Let's Connect


Let's Connect


+91 1234 44 4444

The Cloud:
A Catalyst for Innovation and Agility in Banking

The Cloud: A Catalyst for Innovation and Agility in Banking

December 23, 2021

by ACS Solutions

As banks look at transforming how they have been doing business in the past, they are considering a fast switch to the cloud. According to Accenture, banking features among the leading industries in cloud adoption. However, banks continue to witness strong competition from financial sector technology startups that are entirely built on the cloud. Therefore, the move to the cloud is not just an IT decision, but also a business strategy. The objective is to tap into the cost efficiencies, business agility, access to innovation, scalability, and flexibility which cloud computing brings along with it. According to a recent McKinsey survey1, 60% of the banks plan to shift bulk of their operations to the cloud in the next 5 years.

The challenge of regulatory compliance

It has been seen that cloud infrastructure accelerates modernization initiatives and helps banks to leverage AI, Blockchain, and software containers. However, banks need to address the stringent regulatory requirements, security, and resiliency needs. In today’s market, banks face a multitude of regulatory challenges. Few of the financial regulators who have set guidelines around the use of cloud computing include:

Keeping in mind the increased reliance of the financial service institutions (FSI) on cloud service providers (CSPs), the FFIEC has issued a statement which recognizes the regulatory expectations for improved risk management and enhanced cloud computing controls. It clearly outlines the shared roles and responsibilities of the FSIs and the CSPs, where the responsibility of safeguarding customer information lies solely with the FSIs.

However, the potential benefits of moving to the cloud far outweigh the regulatory concerns. The five major benefits can be summed up as:

business agility
at scale
Reduced capital

Towards becoming more agile

Most banks rely on legacy systems which involve outdated programming languages and mainframes. This affects business agility to a large extent. With the rise of the digital economy, it has become imperative for banks to proactively respond to disruption and keep pace with it. It has triggered the need for digital transformation, along with aligning to changes in the market and consumer behavior. Legacy systems, on the other hand, impede the agility which banks require adjusting to change. If we take the Fintech companies as a case in point, they are not dependent on legacy infrastructure, are cloud-native and can deliver innovative and user-friendly solutions at a much faster pace, attract a large section of customers, and gain market share. To compete, traditional banks need to start evaluating cloud compatibility for their various applications and processes. Next, if compliant with the regulations, they can gradually shift from legacy systems to a public cloud. This move will benefit them in terms of elasticity, functionality, and cost-efficiency.

Tapping into innovation

Besides, the cloud enables innovation, which helps banks to address evolving business needs without compromising on security. With the cloud, the cost of failed innovations is low. Creative IT departments can embrace the risks associated with launching new products with the fair knowledge that they can increase the computing capacity if required or decommission it in case it’s no longer required. This facilitates agile testing and helps launch new products which would have otherwise not been there. By adjusting computing capacity, banks can opt for beta versions, publish them quickly and look forward to pilot programs. It is equally easy to reverse these moves or accelerate them as the cloud-based banks are not limited by traditional IT. Hence, they are provided with the opportunity to “fail fast” and innovate at scale.

Reduced capital expenditure

Between 2022 and 2024, the online banking market is expected to increase significantly. Banks need to make sure that they keep up and meet customers where they are;which is online. CSPs can provide FSIs with new tools and applications while reducing costs and increasing productivity. Cloud-based SaaS products help reduce cost in the following ways:

Provide protection against Ransomware : The finance sector is often a target of malicious actors and, considering the sensitive nature of financial data, cyberthreats can prove extremely costly. Cloud-based platforms provide backup, help secure the data, and mitigate these threats.

Minimize data breaches : An incident of data loss can result in an average cost of $4.23 million2 for a bank. Not only does it leave a dent in the costs but also damages a bank’s reputation, thereby affecting customer trust. Cloud-based platforms allow banks to create a backup of their sensitive data and secure it from data breaches. It has been found that organizations which have moved ahead in their cloud modernization strategy could contain breaches 77 days faster than those who were in the early stages of cloud adoption.

Help host in-house hardware : When banks opt for cloud storage, the CSP procures, installs, and maintains all software and hardware in its data centers. One of the most significant benefits of choosing a CSP is that the banks are saved from enormous upfront costs of hardware installation, software licensing fees, ensuring backup for data, and arranging for extra IT support and services.

Enhanced Scalability

Often on-premises infrastructure cannot handle the changing workloads and banks may have to scale by adding resources such as hardware, software, computing power, and increased memory. This involves increased involvement of labor, money, expertise, and time. In this scenario, the scalability which the cloud offers turns out to be an attractive feature. Banks can use the in-built features and scale at ease. At times, the cloud also offers the option of auto-scaling, which brings down the cost involved in monitoring and scaling resources manually. While a shift to the cloud does ensure scalability it is essential for banks to evaluate scalability in conjunction with security, transparency, and cost-effectiveness.

Continuous Transformation

The Cloud has also evolved into a strategic platform which banks are turning to for digital transformation. It offers speed and flexibility and the ability to operate with reduced risk, which makes digital transformation possible. Also, by enabling faster deployments, cloud computing helps banks to address the new and evolving needs of the customers. It brings about increased collaboration and ensures an improved speed to market. As the cloud and digital transformation are closely linked, banks that are the early adopters will witness a competitive advantage.

The digital transformation journey in the financial services sector can be divided into three phases, the discovery, design, and execution phase. The cloud has an integral role to play in all these three phases where in the first phase the data and analytics help in reviewing the market and the business. Next, in the design phase, the cloud provides the environment and infrastructure for hypothesis and testing future models. Finally, in the execution phase, the cloud equips banks to scale up or down based on their varying needs, which help adapt to market demands faster and transform continually.


While the benefits offered by the cloud become more pronounced, adopting it is no longer an option for the banks. It has turned into a precondition for survival in the digital age. Find out how ACS Solutions has been catering to the cloud needs of Fortune 500 clients across the globe. COVID -19 has heightened the need for banks to adopt digital models among which the cloud has clearly emerged as an imperative and an enabler.


1 .

2 .


Sohini Deb

Sohini Deb

Lead Content Writer, Marketing

Case Studies

Get in touch with us for feasibility studies, joint workshops, pilots and ideation sessions.

    Request a Consultation