How cloud computing in banking can drive efficiency, security and innovation

It is no secret that cloud computing technology has revolutionised the financial services industry over the last few years. Its capabilities include enabling companies to scale their resources, ensure disaster recovery, extend their reach globally and enhance testing and development environments. For banks in particular, these capabilities present significant opportunities.

In this article, we explore the benefits of integrating cloud computing in banking, and how it can be used by banks to drive innovation and digital transformation across their businesses.

One of the main advantages of the cloud for banks is its ability to easily provide elastic scalability. Banks can easily scale up or down their computing resources based on changes in demand. For example, during peak times, such as the end of the month when customers typically perform more transactions, banks can quickly and seamlessly allocate additional computing power and storage to handle the increased workload.

On the other hand, during periods of lower activity, banks can scale down their resources, saving costs by paying only for what they use. This flexibility ensures that banks can efficiently handle fluctuating transaction volumes while ensuring their resources are allocated as efficiently as possible.

In addition, cloud services allow banks to provide computing resources on-demand. Instead of having to procure and maintain their own physical servers and infrastructure, they can leverage the cloud's infrastructure-as-a-service model.

This means that institutions can easily request and use additional servers, storage, and networking resources whenever needed, with the cloud service provider taking care of the underlying infrastructure. This enables them to focus on their core banking functions without the need for extensive hardware management or long lead times for resource provisioning.

Another major benefit of cloud computing is that it enables banks to conduct not just their day-to-day activity, but also their big business moments, quicker and more easily.

With traditional on-premises infrastructure, deploying new services or applications can be a complicated, time-consuming process. With the cloud, however, banks can rapidly deploy and scale new services – such as introducing a new mobile banking app – which can significantly reduce the time and effort required to launch innovative products and services.

This increased agility can offer banks a competitive advantage by allowing them to bring new offerings to market faster, and respond quicker, to changing customer demands which, in an increasingly digitalised world, is one of the industries greatest challenges.

The cloud also affords financial institutions the ability to create and manage separate testing and development environments without the need for additional physical infrastructure. This flexibility means that banks can experiment, test, and iterate on new ideas and technologies in a controlled yet cost-effective manner. By leveraging cloud-based development environments, a bank can innovate more efficiently and bring its ideas to fruition faster.

Cloud providers have access to a vast array of technological innovation tools, consequently allowing for the more advanced innovations to be implemented from the first moment that they go to market, without having to dedicate time and efforts to integrate them in banks’ on-site systems.

In addition, in line with growing concerns on sustainability, cloud providers are increasingly investing in sustainable and environmentally conscious infrastructures, allowing for the most sustainable technologies to be integrated into a bank’s operations, so they become more efficient in energy consumption, and as a consequence, more environmentally friendly, following best ESG practices.

Perhaps one of the most important benefits that cloud computing offers financial institutions is its fortified security infrastructure, which is backed by cloud service providers’ expertise and advanced security measures, to help fight the battle against increasingly sophisticated cybercrime.

In the wake of a cyber-attack, the recovery of data is a priority, which is where the cloud’s disaster recovery capabilities can come into play. These include redundant data storage, data replication, and geographically distributed data centres. By utilising these capabilities, banks can ensure that their data and applications are replicated and backed-up across multiple locations. In the event of a system failure, cyber-attack, or even a natural disaster, banks can quickly recover their operations and resume services, minimising downtime and maintaining business continuity, which is critical to maintain the trust of customers.

An increasingly complex regulatory environment also requires more compliance resource and a robust security posture. A bank can, by leveraging the cloud, benefit from its provider’s adherence to regulations such as GDPR (General Data Protection Regulation) or PCI DSS (Payment Card Industry Data Security Standard).

CaixaBank, Spain’s largest financial institution by number of clients and branches in the country, is constantly seeking innovative solutions to meet the evolving needs of its customers while maintaining operational efficiency, which is why it is leveraging a multi-cloud technology as a fundamental part of this strategy.

Building on its collaboration with IBM Cloud for Financial Services, announced in 2021, and with Microsoft, through the innovation laboratory created in 2022, CaixaBank recently announced a multi-year strategic partnership with Google Cloud.

This will allow the bank to further modernise its infrastructure, reduce costs, enhance security, foster innovation, improve operational efficiency, and deliver better services adapted to customer preferences and daily needs, guaranteeing the best customer experience, which is always the top priority, in line with the bank’s brand purpose: "Standing by people for everything that matters".

This is the second article in a series produced by CaixaBank. Other articles in the series can be viewed on the following links:

• How to win the innovation war on cybersecurity