CBUAE and Core42 Launch World's First Sovereign Financial Cloud for UAE Banks

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CBUAE and Core42 partner for the world's first sovereign financial cloud to boost UAE AI capabilities.

The Central Bank of the UAE (CBUAE) and Core42, a G42 company, signed their partnership in late February 2026 to build the world's first dedicated sovereign financial cloud.
The Sovereign Financial Cloud Services Infrastructure (SFCSI) keeps all regulated institutions' data within UAE jurisdiction, removing reliance on foreign cloud providers.
Licensed financial institutions (LFIs) including banks will access a unified multi-cloud environment managed through a single regulated sovereign layer.
AI and analytics capabilities embedded in the platform will support real-time risk monitoring, fraud detection, regulatory reporting, and operational optimisation.
The SFCSI is an integral pillar of the CBUAE's Financial Infrastructure Transformation (FIT) programme and complements new AI governance guidelines issued in the same week.
The UAE sovereign cloud market is estimated to be growing at over 20% annually, driven by demand for data-sovereign, AI-enabled financial infrastructure.

A New Digital Backbone for UAE Licensed Financial Institutions

The Central Bank of the UAE (CBUAE) and Core42, the sovereign AI and cloud arm of technology group G42, announced a formal partnership in late February 2026 to develop the Sovereign Financial Cloud Services Infrastructure (SFCSI). The initiative is positioned as a cornerstone of the CBUAE's Financial Infrastructure Transformation (FIT) programme, which aims to modernise the UAE's financial ecosystem and strengthen its position as a leading global hub for digital finance.

The SFCSI directly addresses a key concern among regulators worldwide: the exposure of critical financial data to foreign jurisdictions through commercial hyperscale cloud providers. By establishing a dedicated sovereign environment for licensed financial institutions (LFIs), the CBUAE embeds AI governance and data sovereignty into the infrastructure layer itself - aligning technical design with the regulatory expectations that govern the sector.

What the SFCSI Is and How It Works

The SFCSI is a centralised, isolated cloud infrastructure located entirely within the UAE. According to the CBUAE's official press release, the platform is built on the latest financial technology and provides a highly secure, dedicated environment for LFIs - covering banks and other regulated entities. All data and critical workloads remain under UAE national jurisdiction, removing the need for financial institutions to rely on foreign public cloud environments for their core operations.

The platform delivers a unified multi-cloud management framework, allowing institutions to administer all their cloud services through a single, regulated sovereign layer. This consolidation is designed to reduce operational complexity, increase supervisory oversight, and embed compliance requirements directly into the infrastructure that underpins the sector. Gulf News and The National News both reported the announcement as a significant step in the UAE's digital financial infrastructure ambitions.

AI and Analytics at the Core

The SFCSI is powered by Core42's sovereign AI and cloud technology stack, providing financial institutions with access to advanced artificial intelligence and real-time analytics within a controlled, compliant environment. The CBUAE states that intelligent automation and data analysis capabilities within the platform will support deeper operational insights and improve decision-making across digital financial products and services.

Expected use cases include real-time risk monitoring, predictive analytics, regulatory reporting, fraud detection, and operational optimisation. These capabilities are built into the sovereign infrastructure rather than delivered via external AI services, meaning institutions can scale advanced AI functionality without compromising national data control. Talal M. Al Kaissi, Interim Chief Executive Officer of Core42, noted that the SFCSI "allows regulated institutions to scale advanced sovereign cloud and AI capabilities without compromising national control."

Regulatory Alignment and the FIT Programme

The timing of the SFCSI launch is notable. In the same week that the agreement was signed, the CBUAE also issued new guidance on the responsible use of AI and machine learning by LFIs, focusing on consumer protection, transparency, model governance, and risk management. The sovereign financial cloud functions as the technical counterpart to this supervisory framework, providing a regulated environment in which AI-driven financial services can be deployed to meet local requirements.

H.E. Saif Humaid Al Dhaheri, Assistant Governor for Banking Operations and Support Services at the CBUAE, described the infrastructure as providing "a secure, scalable and future-ready foundation that enhances data protection and accelerates innovation." The SFCSI is consistently described as a multi-year programme component rather than a standalone project, meaning its scope and capability will evolve as regulatory requirements and AI technologies advance.

Core42's Role and the Broader Sovereign Cloud Trend

Core42 was formed in 2023 when G42 merged several of its units - including G42 Cloud, its research arm Inception, and ICT provider Injazat - into a single entity focused on AI-enabled solutions at national scale. The company already offers sovereign public cloud, private cloud, and AI cloud infrastructure for government and regulated entities in the UAE, alongside a managed AI platform called Compass. This existing portfolio forms the technical foundation for the SFCSI build-out.

Industry analysis cited by GK Today suggests the UAE sovereign cloud market is growing at a compound annual growth rate of over 20%, reflecting strong institutional demand for environments that eliminate foreign data custody risks while still delivering AI functionality at scale. The SFCSI is distinguished within this global trend by being the first sovereign cloud infrastructure dedicated specifically to the financial sector - with AI capabilities designed in from the outset, not added later.

What Remains to Be Confirmed

Exact implementation timelines, phased onboarding schedules for individual institutions, service-level commitments, and commercial terms have not been disclosed in the materials available as of publication. However, the consistent framing of the SFCSI as an ongoing FIT programme element - rather than a discrete technology project - points to a structured, multi-year rollout. Financial institutions should monitor further CBUAE guidance as supervisory expectations around data residency and AI deployment continue to develop.

What Clients are Asking their Advisors

What is a sovereign financial cloud and how does it differ from a standard commercial cloud?

A sovereign financial cloud is a dedicated infrastructure hosted entirely within a country's own borders, ensuring all financial data stays under national jurisdiction. Unlike commercial public clouds run by global hyperscalers, it gives the national regulator direct oversight and embeds local compliance requirements - such as data residency and cybersecurity rules - into the platform by design.

Will UAE banks be required to migrate to the SFCSI, and has a timeline been announced?

No mandatory migration deadline or formal onboarding schedule has been published. The SFCSI is described as an ongoing element of the CBUAE's multi-year Financial Infrastructure Transformation programme, which suggests a phased rollout rather than an immediate switch for all licensed financial institutions.

How does the UAE's sovereign financial cloud differ from similar projects in other countries?

Several governments have developed sovereign cloud initiatives, but most cover a broad range of public-sector functions. The UAE's SFCSI is specifically engineered for the financial sector, with AI and analytics capabilities built in as core features - not bolt-ons. This sector-specific, AI-native design is what industry commentary cites as making it a first of its kind globally.

What happens to UAE financial institutions that are slow to adopt the sovereign financial cloud?

No penalties for non-adoption have been announced. However, as the SFCSI becomes the regulated environment for AI-powered services and real-time supervisory oversight, institutions that delay may face growing compliance complexity and competitive disadvantage - particularly as CBUAE expectations around data residency and AI governance continue to develop.