The trend toward cloud migration is putting increasing pressure on asset managers to drive their digital transformation. One of the strategic pillars of a cloud strategy is the transition from on-premises to SaaS solutions. For larger, traditional institutions, however, the question arises: Should they move directly to SaaS or opt for a multi-stage approach via PaaS? A gradual migration process can be a sensible option for certain business cases. DORA plays a role in this, and banks make common mistakes during their IT transformation.
Cloud transformation is no longer just a trend in wealth management – it is a necessity. According to KPMG, more than two-thirds of banks in Germany already use cloud-based SaaS solutions. This shift is being driven not only by competitive pressure from fintechs, but also by stricter EU regulations such as DORA, rising operating costs, and the need for greater agility through modular architectures. Forecasts predict that IT spending in the European financial sector will grow by almost nine percent annually until 2028 – significantly above the global average of five to six percent. However, the urgency to modernise also carries a risk: many institutions embark on cloud migrations without a coherent strategy.
Avoid reactive thinking
Large financial institutions, in particular, must deal with complex systems and strict internal compliance requirements. A hasty, one-size-fits-all approach can do more harm than good. Instead, we advocate a phased migration strategy when specific business constraints exist. A recent case illustrates this: A large investment firm with over €100 billion in assets under management began migrating to a Platform as a Service (PaaS) solution, with plans to move to a full SaaS transition as the next step. This phased model helps build a resilient IT foundation while minimising disruption—enabling operations to evolve without completely disrupting them.
PaaS vs. SaaS? Which strategy makes the most sense for large financial institutions?
SaaS solutions offer many advantages, such as rapid adoption, low maintenance, lower total cost of ownership, and scalability. SaaS can also be adapted to complex environments through customisation and hybrid deployment models. The ultimate goal of a cloud strategy is always a transition to SaaS. However, traditional enterprises with complex legacy systems and strict compliance requirements can strategically benefit from starting with PaaS. These organisations may already have in-house PaaS capabilities and application delivery layers. A sudden transition to SaaS could be perceived as too disruptive by a traditional, multi-layered organisation. In such cases, PaaS allows institutions to initially outsource platform management—a stepping stone to SaaS adoption that avoids disruption to application management operations. In a second step, the SaaS transition can be completed by outsourcing application support, administration, and updates. This phase can be approached using various approaches, such as 'reduce and outsource,' 'de-employ,' 'de-employ,' 'de-employ and optimise.' Conversely, institutions that undertake rapid, large-scale migrations without adequate preparation risk costly adjustments and potential operational downtime later on—whether they choose SaaS, PaaS, or a hybrid approach. According to an IBM study, the average cost of a data breach in financial services organisations is US$5.9 million per incident, highlighting the need for carefully planned cloud adoption strategies.
DORA changes the rules of the game
The Digital Operational Resilience Act (DORA), which came into force in January 2025, imposes new requirements on the digital resilience of financial institutions. What at first glance appears to be a regulatory hurdle actually opens up new scope for action. Before DORA, banks often had to independently assess whether cloud models were justifiable from a regulatory perspective. Now, uniform EU standards provide clarity – reducing uncertainty and strengthening trust in modern platforms. Furthermore, DORA forces banks to align their IT architectures with the principles of resilience, transparency, and auditability. This makes operating models based on modular architectures and configurable components not only more attractive but also a regulatory necessity. Those who strategically implement compliance now will gain a head start. Instead of simply avoiding risks, the focus shifts to strengthening resilience and scalability – a paradigm shift that both PaaS and SaaS solutions can support.
Build scalability using the cloud
Cloud migration must be viewed from the customer's perspective. What digital applications do investors need? How can these be directly linked to middleware and the backend? The goal is to make data available in real time and consistently across all system levels. A project with a large asset manager demonstrates the success: In the first phase, the frontend went live within six months – the digital usage rate increased from 20 to over 60 percent. The next step involved merging the client experience and investment management processes to provide real-time data to clients and advisors alike. Objectway also supported the integration of three acquired companies, enabling scalable growth. These steps were part of a broader cloud strategy that later led to the complete migration of the back office and portfolio systems to a PaaS model. The company has now begun its full SaaS transition, pursuing a "shift and optimise" strategy in which existing systems are migrated to the cloud while simultaneously expanding them. This reflects a broader industry trend toward cloud-enabled solutions enabled by modular, composable technologies. The front end delivers rapid proof points. But without a scalable, straight-through processing-capable back end that automates transactions end-to-end and without manual intervention, the potential for success remains limited. With a modular technology approach, companies can leverage interoperable solutions tailored to their individual needs, simplifying complexity while ensuring robust performance, adaptability, and scalability.
Months or years? How long does the cloud migration really take?
Another common misunderstanding in cloud migration projects is the timeframe. Many institutions plan for six to twelve months. This can be realistic, but depends heavily on the initial situation and internal processes. When legacy systems or regulatory requirements come into play, a short-term roadmap is insufficient. Objectway relies on a phased approach with agile milestones to ensure long-term results. It is not just the technology that matters, as the COO continues: The best platform is useless if the operating model can not keep pace. Agile teams, a forward-looking mindset, and a culture that embraces change are needed. Studies by McKinsey and Accenture speak of a "Cloud 2.0" era: technology, data management, security, and user experience are seen as components of a holistic transformation.
Whether PaaS, SaaS, or a hybrid model, it is critical that banks work with a partner that can deliver scalable solutions that support the entire value chain. The innovation framework must be tailored to each client's objectives—be it simplifying complexity, streamlining operations, or transforming the operating model.
"Cloud transformation is no longer just a trend in asset management – it is a necessity." — Alberto Cuccu, Chief Operating Officer at Objectway
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