How to protect your business from cloudwashing

When I read data recently published in Fintech Finance News that said that over half of banking innovation leaders surveyed are sick of cloudwashing, I wasn’t surprised. From clients, to partners, to team members, I hear the same frustration: too many promises of the cloud don’t deliver. 

For years, the term cloud has been stretched to cover everything from genuine cloud-native infrastructure to old systems that have been lifted and stamped onto someone else’s servers. Countless vendor rebrands have resulted in our industry being filled with what is essentially legacy software in a new wrapper marketed as modern innovation. 

So, I can understand the frustration of those surveyed leaders, particularly as cloudwashing creates the illusion of progress while leaving the same problems intact, effectively slowing down the market.

Cloudwashing has meant we’re stuck with an industry that talks about agility and innovation while still being tied to the same outdated foundations. Here’s what cloudwashing is and how you can protect your institution from it. 

How to spot cloudwashing 

Spotting something is the first step towards protecting yourself. If you know your enemy, you can steer clear of them. Cloudwashing isn’t always obvious at first glance, after all, some vendors can often overhaul a brand to make it more modern much faster than tech teams can build an entirely new system to replace their legacy product. But, once you know what to look for, the patterns become clear. 

First though, here’s a little definition for anyone wondering what cloudwashing is. Cloudwashing is a term that refers to when a vendor markets legacy or on-premise software as cloud without actually rebuilding that software for the cloud. In practice, it often means hosting old systems on someone else’ servers and rebranding them as modern infrastructure. The rebrand doesn’t remove the original issues: slow release cycles, costly upgrades, and inflexible architecture. 

Cloud-native, on the other hand, is fundamentally different.  Cloud-native systems are built from the ground up to take advantage of the flexibility and speed that the cloud makes possible. They’re designed around modular services, API first integration, and continuous deployment, so updates are frequent and far less disruptive. 

To spot the difference between the two, here are a few questions to ask potential vendors:

• When was this system built?  
• Was it designed for the cloud from day one, or moved there later?  
• How fast can you adapt to a shifting market and product launch requirements?  
• Can you  launch or change products in weeks, or do we have to wait months for upgrades?
• Do I have the option of enjoying autonomy through APIs and configuration or am I locked into your schedule?  

Furthermore, cloudwashing thrives on vague language. If a vendor can’t give you clear answers to basic questions about deployment or update cycles, that’s a red flag. Here are some key buzzwords to watch out for:  

• Hybrid: Unless specifically explained, this is often code for legacy infrastructure that has been updated to include the cloud in some way that doesn’t truly resolve any of the issues of legacy tech.  
• Major release and scheduled downtime: These terms often signal long, costly upgrade cycles and mean you’re not in cloud-native territory.  
• Closed integrations: Requiring custom builds just to connect to partners is another sign of old architecture under a new name.  
• Opaque pricing models: While not exactly a term, costs ballooning with every small change or new feature is a signal that you’re working with legacy tech.  

True cloud-native providers don’t dodge these questions. They’ll be able to explain how updates are shipped, how quickly you can integrate with third parties, and how their pricing works.  

The cost of falling for cloudwashing

Cloudwashing carries real, measurable risks for financial institutions. When banks buy into cloud-in-name-only, they often discover too late that the limitations and costs of legacy systems remain. Some of those costs include:

• Slower product launches: Institutions still have to wait months, sometimes years, to configure or release new products. 
• Hidden costs: Expensive upgrades and ongoing vendor dependencies eat into budgets meant for innovation.  
• Operational drag: With cloudwashed technology, manual workarounds and downtime will continue to frustrate staff and customers alike.  
• Lost market share: While those struggling with cloudwashed technology are still waiting for the next upgrade cycle, their competitors on true cloud-native systems are already capturing new customers and markets.  

In short, cloudwashing creates the illusion of progress while delaying the very agility it promises. Over time, these delays show up on the income statement while also eroding customer trust and company competitiveness.  

Why core banking systems are a prime target for cloudwashing 

Nowhere is cloudwashing more common, or more damaging, than in core banking systems. Because these systems sit at the heart of financial institutions, vendors know they can’t easily be swapped out, and for hand-tied tech teams, marketing them as cloud-technology often feels safer than admitting the underlying architecture hasn’t changed in decades.

But that safety is false, because the core dictates how fast a bank can move, and being forced to launch slowly can cost institutions in every area from growth to compliance. If you want to protect your business from cloudwashing, ask your core banking system provider direct questions about the design and history of their system.

How to protect your business from cloudwashing

The good news is that cloudwashing is avoidable if you know what to look for. Here are the steps to take to protect your business from cloudwashing.

• Dig into the system’s history: Was it truly built for the cloud, or rebranded later? 
• Ask about release cycles: How often do updates go live, quarterly, monthly, or continuously?  
• Check for autonomy: Find out if your team can configure products and workflows directly or if you’re locked into depending on the vendor.  
• Test scalability in practice: Figure out what happens if you were to onboard thousands of new customers in a short period or enter a new market.  
• Look for transparency: Cloud-native vendors should be transparent about their architecture. Be very wary of heavy marketing language which isn’t backed up by real stories.
• Ask for a test drive: Cloud-native vendors should be able to give you some sort of sandboxed environment to test if this is the right tool for you.  

Essentially, for modern processes, choose modern tools.  

There is no room for cloudwashing in 2026

Cloudwashed technology thrives on appearance and folds under pressure. But financial institutions can’t compete on appearances, they must compete on outcomes, and outcomes often depend on delivering fast product launches and creating customer experiences that inspire trust.

That’s why protecting yourself from cloudwashing isn’t just about avoiding wasted spend, it’s about setting your institution up for growth. By insisting on genuine cloud-native architecture and demanding proof of agility, you can ensure that your next investment drives real impact.