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Cloud computing in banking: Why moving to the cloud is inevitable


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8 min. read

Banks have been using cloud technologies for some time already: 95% of banks have implemented them in one way or another. According to a research (The Cloud Imperative For The Banking Industry) conducted by a bit software company, the transition to cloud services reduces the company’s operating costs by 10-20%, and the time to market is reduced by 30-50%.

Cloud computing in banking is of increasing interest to the financial sphere, analysts say.

The pandemic of COVID-19 has made the scalability, resilience, flexibility, and availability of public clouds much more important to banks than ever before in a matter of weeks. During the pandemic, bankers could compare the performance of cloud technologies (both public and private) with legacy technologies. Many bankers have concluded that the public cloud has shown outstanding results: for example, it became possible to create substantial virtual call centers in a matter of hours. The opportunities resulting from the cloud transition will be revolutionary for individual banks and the industry as a whole.


Cloud technologies will be in demand among those banks whose business can be flexible and innovative. The transition to new technologies will reduce costs.

If the needs of the bank’s customers have not changed over the past ten years, then there are probably no convincing arguments in favor of cloud computing in financial services.

However, for most banks, the pace of product development and change has accelerated. In this case, cloud services can reduce development time, which is necessary for a rapidly changing market environment, and provide banks with new revenue opportunities.

The banking business as a whole is becoming more innovative. Competition forces banks to try something new, not just modernize an existing business. New lines of business can also be developed based on the bank’s own technologies, but credit institutions still need to use new tools, analytics, and artificial intelligence technologies. The easiest way to do this is by creating them in the public cloud.

The cost of cloud computing in banking is lower than using your own infrastructure. This becomes especially important if the product needs to be deployed to many customers. Cloud provider fees may seem high compared to the cost of building and running banks’ own applications. Still, experience shows that overall costs will be lower for banks that use public platforms and then innovate business processes on top of them.


microservice to mass-update the BIOS (4)

Banks that plan to move to the cloud have three options:

Public cloud. Using such a service allows the bank to save significantly: you need to pay only for those services that the bank requires. In addition, public clouds provide almost unlimited scalability.

Hybrid cloud. Hybrid clouds (which combine a bank’s on-premises infrastructure with a public cloud) give you more control over the transition to the cloud. In addition, in this case, the transition becomes smoother.

Private cloud. This type provides maximum flexibility: the bank can customize its cloud environment to meet specific business needs. A private cloud can also provide the ultimate control and performance, as only one client uses cloud resources.


The main reason for disappointment is not always an adequate understanding of migrating to the cloud. Conventionally, it can be divided into five stages.

  • Migration of banking applications to the cloud and their scaling are the content of the first migration stage. On it, banks formulate requirements for cloud infrastructure, transfer their information systems to it, and plan the necessary capacities for further systems development
  • The second stage is applying innovative services offered by cloud providers and those implemented by the banks. Their synergy allows you to get additional value for your business already at this stage of cloud migration. 
  • The third stage of migration is the modernization of the bank’s digital platform and business acceleration. It becomes possible thanks to the flexibility of the cloud architecture, which allows you to deploy new services as quickly as possible: both client services and those aimed at supporting the work of the back office. 
  • The transition to using innovative solutions allows the bank to carry out another stage of migration: the development of new and optimization of existing business processes that will improve the efficiency of the business. 
microservice to mass-update the BIOS (5)

  • And only at the fifth and final stage of migration do cloud technologies become the primary means of introducing innovations and continuous business growth for banks. Now the cloud is becoming not only the infrastructure that ensures the bank’s operation but also a place for experimenting with new developments, services, and business models.

Each bank independently determines the economic rationale for migrating its IT to the cloud and the values it intends to acquire through this migration. But no matter what strategy the bank chooses, the benefits that it will be able to get today remain common.

  • Business flexibility. This essential quality has become incredibly in demand during the COVID-19 pandemic. It has accelerated changes in customer needs, creating a need for flexible products that consider new consumption patterns and modern requirements for banking services. Cloud computing in finance allows banks to use both easily scalable infrastructure and rapidly deployed applications. 
  • Development of innovations. They are becoming vital when banks face pressure from fintech startups. These innovations can be aimed both at creating new banking products and at forming new structures that will help to gain advantages in areas where one or another bank has not yet been active. Finally, the cloud platform will help the bank deploy its “innovative sandboxes” to develop and test promising projects. 
  • Economic efficiency. Especially when solving problems such as launching new applications and services. Using an easily scalable cloud that does not require capital expenditures is much easier than developing your own infrastructure. In addition, clouds allow you to save on application development, preferring SaaS solutions to your own infrastructure software solutions. 

Despite all the risks and fears, the transition to the cloud is the main trend of the time. Also, cloud computing in banking is one of the distinguishing characteristics of a digital bank from a traditional one.

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