Mastering banking on cloud: 3 frontiers that will define the future

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Mastering banking on cloud: 3 frontiers that will define the future

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This content is contributed or sourced from third parties but has been subject to Finextra editorial review.

This article has been co-authored by John Barber, head of Europe, and Gaurav Sharma, senior industry principal, at Infosys Finacle.

Cloud has been a focal point of banking transformation for over a decade now. Banks have made significant strides, shifting workloads to the cloud to drive agility, scalability, and operational efficiency. Cloud has evolved through multiple models—private, public, and hybrid—each with its own strengths and challenges. As banks move further in this journey, the conversation is shifting from ‘why cloud?’ to ‘what’s next in cloud?’

The next frontier of cloud in banking isn’t just about adoption—it’s about strategic mastery. Banks are now facing complex decisions around cloud models, cloud-AI convergence, and ensuring ROI. The focus is no longer on merely migrating to the cloud but on optimising it for greater value and innovation. In this article, we will explore three key frontiers that will define the future of cloud in banking and how banks can master these imperatives to stay ahead.

Hybrid and multi-cloud adoption will accelerate

It has now been widely acknowledged that the right way to embark on cloud transformation journey is not an either/or model approach. Banks want to have the control and security of a private cloud while benefiting from the agility and scalability of a public cloud. The concerns around regulations, governance, and security presents the challenge of striking the right balance between different cloud options. Hybrid and multi-cloud offers that opportunity to banks.

Hybrid cloud adoption is gaining momentum, however, the adoption rates vary for different application areas. In a survey by Infosys Finacle and Qorus, 26.5% banking executives chose hybrid cloud as the most preferred cloud model for payments – highest for any application area. Other banking application areas where hybrid cloud is a popular model include loan servicing (22.7%), digital channel suite (22.3%), and data lake, analytics and AI (20%). In coming years, we expect the hybrid cloud adoption rates to increase further across all application areas.

On the other hand, multi-cloud allows banks to utilise multiple cloud platforms while avoiding dependency on a single vendor. It enables flexibility as banks can select top-tier services from various cloud providers based on their storage, computing power, and AI requirements. Gartner predicts that by 2025, over 85% of organisations will adopt a cloud-first approach, with more than half of these relying on multi-cloud strategies to fuel business innovation and digital transformation. Multi-cloud approach will also improve resilience and ensures business continuity by distributing workloads across multiple cloud environments.

To get hybrid and multi cloud strategy right, banks need a comprehensive business-driven decisioning framework to identify right cloud setup for each workload along with a data and application governance framework. Banks must also look at hybrid and multi-cloud investments as catalyst to drive enhanced enterprise security.

Banks will embrace cloud and AI synergy

Cloud and AI are being seen as mutual catalysts with powerful synergy. Where AI brings the capability to analyse datasets and make informed decisions, cloud provides necessary infrastructure to store, process, and access the data anywhere. In upcoming years, this integration of cloud and AI will help banks scale operations, optimise costs, and enhance customer experiences, ensuring innovation and competitiveness.

Cloud-native banking platforms will facilitate the rapid development, deployment, and scaling of applications. This is crucial for AI and generative AI models, which require substantial computational power and experience fluctuating demands. Moving ahead, AI won’t just be another service running in the cloud—it will be the intelligent force optimising every aspect of cloud operations. Cloud also fosters interoperability between different technologies, enabling banks to seamlessly integrate AI with other emerging technologies like edge computing, quantum computing, and IoT.

On the other hand, AI will transform cloud infrastructure management by leveraging ML to automatically monitor, analyse, and optimise cloud resources. This will help banks predict potential discrepancies proactively, optimise resource allocation, and handle routine. As AI continues to evolve, cloud will become more resilient, adaptive, and capable of supporting increasingly complex workloads. Banks will focus on experimentation and cross-functional collaboration between IT and business teams, ensuring AI and cloud investments align with business objectives and drive measurable impact.

FinOps and AIOps to help banks maximise their cloud ROI

As more workloads move to cloud, volume of data will grow, necessitating greater cloud consumption and computing requirements. Managing and optimising cloud costs is one of the biggest challenges banks will face in this journey. The complexity is compounded by hybrid and multi-cloud environments, making the ROI conversation difficult.

Going ahead, banks will focus on balancing cloud costs with measurable outcomes, especially as they navigate various cloud models. Banks that fully leverage cloud are ahead of peers in achieving measurable returns. In a PwC survey, 40% cloud-powered companies, compared to 24% of the rest of the survey population, say they expect 15%+ revenue growth over the next 12 months.

Imbibing capabilities around FinOps (Financial Operations) and AIOps (AI for IT Operations) will help banks maximise their cloud ROI. According to Deloitte, banks are increasingly using a FinOps approach to track and optimise cloud expenses, indicating a need to maximise the return on cloud investments. FinOps helps banks meticulously monitor and manage cloud expenditures, enabling enhanced visibility cloud consumption. It allows banks to better forecast cloud demand and right size resources in line with business priorities. AIOps strengthens the impact of FinOps by leveraging the cognitive power of AI and ML models to accurately predict the optimum level of resource allocation.

To succeed with FinOps and AIOps strategy, banks must navigate the concerns related to data sensitivity and integration with existing systems. Banks must foster collaboration between finance, IT, and business teams to ensure buy-in and shared ownership of FinOps and AIOps initiatives.

The road ahead

Cloud will remain the cornerstone of banking transformation, not just as an infrastructure backbone but as a catalyst for innovation and growth. Banks must move beyond conventional cloud adoption and strategically leverage hybrid and multi-cloud environments, enhance cloud efficacy, and optimise costs.

Success in this evolving landscape hinges on a well-calibrated mix of capabilities, talent, and strategic technology partnerships. By embracing a cloud strategy that balances agility with governance, banks can unlock new revenue streams, enhance customer experiences, and future-proof their operations.

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This content has been created by the Finextra editorial team with inputs from subject matter experts at the funding sponsor.