Why are banks adopting cloud? and How does cloud computing help customers?

Cloud computing is not just a buzzword anymore. It is a reality that is transforming the way banks and other financial services organizations operate, innovate and deliver value to their customers. In this blog post, we will explore what cloud computing is, how banks are using it, and what benefits it brings to both banks and their customers.

What is cloud computing?

Cloud computing is the delivery of computing services such as data storage, software applications, analytics, and networking over the Internet, rather than on-premise or in-house servers. Cloud computing enables users to access these services on demand, pay only for what they use, and scale up or down as needed.

There are different types of cloud computing models, such as public cloud, private cloud, hybrid cloud, and multi-cloud. Public cloud refers to the use of shared resources and services provided by third-party vendors such as Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform (GCP). Private cloud refers to the use of dedicated resources and services that are owned and managed by the organization itself or a trusted partner. Hybrid cloud refers to the combination of public and private cloud resources and services to achieve the optimal balance of cost, performance, security, and flexibility. Multi-cloud refers to the use of multiple public cloud providers to leverage their different capabilities and avoid vendor lock-in.

How does cloud computing help banks?

Banks are increasingly adopting cloud computing as a strategic enabler for their digital transformation and business growth. According to a report by PwC, 52% of banking executives say that the cloud is extremely important for their organization’s innovation agenda, and 72% say that they will be operating in a hybrid or multi-cloud environment by 2022.

Banks are using the cloud for various purposes, such as:

  • Customer engagement: Banks are using cloud-based artificial intelligence (AI) and machine learning (ML) platforms to analyze customer behavior patterns and generate personalized messages, offers, and recommendations. For example, a retail bank used an AI/ML platform to send loan offers, overdraft warnings, and currency exchange-rate promotions based on geolocation data.
  • Cross-border payments: Banks are using cloud-based platforms to facilitate faster, cheaper, and more secure cross-border payments. For example, SWIFT, the global provider of secure financial messaging services, launched SWIFT gpi (global payments innovation), a cloud-based service that enables real-time tracking of cross-border payments.
  • Real-time payments: Banks are using cloud-based platforms to enable real-time payments within and across countries. For example, Zelle, a US-based digital payments network owned by seven major banks, uses AWS to process over 1 billion transactions per year.
  • Data analytics: Banks are using cloud-based platforms to store, process, and analyze massive amounts of data from various sources. This enables them to gain deeper insights into customer preferences, market trends, risk factors, regulatory compliance, and business performance.
  • Product innovation: Banks are using cloud-based platforms to develop and launch new products and services quickly and efficiently. For example, Goldman Sachs used GCP to create Marcus, its online banking platform that offers savings accounts and personal loans.
  • Security: Banks are using cloud-based platforms to enhance their security posture and protect their data from cyberattacks. Cloud providers offer advanced security features such as encryption, firewalls, identity and access management, threat detection and response, backup and recovery, and compliance tools.

What benefits does cloud computing bring to banks and their customers?

Cloud computing offers a number of benefits for banks and their customers, such as:

  • Cost reduction: Cloud computing reduces the capital expenditure (CAPEX) and operational expenditure (OPEX) associated with maintaining on-premise IT infrastructure. Cloud computing also enables banks to optimize their resource utilization and pay only for what they use.
  • Scalability: Cloud computing enables banks to scale up or down their computing resources and services according to their business needs and customer demand. This improves their agility and responsiveness in a dynamic market environment.
  • Performance: Cloud computing improves the performance of banking applications and services by leveraging the high-speed network connectivity, distributed architecture, and advanced hardware of cloud providers. This enhances the customer experience and satisfaction.
  • Innovation: Cloud computing enables banks to access a wide range of innovative products-as-a-service offered by cloud providers. These include AI/ML tools, blockchain platforms, data analytics solutions, chatbots, voice assistants, biometric authentication systems, etc. These products-as-a-service help banks create new value propositions for their customers and differentiate themselves from their competitors.
  • Data monetization: Cloud computing enables banks to monetize their data assets by creating new revenue streams from data-driven insights. For example, banks can use data analytics to offer personalized financial advice, cross-sell and up-sell products and services, or sell anonymized data to third parties.

Challenges of Cloud Banking

While the cloud offers many benefits for banks, it also poses some challenges, such as:

  • Data privacy and security: Banks need to ensure that their data is protected from unauthorized access or leakage when stored or processed in the cloud. They also need to comply with the data protection laws and regulations of different countries and regions.
  • Vendor lock-in and interoperability: Banks need to avoid becoming dependent on a single cloud provider or platform that may limit their flexibility or choice. They also need to ensure that their cloud services can interoperate with their existing systems or other cloud services.
  • Culture and talent: Banks need to foster a culture of innovation and collaboration that supports their cloud adoption. They also need to attract and retain the talent that has the skills and experience to work with the cloud.
  • Cost management and optimization: Banks need to monitor and control their cloud spending and usage to avoid overspending or underutilizing their resources. They also need to optimize their cloud performance and efficiency to maximize their return on investment.

Opportunities of Cloud Banking

Despite the challenges, the cloud also offers many opportunities for banks, such as:

  • Customer satisfaction and loyalty: The cloud can help banks improve their customer satisfaction and loyalty by offering more relevant and convenient services that meet their needs and expectations.
  • Competitive advantage and differentiation: The cloud can help banks gain a competitive advantage and differentiation by leveraging new technologies and capabilities that enable them to offer unique value propositions or solutions.
  • Revenue growth and profitability: The cloud can help banks increase their revenue growth and profitability by reducing their operational costs, increasing their operational efficiency, and creating new revenue streams or business models.

Best Practices and Tips for Cloud Banking

To succeed in their cloud journey, banks should follow some best practices and tips, such as:

  • Start small and scale up: Banks should start with small-scale projects that have clear objectives and benefits, such as migrating a non-critical application or testing a new feature. They should then scale up gradually based on the results and feedback.
  • Adopt a hybrid or multi-cloud approach: Banks should adopt a hybrid or multi-cloud approach that allows them to use different types of clouds (public, private, or community) or different cloud providers (AWS, Google Cloud, Microsoft Azure, etc.) based on their needs, preferences, or requirements.
  • Align with business goals and strategies: Banks should align their cloud initiatives with their business goals and strategies, such as improving customer experience, enhancing operational efficiency, or driving innovation. They should also measure and evaluate their cloud outcomes against their key performance indicators (KPIs).
  • Partner with experts and providers: Banks should partner with experts and providers that have the expertise and experience to help them with their cloud adoption. They should also leverage the best practices and tools that the experts and providers offer, such as cloud frameworks, methodologies, or platforms.


Cloud computing is changing how banks handle their business, and it has implications for customers as well. By embracing the cloud, banks can offer more personalized, convenient, and secure services to their customers, as well as innovate and transform their operations and services. However, banks also face some challenges, such as data privacy and security, vendor lock-in and interoperability, culture and talent, and cost management and optimization. To overcome these challenges and seize the opportunities, banks should follow some best practices and tips, such as starting small and scaling up, adopting a hybrid or multi-cloud approach, aligning with business goals and strategies, and partnering with experts and providers. By doing so, banks can succeed in their cloud journey and become cloud-powered banks.

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