Guide to Cloud Computing in Banking and Financial Services (2025)

Is cloud computing changing banking? Because of the vast amounts (growing by day) of sensitive data that are handled in the finance industry, it is a must for these institutions to have complete faith in the data storage solution that they have implemented.

The question shouldn’t be about whether the cloud is a trend in modern banking, but rather how its integration can actually refine financial operations, improve customer experiences, and ensure compliance with many regulations.

Continue reading to explore:

• What cloud computing is and why it’s critical for the financial industry.
• Main differences between cloud and on-premise storage solutions.
• The benefits of cloud computing for financial organizations.
• Challenges to consider before adopting cloud technology.
• Cloud options for the banking sector and how to choose the right provider.
• A checklist to help prepare your company for cloud adoption.

What is Cloud Banking? - Definition

Cloud banking is the delivery of computing services like servers, storage, databases, networking, software, and analytics over the Internet to financial institutions. Companies can access and manage their resources remotely instead of relying on physical hardware and on-premise data centers.

Why is Cloud Computing Important in Financial Services?

Think about planning a birthday party: you have to buy snacks and drinks, your close ones want to pitch in for the gift, and you have to book a taxi ride there and back. Before cloud banking, it would take more effort—now, it’s a matter of seconds, you only need a smartphone and a banking app.

But cloud computing isn’t just an important standard for consumers.

From the perspective of financial institutions, cloud-based banking:

• Improves agility and flexibility and is a trigger for innovative solutions
• Protects sensitive data
• Can enable personalized services that strengthen brand loyalty.

Cloud Solutions vs. On-Premise Solutions: A Short Comparison

5 Core Benefits of Cloud Computing in Banking and Financial Services

1. Cost Efficiency and Operational Flexibility

• Cost Reduction: While it is not a set-in-stone rule, for most financial companies, cloud-based solutions are cheaper than on-premises infrastructure. You don’t need to replace the hardware or worry about the physical space or maintenance costs but still get the full benefits of an on-prem structure.
• Operational Flexibility: Usually, cloud services operate on a pay-as-you-go model, in which financial companies only pay for the resources they use. So, for example, if there’s a surge in online shopping before Christmas, cloud resources can accommodate and manage that financial data easily. On the other hand, during slower periods, the infrastructure shrinks, and you only use the necessary resources.

2. Cost Transparency and Predictability

• Clearer Budgeting: When you only pay for what you use, it is easier for financial services firms to forecast upcoming costs and avoid overprovisioning. It also leads to more efficient resource usage.

3. Speed and Efficiency

• Faster Deployment: On-premise solutions require a lot of physical work, but cloud-based banking can be set up within hours. This means that financial institutions can quickly launch new features, services, or products to attract consumers.

4. Disaster Recovery and Business Continuity

• Built-In Redundancy: Cloud services are designed with backup systems to keep everything running steadily, even if something goes wrong. Disaster recovery solutions that include data backup, redundancy, and failover protection are like additional engines in your car—if one fails, another takes its place.
• Minimal Downtime: At Comarch, we distribute infrastructure across 6 cloud regions, so even if one experiences an outage, your financial data is still secure. That’s how we ensure continuous service and minimize the risk of downtime.

5. Scalability and Flexibility for Financial Institutions

• Dynamic Scaling: In the past, financial organizations had to buy infrastructure and resources to prepare for peak loads. But now, banks can dynamically adjust computing resources based on traffic fluctuations without worrying about physical infrastructure.
• Global Expansion: The ability to quickly adjust resources and deploy cloud-based services allows financial institutions to expand into new markets without worry about physical infrastructure.

5 Key Challenges of Cloud Adoption in Banking and Financial Services

1. Data Security and Privacy Concerns

Sensitive Financial Information: Banks and other financial institutions handle large, sensitive datasets, including personal data, account details, and transaction histories. Make sure the data is protected with state-of-the-art security measures.

Encryption and Key Management: Advanced encryption strategies safeguard sensitive data at rest and in transit. Financial companies must handle encryption keys securely to avoid data exposure.

Access Controls: Only authorized bank personnel should be able to access personal data. Establish granular access controls and identity management systems to lower the risk of insider threats and potential data leaks.

2. Regulatory Compliance and Governance

Industry Regulations: To protect sensitive data, financial institutions are subject to strict regulations such as DORA or NIS2. They also have to comply with standards such as ISO 27001 and PCI DSS. Cloud banking service providers should meet these standards with additional certificates, such as SOC 2.

Data Sovereignty: On top of industry regulations, financial institutions must adhere to laws governing where financial data is stored and processed. Cloud providers often store data in data centers located in multiple countries, which can create compliance issues if the financial institution's data is moved to regions with different data protection laws.

Audit and Reporting Requirements: Financial organizations must keep transparent audit trails for compliance reporting. Cloud environments can make tracking and reporting difficult, especially if the cloud provider does not provide adequate assistance for compliance monitoring or data access audits.

3. Data Integration and Migration

Legacy Systems: More often than not, banks utilize legacy IT systems that are difficult to integrate with innovative, cloud-based solutions. Migrating data from these legacy systems to the cloud can take a lot of time, is expensive, and potentially disruptive to ongoing operations. A good cloud service provider will offer comprehensive help in that area. 

Data Quality and Consistency: Data should be consistent across on-premise and cloud systems. Every financial institution should develop detailed data governance processes so information is accurate, consistent, and properly synchronized.

4. Operational Disruptions and Service Reliability

Downtime and Service Outages: Even with the most secure clouds, there is still a slight possibility of service outages. Any downtime in the cloud infrastructure, whether due to technical issues or natural disasters, can interrupt banking services and affect customer satisfaction.

Performance Variability: Each cloud provider and cloud application are different, so financial institutions need to ensure sufficient performance. Factors such as network latency, cloud provider load, and other external conditions should be addressed in cloud SLAs.

5. Cultural and Organizational Resistance

Internal Resistance to Change: Employees of financial institutions, particularly in traditional banks, may resist adopting cloud computing solutions due to concerns about job security, new technologies, or changes in work processes. Make sure your company provides training and can manage change properly.

Cloud-Specific Skill Gaps: Introducing new technologies such as cloud banking often requires skilled personnel, including cloud architects, security experts, and data engineers. A cloud provider like Comarch helps you fill this talent gap.

Cloud Options for Financial Institutions: Types of Hosting Environments & Service Models

Types of Cloud Hosting Environments

Public Cloud

• Definition: Cloud resources (servers, storage, etc.) are owned and operated by a third-party provider and shared in multiple companies.
• Best Use Cases: Ideal for non-sensitive operations, apps, or services that do not require strict compliance controls.
• Benefits: Low upfront cost, scalability, flexibility, and access to a wide array of services.
• Challenges: Potential concerns with data security, compliance, and loss of control over infrastructure.

Private Cloud

• Definition: A cloud environment dedicated to a single organization, either hosted internally or by a third-party provider.
• Best Use Cases: Suitable for banks with sensitive customer data, stringent regulatory requirements, and the need for high levels of control over security.
• Benefits: Greater control, enhanced security, and customization.
• Challenges: Higher costs, limited scalability compared to public cloud, and more complex management.

Hybrid Cloud

• Definition: A combination of private and public clouds, allowing data and applications to be shared between them.
• Best Use Cases: Ideal for financial institutions that need flexibility and the ability to keep sensitive data on-premise while utilizing public cloud for less critical operations.
• Benefits: Flexibility, scalability, and optimized use of existing on-premise infrastructure.
• Challenges: Complexity in managing multi-cloud environments, potential integration issues, and security challenges.

Multi-Cloud

• Definition: The use of multiple cloud service providers (public or private) for different parts of an organization’s IT infrastructure.
• Best Use Cases: Large banks looking to avoid vendor lock-in, improve redundancy, and enhance resilience.
• Benefits: Flexibility, redundancy, and reduced risk of service interruptions.
• Challenges: Increased complexity, cost, and the need for skilled staff to manage multiple cloud platforms.

Cloud Service Models

IaaS (Infrastructure-as-a-Service)

• Definition: Provides virtualized computing resources over the internet, including virtual machines, storage, and networking.
• Best Use Cases: Ideal for financial institutions that want to manage their own operating systems, applications, and middleware without investing in physical hardware.
• Benefits: Flexibility, scalability, and the ability to use a wide range of computing resources on demand.
• Challenges: Requires expertise to manage infrastructure, operating systems, and middleware.

PaaS (Platform-as-a-Service)

• Definition: Provides a platform that allows customers to develop, run, and manage applications without the complexity of maintaining the underlying infrastructure.
• Best Use Cases: Suitable for developing and deploying banking apps, digital wallets, and fintech platforms without worrying about infrastructure.
• Benefits: Simplifies application development and deployment and integrates development tools, database management, and other essential services.
• Challenges: Potentially limited control over the infrastructure and platform, and may require adjustments to fit specific needs.

SaaS (Software-as-a-Service)

• Definition: Provides software applications over the internet on a subscription basis, often accessible via a browser. Examples include CRM, accounting software, and core banking systems.
• Best Use Cases: Ideal for banks looking for ready-to-use software without needing to develop or manage it themselves. Popular examples include core banking platforms, customer relationship management (CRM), and financial planning tools.
• Benefits: Lower upfront costs, ease of use, and no need to manage software updates or hardware.
• Challenges: Less customization, reliance on the vendor for security and updates, and integration challenges with legacy systems.

BPaaS (Business Process-as-a-Service):

• Definition: Provides cloud-based business processes that allow financial institutions to outsource non-core operations like customer service, payment processing, or compliance tracking.
• Best Use Cases: Effective for automating processes such as KYC (Know Your Customer), AML (Anti-Money Laundering) checks, and other routine tasks.
• Benefits: Cost-efficient, scalable, and enables focus on core business functions.
• Challenges: Requires a high level of trust in third-party providers and may have limitations in highly regulated environments.

How to Prepare Your Financial Institution for Cloud Adoption in 2025 – Practical Checklist

Steps for Cloud Integration:

1. Assess your current IT infrastructure and identify workloads for migration
2. Develop a step-by-step cloud migration strategy, including timelines and risk assessments
3. Choose between public, private, or hybrid cloud models based on regulatory and operational needs
4. Ensure compliance with financial regulations (e.g., GDPR, CCPA, PCI DSS) before migration
5. Implement a phased migration approach to minimize disruptions
6. Set up monitoring and security controls to track performance and detect threats

 Build a Cloud-Ready Workforce:

• Provide cloud training for IT and security teams on cloud architecture, compliance, and security best practices
• Encourage certifications for employees (e.g., AWS Certified Solutions Architect, Google Cloud Professional, Azure Fundamentals)
• Foster a cloud-first mindset by integrating cloud technologies into daily operations
• Develop a change management plan to guarantee swift adoption
• Partner with cloud experts or consultants if internal expertise is limited

Select the Right Cloud Service Provider:

• Evaluate providers based on financial industry experience and compliance track record
• Verify security and compliance certifications (e.g., ISO 27001, SOC 2, PCI DSS)
• Assess data residency options and disaster recovery capabilities
• Review service level agreements (SLAs) for uptime guarantees and support response times
• Consider multi-cloud or hybrid strategies for flexibility and risk management
• Check customer reviews, case studies, and industry benchmarks for provider performance

Why 2025 will be an Important Year for Cloud in Finance

Cloud technologies are fueling changes in the banking sector. They are influencing the way banks operate, deliver services, and remain competitive. This means that cloud banking cannot be taken as a temporary fad.

• Hybrid and multi-cloud strategies are definitely on the rise as financial institutions realize the power behind combining the flexibility of the public cloud with the control and security of private cloud environments.
• In 2025, even more banks will embrace edge computing to process data closer to the source, enabling faster transactions, enhanced customer experiences, and better risk management.
• Integrating the cloud with AI brings even more benefits, such as better compliance monitoring, fraud detection, risk assessment, or advanced analytics.

It looks like the cloud will continue to be a central pillar for the financial industry. Banks must focus on embracing these technologies with the right support, such as from Comarch.

We offer assistance every step of the way, from initial consultations and answering questions to cloud migration and ongoing cloud banking services. Learn more about our offerings or contact our experts today.