The CIO's Dilemma: Balancing Cost, Complexity, and Client Proximity Amid Digital Transformation

Last week, Caspian One Open Data shared key takeaways from the AWS re:INVENT panel, with a particular focus on insights from our CTO, Lewis Poe. Given the depth of the discussion, we couldn’t cover it all in one post. So, we’re back with a follow-up to spotlight additional valuable perspectives for CIOs — this time, drawing on key call-outs from both Lewis and Hugh Richards, MD of Product and Solutions at DXC Luxoft. 

Click here to watch the full AWS re:INVENT session

The Ever-Present CIO Challenge 
Ask any CIO of a large bank about their priorities, and you’ll likely get the same answer today as you would have a decade ago—or a decade from now. Their core drivers remain constant: 

  1. Cut Costs 

  2. Reduce Complexity 

  3. Get Closer to Clients 

These three pillars form the foundation of every CIO’s strategy. But while the goals haven’t changed, the playing field certainly has. Today, a wave of new regulations, legacy system migrations, and disruptive technologies like AI, cloud-native technologies, and open banking are adding layers of complexity to an already monumental task. 
 

Open Banking: The Next Big Shift in Financial Services 
There’s a significant global movement underway called open banking. Almost every G7 country has adopted a regulatory framework for open banking, focusing on the secure and digital sharing of customer data. Recently, the U.S. Consumer Financial Protection Bureau (CFPB) announced new open banking regulations, signaling a major shift in the U.S. financial services landscape. 

These regulations will force U.S. banks to open their systems to third-party providers through highly secure, real-time APIs. While it sounds simple in theory, in practice, this change will be seismic. The regulatory timelines are aggressive, requiring financial institutions to implement scalable, secure APIs that can handle real-time information with ultra-low latency. 

“One of the key lessons we've observed across various financial institutions is that leveraging the cloud has been a fundamental enabler for regulatory transition.”

- Lewis Poe

Key Enabler: Cloud Technology 
One of the biggest lessons learned from financial institutions globally is that leveraging the cloud is fundamental for meeting open banking demands. Traditional infrastructure simply can’t handle the required scale, speed, and security. Cloud-native technologies offer clear benefits, including: 

  • On-Demand Scalability: Cloud-native APIs can scale dynamically to meet real-time data demands. 

  • Automation: Processes like compliance checks, security scans, and system rollouts can be fully automated. 

  • Fault Tolerance: Redundancy and auto-recovery mechanisms ensure uptime. 

Feedback from global financial institutions is clear: Adopting cloud-native technologies has been the most important change they’ve made to meet regulatory and operational challenges. Canadian and U.S. financial institutions would be wise to follow this example, using cloud adoption to fast-track their compliance journey. 

Technical debt is the CIOs silent nightmare.
— Hugh Richards

The Cost Conundrum: Unpacking the Hidden Price of Technical Debt 
Technical debt is like credit card debt—manageable at first but catastrophic if ignored. While many banks have already migrated simpler systems to the cloud, the hardest challenge lies in moving deeply embedded legacy systems. These aren’t simple "lift-and-shift" operations; they require complex re-engineering. 

The Challenge: 

  • Parallel Operations: Cloud migrations often require running old and new systems side by side. 

  • ISV Compatibility: Vendors may not support cloud environments, especially older systems. 

  • Skills Shortage: Legacy system specialists are retiring, leaving gaps in knowledge. 

The Takeaway: To escape this debt spiral, CIOs must build an end-to-end ROI strategy that captures the hidden costs of running parallel systems, staffing duplication, and retraining employees. Cloud-native solutions allow you to eliminate technical debt incrementally, focusing on high-impact areas first. 


The Cultural Challenge: Moving Minds, Not Just Systems
 
Every digital transformation hinges on human transformation. Migrating systems is difficult, but changing mindsets is harder. Many Subject Matter Experts (SMEs) resist change, often fearing redundancy or a loss of control. Without cultural alignment, even the best technology investments can fail. 

The Challenge: 

  • Fear of the Unknown: Seasoned employees feel their roles are at risk. 

  • SME Resistance: Subject matter experts may resist efforts that make them obsolete. 

  • Partner Reliance: Change often requires support from external partners. 

The Takeaway: Invest in culture as much as you invest in technology. CIOs must communicate a clear “why” behind every change. People fear what they don’t understand, so clear roadmaps and milestones are crucial. Involve SMEs early in the process, making them stakeholders instead of skeptics. 

We’ve now hit the bottom of the road where big operational changes are going to have to happen.
— Hugh Richards

Complexity Crisis: The Legacy Systems Trap 
Many CIOs think they've "done the hard part" by migrating simpler systems to the cloud. But the most critical legacy systems—those that power customer interactions and compliance—still remain. These systems are old but essential, and they have deeply embedded workflows that are difficult to unwind. 

The Challenge: 

  • Operational Dependencies: These systems have dependencies on older platforms, making cloud compatibility difficult. 

  • Break-Fix Cycle: Changes in one system may cause failures in downstream workflows. 

  • Consolidation Pressure: It’s not just about moving systems but collapsing and consolidating them. 

The Takeaway: Banks must recognize that the easy migrations are over. The next phase of transformation involves moving systems that cannot be commoditized. Success requires a layered migration roadmap that accounts for system dependencies and operational impact. 

Platforms like Caspian’s on AWS Marketplace offer a commoditized solution that meet the security, scalability, and compliance requirements needed for open banking.
— Lewis Poe

Differentiated vs. Commoditized Systems 
Not every system is a competitive advantage. Many banking systems are commoditized—meaning they can be outsourced or run on standard cloud platforms. Differentiated systems, by contrast, are where CIOs should focus their energy, as they offer unique, customer-facing value. 

The Challenge: 

  • Lack of Prioritization: Treating all systems as "critical" wastes time and effort.

  • Limited Visibility: Without a clear view of system value, CIOs risk over-investing in the wrong areas. 

The Takeaway: CIOs must categorize systems as either: 

  • Differentiated (core to your value proposition) 

  • Commoditized (outsourceable or standardizable) 

Cloud providers can handle commoditized systems, allowing internal teams to focus on the differentiated, revenue-generating systems that drive competitive advantage. 

“Embrace partners!”

- Hugh Richards

 
The Role of Strategic Partners 
No bank can transform in isolation. Strategic partners—like AWS, Intel, and industry-specific technology vendors like Caspian One Open Data—can accelerate transformation. While some CIOs worry that outsourcing leads to a loss of control, the right partner can serve as a co-innovator. 

The Challenge: 

  • Outsourcing Anxiety: CIOs worry about “losing control” of core systems. 

  • Partner Fit: Not all partners have experience with banking compliance and legacy systems. 

The Takeaway: Choose partners, not vendors. Vendors deliver products; partners co-design, co-develop, and co-own the outcome. Work with partners that understand banking’s regulatory landscape, such as those experienced with open banking frameworks. 

 

Some final thoughts 
Success in a FI’s next chapter hinges on how effectively you navigate the convergence of cost, complexity, and client connection. With the rise of open data and cloud-native technologies, the path forward is clear. Banks that embrace cloud transformation—while also fostering cultural change and upskilling their people—will emerge leaner, more agile, and better prepared for the next wave of financial disruption. 
 
If you’d like to discuss your open data plans with our team, reach out and we’ll help you explore tailored strategies to drive growth, streamline complexity, and stay ahead of industry change. 

Previous
Previous

2024 In Review -Highlights and accomplishments as a team.

Next
Next

Navigating the Future of Open Banking and Digital Transformation.