Sovereign Innovation in Financial Services

The mandate for leaders in the financial services sector to modernize or risk irrelevance is clear. However, for CIOs, CTOs, and Heads of Digital Transformation, this directive comes with a formidable caveat: modernize, but do not compromise on security, compliance, or operational resilience. 

On one side, there is the market demand for agility, real-time analytics, and customer-centric digital experiences. On the other, is a regulatory landscape that is becoming increasingly intricate. From the European Central Bank (ECB) guidelines and the Digital Operational Resilience Act (DORA) to GDPR and evolving ESG standards, the guardrails are tighter than ever. 

In the past, these forces of innovation and regulation were often viewed as opposing poles. However, a shift is occurring today. Leading institutions are discovering that with the right architectural approach, compliance can serve as a foundation for sustainable innovation. 

The Shift From If to How 

Today, the question is no longer if financial institutions should move to the cloud, but how they can do so without relinquishing control, especially in a time of increased need for data sovereignty. The all-in public cloud migration, frequently pushed as the ultimate goal by software vendors, is often impractical for banks and insurers managing deep legacy dependencies and mission-critical mainframes. 

Instead, a structured, phased modernization strategy is emerging as the superior path. This approach favors hybrid cloud models that allow organizations to modernize step-by-step. By layering intelligence over existing systems rather than forcing a risky big bang migration, firms can preserve core stability while unlocking the flexibility of the cloud. 

The Role of RISE with SAP in Compliant Transformation 

This is where RISE with SAP (now SAP Cloud ERP Private) serves as a critical enabler. The offering provides a unified, subscription-based pathway to modernize ERP systems, bringing together infrastructure, core applications, and transformation services. However, for highly regulated industries, the standard offering is often just the starting point. 

To bridge the gap between standard cloud benefits and specific regulatory needs, financial institutions are turning to the tailored option delivered by RISE with SAP Premium Suppliers like T-Systems. This model offers a best-of-both-worlds scenario: the commercial simplicity of a single SAP contract combined with the nuanced technical managed services of a partner who understands the sector and the data sovereignty requirements for European entities. 

T-Systems, for instance, provides a certified private cloud specifically designed to meet German and EU regulations. This ensures that while the software is global, the infrastructure remains sovereign and aligned with BaFin requirements, auditable, and transparent. 

Data Sovereignty and the AI Frontier 

Sovereignty is more than just data residency; it is the bedrock of future capability, particularly regarding Artificial Intelligence (AI). As financial firms look to deploy AI for everything from anomaly detection to automated reporting, the data feeding these models must be governed by strict standards of explainability and privacy. 

A sovereign cloud architecture ensures that data remains within European legal boundaries, protecting it from external jurisdiction risks. This creates a safe harbor where institutions can experiment with AI and data analytics, knowing their compliance posture is uncompromised. 

What This Means for SAPinsiders 

Innovation and regulation do not need to compete when it comes to modernization. The journey to the cloud in the financial sector does not require a trade-off between progress and protection. By leveraging a tailored RISE with SAP approach, leaders can build a composable, compliant data strategy that satisfies regulators while delighting customers. 

Establishing a path for ongoing innovation is essential as organizations transition to the cloud. Modernization is no longer about moving fast and breaking things; it is about moving smartly and building things that last. With sovereignty secured and a clear roadmap in place, financial institutions can pursue innovation not just with speed, but with confidence. At the same time, they can also use the modernization they have achieved as a path for continuous innovation, not one-off projects. 

Leverage the Tailored option to solve for complexity. If your organization operates in a regulated industry (such as healthcare, public sector, or manufacturing) or has unique legacy dependencies, you do not have to accept a one-size-fits-all public cloud model. You can utilize partner-managed private clouds within the RISE with SAP framework to gain the commercial simplicity of a subscription model without sacrificing the bespoke security, specific SLAs, or data residency controls your business requires. 

Download the whitepaper to know how T-Systems can help you leverage RISE with SAP to achieve your transformation goals.