Updated on 29/04/2022

Cloud Computing and Banking

Cloud Computing and Banking meet. After the advent of digital, Cloud Computing is probably the technology that has revolutionized business structures, production processes, and entire industries more than any other. In this post, we will focus on a very important sector that impacts us all: the banking sector.

Let’s start from a very simple question: how important is cloud technology for the banking sector? And, above all, how important will it be in the future?

We respond with a few numbers, from the latest Abi Lab Investment Priorities Report, presented on 21 March 2022. The research, conducted on a sample of 25 Italian banks in particular in January and February, shows ICT budget 2022 growing for 64% of credit institutions. In particular, 48% expect this year an investment increase of more than 5% compared to 2021. 28% declare a constant budget and only 8% of the sample has decreasing estimates.


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The largest banks, above 20 billion: more than eight out of ten (84.5%) declare a growing budget. The quota is reduced to 41.6% for small institutions, where only eight out of ten (8.3%) think to invest less than 2021. Where does this money go? The first priority is the development of cloud computing (64%).

We will also focus on the positive impacts that cloud technology has on the various sector areas and processes, specifically around cost reduction, flexibility, customer relations, and security.

In the continuation of this article we will try to focus, precisely, the positive impacts that the technology of the “cloud” has (and, above all, may have) on the various fields and processes of the sector. We will focus on four core areas in particular: cost reduction, flexibility, customer relationship and security.

The starting point: cost reduction

First of all, Cloud Computing translates into targeted and intelligent savings, and overall cost reduction. Why?

The answer is simple: Relying on cloud service providers means, first of all, not having to buy expensive hardware and software, which take up space, and cost time and money (also for specialized personnel) for both management and maintenance. Next, it’s about on-demand and pay-per-use optics. Translated: enormous (and previously unthinkable) computing power and storage capacity, available immediately and at a low cost, according to demand and without the responsibility for managing or maintaining it. Instead, this aspect is entrusted to the external cloud provider who offers a level of specialized expertise that is impossible to achieve with internal staff.

The importance of flexibility

As we mentioned above, the cloud, thanks to the on-demand approach, allows companies to significantly reduce costs, while increasing performance.

But that’s not all. Thanks to this “on-demand” approach, flexibility and scalability also increase exponentially.

In an ecosystem that is changing rapidly due to continuous tech innovation, this is more important than ever before. Such innovations in fact, are spurring important changes in both the market and in customer expectations. For banking organizations, it’s an absolute necessity to be able to quickly adapt to these changes; this can be difficult if you are linked to “physical” and local infrastructures. This applies to all types of industries, but it is even more decisive for the banking sector.

Think of the speed required to put new products and services on the market: with the cloud, the necessary IT resources are activated on-demand, without excessive investment in IT resources.

Not surprisingly, the market volume around this technology is really huge: according to a study conducted by Gartner in February 2022, the market volume of Cloud Computing will rise from 1.3 trillion dollars in 2022 to 1.8 trillion dollars estimated for 2025. According to Gartner, nearly two-thirds (69.5%) of IT spending went from traditional solutions to the cloud, compared to 41% in 2022

Then there are some exceptional cases, related to complex banking operations that occur once in a while, or rarely. Often, these are very delicate situations where you cannot risk errors or malfunction: such situations may require a very high computational power, concentrated in a short period of time, to handle abnormal peaks of operations. 

With the cloud, these extraordinary and “emergency” scenarios can be managed with ease, without overallocating IT resources. Once the peak period has passed, the cloud makes it easy to quickly return to normal management. You can understand how fundamental this is.

Improve the relationship with customers with personalization 

How important is your relationship with customers? Most companies see the value in improving several customer-focused activities: communication, Customer Experience, and CRM (Customer Relationship Management). We’ll look at industry data to answer these questions.

First, according to Gartner survey, as many as 88% of organizations from all sectors expect Customer Experience to be the area where companies will be competing.

Now let’s focus on the specific area of banking: for the next year, more than half (53%) of respondents indicated the digital user experience, followed by customization (45%), among the factors that will have the greatest positive impact on customer experience.

But the road is still long, because despite the importance of mapping the customer journey has been recognized is still a novelty. This process reveals how consumers interact with the brand and how to use the right channel at the right time, however its adoption by the banking sector is still little widespread: only 16% of respondents, In fact, it monitors the customer journey via web and in branches. 42% say they don’t have a dedicated program, followed by 22% who say they want to implement one (source: digital4.biz).

So, how do you improve your relationship with customers?

The answers could be many, complex, and multifaceted. But they all revolve around a key concept: that the most effective way to improve the relationship with customers is to know them more deeply, to be able to anticipate their desires and needs, and to talk to them in a personalized way. To be in the right place, at the right time, with the right proposal.

Until recently, it was impossible to apply this to the huge audiences of sectors such as banking. However, this is now possible thanks to digital transformation and analysis of Big Data. All of us, online and through all the different devices we use every day, leave digital traces that help companies to understand who we are, our characteristics, how we behave and how – tendentially – we will behave in the future. By analyzing these tracks in depth, companies can divide their audience into increasingly specific targets, to be hit with tailored actions.

Of course, all this requires a very high capacity for data processing, storage, and interpretation, capacity that only Cloud Computing systems can guarantee.

You can go even further, to the point of personalization: addressing each person in a different and interactive way, with a one-to-one dialog. That’s what a company specializing in marketing services and personalized customer service like Doxee does. To give a concrete example: Doxee has created a campaign based on personalized videos for Poste Italiane (focused on its new “Smart Booklet” tool), which allows them to communicate with customers effectively and in omnichannel mode. The video narration is built step by step, according to the choices of the user who, instead of being a passive user, becomes an active agent. 


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The basis of everything: safety

If the issue of security, after digital transformation, has become of primary importance in all sectors, it is even more so in the banking sector. The reasons are clear: we are dealing with large sums of money, with customers’ life savings, and with very sensitive, personal data. Let’s make one thing clear right away: Cloud Computing systems guarantee the highest level of security; the necessary condition is to rely on solid and reliable providers.

But why is a system in the cloud more secure than one in-house?

First of all, it’s a matter of budget: cloud system providers invest an enormous amount of time and money to constantly update and maximize their security systems. This level can hardly be reached by individual banks; and, in any case, the expense would be enormous.

Then there is another fundamental aspect: the banking sector, for several years now, has been abandoning the rigid and closed structure of years past. This is mainly due to digital transformation: web and mobile apps, often tailored to the user, the need to be always-on, and in omnichannel mode. All of this makes the system much more vulnerable to cyber threats, which are constantly evolving and increasingly refined.

Also for this reason, it is very difficult for a local security system to compete with the systems put on the track by cloud service providers, which are constantly updated.