As the financial services industry accelerates its digital transformation, technology leaders are under pressure to modernise legacy systems while safeguarding compliance, security, and sovereignty.
According to Andrew Bennett, business development Manager at Routed, hosted private cloud is fast becoming the model of choice for striking the right balance.
“Institutional decision-makers are no longer asking if they should move to the cloud, but rather how to do it in a way that manages risk, avoids lock-in, and still enables innovation,” Bennett says. “Hosted private cloud delivers the agility and scalability you’d expect from public cloud, but with the control, predictability, and compliance advantages of a private environment.”
Matching workloads to the right environment
Bennett explains that, for most financial institutions, the reality is a hybrid mix: “Legacy systems of record, core banking platforms, and compliance-heavy workloads have no commercial benefit in being re-architected for public cloud. They belong in a secure, private environment. On the other hand, digital services that drive growth – mobile banking apps, customer portals, analytics – benefit from the scalability and feature set of public cloud.”
This deliberate workload placement, he says, is the cornerstone of modern hybrid strategies, enabling banks and insurers to combine stability and innovation without compromising either.
Managing risk, failover and lock-in
Hosted private cloud offers financial institutions a “best of both” approach to risk management. By keeping mission-critical systems in a secure, locally hosted environment, organisations can ensure high availability and disaster recovery capabilities while avoiding the vendor lock-in that often comes with integrated public cloud platform services.
“Public cloud providers offer powerful development tools, but those same tools can create migration barriers,” Bennett cautions. “We see many institutions using public cloud for infrastructure while developing their own modern services in-house, giving them more control over their future technology roadmap.”
Compliance and sovereignty in focus
With frameworks like PCI DSS for payments, ISO27001 for information security, and South Africa’s POPIA governing personal data, compliance requirements shape every infrastructure decision in the sector. Data sovereignty – knowing exactly where data is stored and under whose jurisdiction it falls – has moved to the forefront of boardroom discussions.
“The geopolitical landscape is changing the conversation,” Bennett notes. “Legislation like the US CLOUD Act means that data hosted with a US-headquartered provider could be subject to foreign government access, even if it’s stored locally. By hosting all infrastructure in South Africa and managing it with local teams, Routed gives institutions the assurance that their data governance remains under local law.”
The road ahead for financial services cloud adoption
Bennett believes the future for South Africa’s financial services sector will be hybrid by default, with hosted private cloud playing a central role.
“It’s not about choosing public or private cloud exclusively – it’s about finding the optimal mix for each workload and business objective,” he says. “The winners will be those who can modernise at pace without compromising on security, compliance, or customer trust.”
As part of its commitment to supporting this journey, Routed continues to invest in local infrastructure, partnerships, and expertise. Operating from data centres in Johannesburg and Cape Town, the company delivers vendor-neutral, VMware-based hosted private cloud solutions that enable financial institutions to innovate confidently.