As public cloud technology and hybrid multicloud architectures are being adopted in financial institutions at an increasing rate, we’re observing that their counterparts in the public sector— central banks—are a long way behind, due at least in part to a profoundly risk-averse approach.

While central banks have a very different mission from commercial banks, what they do have in common is the need to modernize their IT operations to support digital transformation, contain costs, source key skills and mitigate operational and cybersecurity risks.

To get a better understanding of how central banks compare to private sector organizations in how they think about public cloud and approach their cloud migration strategy, we partnered with the team at OMFIF to produce a first-of-its-kind report that looks at the opportunities and challenges of public cloud services seen through the lens of central banking officials.

Central Banking and Cloud Services: The New Frontier is based on a series of interviews with executives to illustrate an informed picture of what cloud technology can offer central banks and the challenges they face in adopting it. In exploring the benefits that cloud migration gives central banks, we also examined the ways in which financial institutions in the private sector have addressed the hurdles that are hampering central bank cloud adoption. Some of these challenges are technical, some are legal, some are cultural, and different solutions are necessary to address each.

In IBM Cloud, we are working to drive new levels of ecosystem collaboration and knowledge-sharing that support cloud adoption by de-risking the journey and reducing the time-to-value. We see public cloud as an enabler of a better future for financial services, not as a destination.

The following five takeaways are insights that we have gleaned from our extensive customer engagements, global regulatory outreach program and the industry contributions of the IBM Financial Services Cloud Council:

1. Allow your digital transformation ambitions (not your fears) to drive your cloud strategy.
2. Know yourself, your stakeholders and your data.
3. Be solution-oriented and nimble in combining technical, operational and legal capabilities to deliver outcomes that matter to your organization.
4. Understand the immediate power and sustained value of great architecture with embedded security controls and continuous monitoring.
5. Maximize the optionality that hybrid multicloud brings to mitigate regulatory and technological uncertainty in your environment.

IBM believes that dependability, reliability and trust need to be at the heart of every cloud strategy. Done right, our take is that the cloud can deliver unparalleled benefits in performance and total cost of ownership without compromising resiliency, security and compliance. And that conviction holds true across both public-sector institutions and private-sector enterprises.

The good news is that for every cloud transformation challenge, there is a solution—this includes privacy-enhancing technologies like confidential computing and Keep-Your-Own-Key (KYOK) cryptography, architectural patterns that enable intentional and optimized choices about workload placement, pre-defined security controls with continuous posture management, and specific deployment measures that address data localization requirements.

We’re confident that by learning from the successes and challenges experienced by the private sector, the central banking community will unlock the benefits of public cloud faster than ever before by addressing inhibitors that may currently be holding them back and better informing their perspective on how best to manage the evolving risk dynamics in the financial services sector.

The future for financial services is bright. And we’re very proud to be at the heart of it.