How AI and clouds are transforming traditional banks

The banking world is experiencing a revolution: the move away from traditional mainframes to agile, AI-based cloud infrastructures promises a new era of efficiency and customer centricity. A profound change is imminent that will reshape the entire industry.

The transformation of the banking sector is gathering pace. According to a recent research report by NTT DATA, based on a survey of 650 decision-makers from the international banking industry, the sector is on the verge of a paradigm shift. The report "The Digital Horizon: Banking's Shift from Mainframe to AI-Driven Cloud Infrastructure" sheds light on the trend away from mainframe systems towards an infrastructure that is determined and dominated by artificial intelligence (AI) and cloud technologies.

Mainframes were long regarded as the unshakeable backbone of the banking industry, but clear shifts are now emerging. While 63 percent of the banks surveyed (55 percent in Germany) still cling to mainframe systems, an equally large number worldwide, and even 70 percent in Germany, see generative AI as a catalyst that will significantly simplify the migration of applications to the cloud. This development is not only reflected in the technology, but also in a cultural change within the banks, which are establishing new business models and management standards through AI and cloud technologies. The vast majority of board members of the banks surveyed are also convinced of AI and cloud initiatives in their companies and support them. This applies to 91 percent globally and even 92 percent in Germany. However, there is still a lack of implementation, mainly due to a lack of specialists.

Challenges and opportunities

The transition to the cloud and the integration of AI also present banks with challenges in areas such as data protection and overcoming technical and organizational hurdles. At the same time, these technologies open up new opportunities, for example in business optimization, risk reduction and supporting regulatory compliance. The study shows that generative AI can particularly help to refine business processes and overcome the complexity of data migration.

However, the integration of AI and cloud technologies goes far beyond technical aspects. It enables banks to gain a deeper understanding of customer needs and opens up the possibility of offering customized, efficient and secure services. Kaz Nishihata from NTT DATA emphasizes that this technological wave is not only redefining services, but also the role and self-image of banks. The industry is actively moving towards innovation to secure its own competitive advantage in a rapidly evolving digital landscape.

Concerns and perspectives

Alongside the opportunities, there are also concerns, particularly with regard to the use of AI models from third-party providers. data privacy, loss of control and dependencies are the main issues here. Nevertheless, the trend towards digitalization is unstoppable, with 34 percent of banks recognizing the challenges of integrating generative AI into their existing IT infrastructures. The future of banking will be characterized by a close integration of man and machine, whereby the ethical and social implications of this development must always be kept in mind.

NTT DATA's report highlights a turning point in banking: The era of mainframes is coming to an end, while AI and cloud technologies are entering the stage. This change promises not only technological innovation, but also a realignment of customer relationships and an increase in service quality. Banks that master this transition will position themselves at the forefront of a new wave of digitalization that has the potential to fundamentally change the banking industry.

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