Take your cloud strategy from cost saver to profit driver
Executive Summary
Banks have captured the foundational cloud benefits — cost reduction and scalability. Their next opportunity is to use cloud for profitability and efficiency gains. AI-powered automation and smart multi-cloud strategies can improve operating ratios and streamline operations, with results that align with their bank’s performance goals.
Banks have embraced cloud computing in recent years, and that trend isn’t going away. Grant Thornton’s Digital Transformation Survey found cloud computing to be among the top five technologies banks are investing in this year — but their reasons are evolving.
After initially adopting and migrating to cloud service providers (CSPs), banks became aware of concentration risk — the potential for large losses if a bank has an over-reliance on a single CSP. If they fully outsourced their technology infrastructure to one of the prominent CSPs, and if the provider experienced an outage or data breach, the consequences could be significant and multifaceted (such as service disruption, data loss, reputational damage, legal and regulatory implications). That concern has led to more institutions adopting multi-cloud strategies.
“The mindset of aligning to a single CSP has started to evolve,” said Vikrant Rai, Grant Thornton Risk Advisory Services Managing Director. “Not only because of concentration risks, but also because there are benefits to exploring capabilities with unique services and AI-powered bespoke solutions that could be utilized to drive innovation and profitability.”
Banks that want to find new value in their cloud investments are now asking: How can we use the cloud to drive profitability, not just reduce costs? The answer lies in AI-powered automation and strategic multi-cloud adoption strategy.
The next phase: Cloud-powered automation
Banks are doing more than just cost optimization and risk resilience with their cloud strategies. CSPs are now offering sophisticated tools that were previously out of reach for most financial institutions.
“Now what we're seeing is banks implementing enterprise business software with ever more sophisticated AI tools built into the applications designed to supercharge automation," said Rich Sittema, Grant Thornton Transaction Advisory Services Principal. "These are both native tools and add-ons you can license. Effective adoption of these tools is exciting because once the process changes have been made, the potential for AI and automation as a lever to improve efficiency ratio becomes more and more real.”
Where cloud-enabled AI creates value
Customer service: Cloud-native AI chatbots and virtual assistants able to scale instantly during peak periods, handle inquiries across all digital channels and integrate seamlessly with core banking systems.
Risk management: Cloud-based AI models able to process transactions in real-time across multiple data sources, automatically scale during high-volume periods and update fraud detection algorithms continuously.
Document processing: Cloud-powered intelligent systems able to process thousands of documents simultaneously, extract data from multiple formats and integrate findings directly into loan origination or compliance workflows.
Personalized banking: AI analytics running on cloud infrastructure able to analyze spending patterns across millions of customers simultaneously, delivering real-time insights and recommendations through mobile apps and online banking.
Operational efficiency: Cloud-based AI agents able to handle data entry and deposit origination at scale, automatically route complex cases to human bankers and provide real-time client recommendations during customer interactions.
Banks that have already invested in these cloud capabilities are already seeing real returns.
“We have clients that have significantly grown their deposit base by leveraging digital and cloud technologies,” Sittema said. “In one case, a banking client realized material deposit increases over two to three years by modernizing its digital channels and integrating cloud-based infrastructure. Another client nearly doubled its deposit base over five to six years by adopting a cloud-native digital banking platform.”
Measuring success: Tying banking KPIs to cloud ROI
The key to demonstrating cloud ROI isn’t creating new metrics — it's showing improvement in the performance indicators your board already tracks.
“You have to point to how well these cloud investments improve the KPIs you’re already using to measure the bank's performance,” Sittema said.
The key is aligning cloud strategies with traditional banking efficiency metrics:
- Cost-to-income ratio: AI can automate repetitive, manual and data-intensive backoffice tasks such as data entry, compliance checks and reconciliations.
- Straight-through processing rate: By automating complex document processing and underwriting, AI increases the rate of fully automated transactions. This reduces the need for manual intervention and accelerates processes like loan approvals, account openings and other services.
- Average handling time and turnaround time: AI-powered chatbots and virtual assistants can resolve many customer questions instantly. In the back office, automation reduces the time needed to fulfill customer requests, leading to lower average handling and turnaround times for customer service and operational tasks.
The evolution of cloud technology also enables more precise cost tracking than ever before, giving banks unprecedented visibility into which investments actually drive results. "Historically, banks paid for cloud resources on a continuous basis, often bundling those costs into broad operational buckets," said Supreet Singh, Grant Thornton Technology Modernization Managing Director. “But with serverless computing models, cloud spend can now be tied directly to individual transactions. This enables banks to associate the cost of a specific customer interaction with its actual cloud usage.”
This granular visibility means banks can identify exactly which cloud investments deliver the highest returns and optimize resource allocation accordingly.
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The smaller bank advantage
"Large banks have always invested heavily in their own IT talent and infrastructure to build sophisticated capabilities — AML systems, customer relationship management platforms and other complex initiatives. For smaller banks with limited resources, the likelihood is higher that they have been behind the curve in making those kinds of investments. CSPs now give them instant access to enterprise-grade applications and services.”
While larger banks have access to bigger data centers and cloud investments, smaller banks may be uniquely positioned to pursue cloud strategies for profitability.
“Smaller banks can gain more relative advantage from cloud adoption than larger banks,” said Graham Tasman, Grant Thornton Head of the Banking Industry. “Large banks have always invested heavily in their own IT talent and infrastructure to build sophisticated capabilities — AML systems, customer relationship management platforms and other complex initiatives. For smaller banks with limited resources, the likelihood is higher that they have been behind the curve in making those kinds of investments. CSPs now give them instant access to enterprise-grade applications and services. They can leapfrog years of development.”
This means smaller institutions often require smaller cloud investments for similar impact.
“Maybe you're leveraging one primary cloud platform, which reduces complexity and gives you more agility,” Singh added. “You’re able to get products out quicker when you're not managing the complete testing of multiple clouds across all geographies.”
Your next steps
Success with cloud-driven profitability starts with strategy, not technology. The key is ensuring your cloud investments align with your broader business objectives.
“If you don't have a cloud strategy that’s integrated with your customer experience and customer strategy, that’s where you need to start,” Sittema said. “Unless you start there and you understand the benefits to new and existing customers and to your bank, then you're basically adopting cloud for the sake of adopting cloud and hoping that it works out. That’s not an effective long-term strategy to build efficiency or profitability.”
Start with pilots
Before committing to major changes, validate your approach through pilot programs that demonstrate measurable results toward existing banking KPIs. Test multi-cloud strategies through tabletop exercises, rotating workloads across different platforms while maintaining existing operations.
This methodical approach — starting with strategy, measuring results, and testing before scaling — sets banks up for optimal use of their cloud investments. “Banks that establish these foundations now will be best positioned to capitalize on new AI capabilities and cloud innovations,” Tasman said. “The key is starting with strategy, measuring what matters and building from there.”
Contacts:
Partner, Transaction Advisory Services,
IT M&A Advisory
Grant Thornton Advisors LLC
Richard Sittema has more than 15 years of experience in business consulting. He started his career in business analyst roles on large-scale systems integration and IT-related consulting engagements for public, private and not-for-profit organizations.
Cleveland, Ohio
Industries
- Manufacturing, Transportation & Distribution
- Not-for-profit & Higher Education
- Healthcare
Service Experience
- Transaction Advisory
- Technology Modernization
- Risk Advisory
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This Grant Thornton Advisors LLC content provides information and comments on current issues and developments. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
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