Lessons financial institutions must learn from the Cloudflare outage

Cloudflare recently experienced an outage triggered by a configuration change in its bot-management infrastructure. A critical routing component crashed, bringing a large portion of its traffic-handling services to a halt for several hours.

It was the latest in a long series of major infrastructure incidents, but familiarity shouldn’t reduce our concern. Every outage highlights just how fragile and interdependent our digital economy has become.

When a major upstream provider hits trouble, its problems don’t stay politely contained. They ripple through ecosystems at speed, taking social networks offline, slowing e-commerce, breaking authentication journeys and interrupting payments. The fallout doesn’t care which industry the root cause sits in. Once the infrastructure shakes, everyone feels it.

This is why financial institutions must become a prepper – prepare for failure before it happens, not scrambling to respond when systems go dark.

A digital economy balancing on a tightrope

For all its sophistication, the internet is surprisingly vulnerable. It runs on a narrow set of critical providers. Even the most advanced digital platforms sit on top of complex, interdependent layers of cloud services, API gateways, security tools and network infrastructure. That complexity is both a strength and a weakness. It offers flexibility and scale, but it also means a small failure can escalate rapidly.

Several forces are contributing to the rise in large-scale outages. Resilience has always been expensive to build, and duplicating providers or infrastructure often becomes a “late” problem. At the same time, as companies scale, their systems become harder to untangle – more interdependencies, more hidden links, more potential points of failure. And culturally, the industry still tends to reward speed, growth and feature delivery over the unglamorous work of strengthening the foundations.

Consolidation only adds more pressure. When large parts of the internet are concentrated around a handful of cloud or security platforms, outages become far more disruptive.

The unique vulnerability of payments

Payments are particularly exposed because a single transaction relies on a long supply chain. Cloud platforms, processors, third party APIs, fraud tools, card schemes, authentication services: they all sit behind that moment when someone taps a card or clicks to pay. If a single link in that chain snaps, the entire experience can collapse.

The Cloudflare outage mirrored the dynamics of last year’s CrowdStrike incident. The root problem had nothing to do with payments directly, yet payments became one of the most visible casualties. That’s the nature of the ecosystem. It is tightly connected, highly distributed and fundamentally dependent on the strength of its weakest link.

Resilience must be designed, not improvised

In financial services, resilience is not a nice-to-have. It’s part of the core information security triad – confidentiality, integrity and availability. Lose availability, and the other two principles can’t function meaningfully.

Resilience has to be designed long before an incident hits. This prepper mindset means understanding your architecture deeply, rehearsing failure scenarios regularly, and ensuring your teams know exactly what to do when a provider or service goes dark. Good architecture isolates faults rather than amplifying them. Good process ensures continuity plans are living documents, not emergency PDFs no one has opened since onboarding.

Compliance frameworks play a big part here. ISO, PCI, DORA, NIST, NIS2 – these aren’t there for box-ticking. They’re the guardrails that keep resilience embedded in day-to-day operations instead of becoming a once-a-year audit exercise.

The consequences of ignoring incidents are severe: damaged trust, reputational hits, direct financial losses, increased fraud exposure, and greater regulatory pressure. In an industry where competitors often rely on the same core infrastructure, resilience becomes one of the last true differentiators.

So, what should companies be doing now?

The organisations that manage outages best are the ones that treat resilience as fundamental engineering, not optional insurance. In practice, that means:

• Embed cybersecurity in operations. CISOs and compliance leaders need meaningful authority and budget, not symbolic roles.
• Eliminate single points of failure. Design systems with multiple cloud providers, intelligent routing, and strong fallback mechanisms.
• Use AI as an accelerator, not a replacement. AI can detect abnormal traffic patterns, surface early signs of infrastructure stress, and trigger automated failover – but it cannot replace architectural thinking or the operational discipline required to build true resilience.
• For payments providers specifically, the private-cloud-versus-public-cloud debate often comes up. The reality is that private clouds are extremely costly and rarely match the global reach or reliability of major cloud platforms. A multi-cloud strategy, backed by thoughtful redundancy planning, is far more realistic for maintaining availability at scale.

Turning disruption into progress

To their credit, major platforms treat outages with the seriousness they deserve – reputational risk alone demands it. Cloudflare sits behind everything from WAF protection to edge routing, and when it goes down, every business depending on it is forced to examine its own exposure.

This latest incident should be exactly that: a moment of honest assessment. The goal isn’t perfection. It’s designing a system that doesn’t collapse because one provider falters.

Resilience must become an everyday discipline. If our digital economy relies on shared infrastructure, then every organisation has a responsibility to design for failure, rehearse for disruption and invest in the capabilities that keep services available when the unexpected happens.

The question for every financial institution is simple: when the next outage hits, will you be a casualty or a case study in resilience?