their providers, and ensure the continuity of their services in the event of an incident.
The choice of a cloud architecture is therefore no longer purely a technical decision. It is now also part of a regulatory compliance approach.
GDPR and data localization: obligations that cannot be overlooked
The GDPR (General Data Protection Regulation) governs the collection, processing, and retention of personal data within the European Union.
Migrating to the cloud does not exempt companies from these obligations. They remain responsible for protecting the data they process, even when relying on a cloud provider.
This is why data localization is an important point of vigilance, particularly for sectors handling sensitive information.
“That's why it's so important to host data in Europe. That's why most French companies do it and follow this rule. It's also a way of protecting a company's reputation and its customers' trust”.
When data is transferred outside the European Union, the company must ensure that these transfers comply with GDPR requirements and provide an equivalent level of protection.
The CNIL ensures compliance with these obligations
In France, the CNIL (French Data Protection Authority) is responsible for ensuring compliance with the GDPR.
It can support organizations in their compliance efforts, audit their practices, and impose sanctions in the event of a breach, particularly following a data leak or a failure to protect personal information.
Conclusion
Cloud computing offers significant advantages. It helps them gain flexibility, optimize costs, and strengthen infrastructure performance, provided the risks are anticipated from the earliest stages of the project.
Dependence on a provider, cybersecurity, service continuity, or regulatory compliance: a successful cloud migration relies on a strategy tailored to the company's specific challenges. Beyond the technology itself, it is the ability to manage these risks that ensures the long-term resilience of the IT environment.
Looking to secure your cloud migration or modernize your infrastructure? Digital Novva Partners' experts support banks, insurers, and companies operating in critical environments with a pragmatic approach tailored to their operational, technical, and regulatory challenges. Contact our experts to discuss your cloud project. Contactez nos experts pour échanger sur votre projet cloud.
Q&A
Is the cloud secure for banks and insurers?
Yes, provided it is properly configured. Major cloud providers invest heavily in the security of their infrastructure. However, companies remain responsible for access management, environment configuration, and data protection. Security therefore relies on a shared responsibility model.
What are the main cloud risks for banks and insurers?
The main risks include:
- Dependence on a cloud provider;
- Configuration errors that can lead to data leaks;
- Cyberattacks;
- Service interruptions;
- Regulatory compliance challenges.
These risks can be limited through appropriate architecture and a well-defined security strategy.
How can service continuity be guaranteed in the cloud?
Service continuity relies on several complementary mechanisms, such as data geo-redundancy, load balancing, disaster recovery plans, and depending on requirements, multi-cloud or hybrid architectures. These best practices help limit interruptions and strengthen the resilience of IT environment.