Tech Transformation in Finance: Part One – The Projects
As financial institutions navigate global uncertainty, long-term tech transformation projects - from cloud migration to AI integration - are reshaping the industry's future. Take a closer look at the projects at the heart of tech transformation in finance.
Marcus Graziano
Managing Director
marcus.graziano@caspianone.co.uk
Recent times have been marked by economic volatility, geopolitical tension, and rapid technological advancement. Because of this, financial institutions are under increasing pressure to modernise. The industry is undergoing a significant shift from sunsetting legacy systems to embracing cloud infrastructure and integrating AI. Explore how long-term, strategic technology projects are reshaping the financial landscape, driven by the need for cost efficiency, regulatory compliance, and future-ready operations.
Project Prioritisation in Finance
Several factors are contributing to our current economic climate, significantly impacting how financial institutions operate. Trade tariffs, conflicts in Eastern Europe, the Middle East, and South Asia, and even the ongoing fallout from the COVID-19 pandemic are all contributing to recent economic volatility.
While the geopolitical landscape is creating uncertainty across global markets, the need for technological transformation and modernisation of complex financial systems remains. Most organisations are prioritising long-term, high-impact technology projects, typically multi-year transformations, over short-term engagements. Significant investments are being made to modernise legacy systems to achieve wider-reaching benefits beyond those created by reactive projects that flex with immediate changes in economic conditions.
The long-term and strategic nature of the projects being prioritised across the industry means that reducing operating costs is a major driver behind these projects. Many financial institutions operate on outdated technology stacks deeply embedded in their operations. These legacy systems are expensive to maintain and difficult to replace due to their complex dependencies across the front, middle, and back office.
As a push for cost reduction and operational efficiency grows, financial institutions are increasingly focused on:
Sunsetting legacy applications
Reducing estate size
Repurposing or eliminating redundant functionality
Improving their digital offering and capabilities
Many Chief Information Officers (CIOs) are actively working to decommission outdated platforms and streamline operations; however, difficulties remain with the burden that the size of digital transformation projects place on IT teams.
Cloud Enablement and Infrastructure Strategy
The speed at which financial institutions must operate necessitates digitalisation and ongoing tech transformation. At the heart of this shift is cloud migration, which remains a top priority for financial institutions aiming to modernize their infrastructure and stay competitive. Real-time access to data, reduced dependence on physical storage, and streamlined operations are just a few of the benefits that financial organisations are aiming to achieve by moving from on-premise to cloud-based solutions.
But while the benefits are clear, the path to the cloud is anything but straightforward. One of the most significant hurdles in cloud adoption is navigating an intricate patchwork of global regulations. Data privacy laws and data sovereignty requirements pose considerable challenges for working with cloud vendors, especially those based overseas.
For example, the European Union’s General Data Protection Regulation (GDPR) imposes rules on how personal data is handled, with strict provisions for the cross-border transfer of personal data. Countries like the U.S., UK, and Switzerland are considered “third countries” under GDPR, and transferring data to them without proper safeguards can, and has, led to significant financial penalties. To address this, frameworks such as the EU-U.S. Data Privacy Framework—and similar agreements with the UK and Switzerland—have been introduced to ease the compliance burden. These frameworks help, but they don’t eliminate the risks entirely.
Security vulnerabilities, data governance challenges, and compliance gaps still persist, particularly when transitioning from traditional on-premise systems to cloud-based infrastructure. While these issues aren’t new, the involvement of third-party providers introduces new variables. For instance, a financial institution may unknowingly store sensitive data with a U.S.-based provider, triggering regulatory obligations they hadn’t anticipated.
Despite these complexities, the financial sector continues to embrace cloud technologies for good reason. Cloud adoption enables organisations to:
Lower infrastructure and development costs
Boost agility and responsiveness
Support scalable, modern workflows
The key to success lies in having expert teams that understand the regulatory landscape and how to implement this knowledge into building a cloud strategy that prioritises compliance, security, and transparency. With the right approach, financial institutions can harness the full power of cloud-based systems without compromising on trust or control.
AI and Financial Services
Artificial intelligence is one of the most talked-about technologies in the financial sector today, but the picture is far more complex when it comes to actual adoption.
Many institutions dream of a top-down AI transformation, where systems are rebuilt from the ground up with AI at their core. This approach promises long-term innovation and competitive advantage, but in reality, it remains largely aspirational. The cost, complexity, and risk involved in overhauling legacy infrastructure make such transformations difficult to justify, especially in highly regulated environments like finance.
Instead, what we’re seeing is a more practical, bottom-up integration of AI, where individual roles and workflows are enhanced with agentic AI and AI-powered tools. This incremental approach allows organisations to realise tangible benefits without the disruption of a full-scale rebuild. Some real-world examples include:
AI-assisted coding tools that help developers write, debug, and optimise code more efficiently
Workflow automation that reduces manual effort in tasks like document processing, compliance checks, and customer onboarding
Enhanced productivity platforms like Microsoft Copilot, which integrate AI into everyday tools such as Excel, Outlook, and Teams
These tools are already reshaping how work gets done across financial institutions, improving speed, accuracy, and decision-making. However, AI adoption isn’t without its challenges. Skill dilution, particularly among junior developers who may become overly reliant on AI tools and miss out on foundational learning, is an emerging challenge that we have yet to understand the long-term impact of fully.
AI adoption also presents barriers to organisational risk management, cybersecurity, and compliance. AI introduces new variables into decision-making processes, new attack surfaces, and risks that can inadvertently violate regulatory requirements. Navigating these challenges requires balance. Embracing AI’s potential while investing in governance, training, and risk frameworks helps ensure thoughtful, strategic implementation.
The Benefits and Realities of Tech Transformation
Tech transformation has become a buzzword, but it is strategically important across most financial institutions looking to keep pace in a rapidly evolving and increasingly volatile landscape. But what does it actually involve?
Legacy system modernisation – replacing or reengineering outdated infrastructure to support modern capabilities
Enhanced client engagement – leveraging digital channels to deliver seamless, personalised experiences
Agile, cloud-native architectures – enabling faster development, deployment, and scaling of services
The benefits of tech transformation initiatives are compelling, and organisations that get it right find themselves with greater flexibility to respond to market changes, faster change cycles, and long-term cost efficiency. This can lead to increased innovation and responsiveness, streamlined operations, and reduced technical debt.
On the flip side, one of the biggest challenges organisations face in tech transformation is technology inertia. Once systems are implemented - especially in large, regulated environments - they tend to stay. Without active oversight, this can lead to bloated tech stacks, where overlapping tools, redundant platforms, and legacy dependencies quietly accumulate over time.
However, the journey is anything but simple. Transformation must be treated as an ongoing discipline, not a one-off project. It requires continuous evaluation, rationalisation, and governance to ensure your tech stack remains lean, agile, and aligned with business goals. True transformation is a multi-year, multi-million-pound commitment that requires investment in technology, people, processes, and culture.
Tech Transformation Challenges in 2025
Today’s operational challenges are reshaping how organisations are approaching the talent, investment, and regional strategies behind tech transformation. Ongoing global uncertainty continues to influence investment decisions and dampen risk appetite. At the same time, sourcing skilled talent has become increasingly difficult, especially in a cost-conscious environment where budgets are tight but expectations remain high. Companies are also rethinking how they distribute their workforce, striving to strike the right balance between operational efficiency and access to top-tier talent.
As a result, many firms are rethinking their location strategies, not just to reduce costs, but to align with evolving workforce expectations. Take Poland, for example. It’s become a prominent tech hub thanks to its deep talent pool and strong technical education system. However, many professionals in the region now prefer remote or hybrid work models, which can clash with the recent rise in return-to-office mandates. This tension is emblematic of a broader shift: companies must now navigate not just where talent is located, but how that talent wants to work.
To address these challenges, organisations must take a strategic, people-first approach that aligns the right talent with the right roles, not just in technical skills but also in cultural fit. This also involves navigating the shifting dynamics between remote and in-office work and building flexible, resilient, future-ready teams. At the same time, supporting the development of regional centres of excellence is key to enabling scalable growth while maintaining quality, consistency, and cohesion across the organisation.
Whether you're navigating legacy system modernisation, cloud migration, or AI integration, the path forward can feel complex, but you don’t have to go it alone. At Caspian One, our experts specialise in guiding financial institutions through strategic, long-term tech transformations that deliver real impact.
Get in touch with one of our specialists today to explore how we can support your digital evolution with insight, experience, and precision.
Disclaimer: This article is based on publicly available, AI-assisted research and Caspian One’s market expertise as of the time of writing; written by humans. It is intended for informational purposes only and should not be considered formal advice or specific recommendations. Readers should independently verify information and seek appropriate professional guidance before making strategic hiring decisions. Caspian One accepts no liability for actions taken based on this content. © Caspian One, March 2025. All rights reserved.
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