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The Benefits of Cloud-Native Digital Banking

The cloud isn’t just “the cloud” anymore in digital banking. Today, making the distinction between what kind of cloud-based solution is key. Simply having a cloud-based digital banking solution doesn’t tell the whole story.

For banks and credit unions considering a switch to a cloud-based system, they’ve got questions. How do I ensure I maximize my decision to move to a cloud-based solution? What type of cloud-based digital banking solution is best?

The simple answer is: to maximize the benefits of a cloud-based solution, a fully cloud-native solution is the only way to go. Here’s why.

Cost Reductions and Improved Cost Predictability

The software updates, server maintenance, and upgrading of hardware that legacy and cloud-hybrid IT systems require can impose a significant financial burden. Especially when considering the costs of specialized staff to perform these crucial tasks. 

Cloud-native digital banking architecture, however, continuously updates and maintains all aspects of the infrastructure automatically, which reduces personnel costs. It also is much easier to update and replace cloud-native components without having to reintegrate or replace costly legacy systems. The cost of the platform includes upgrades, which keeps expenses consistent. 

Similarly, cloud-native infrastructure includes automatic scaling. Businesses can reduce or increase computing resources as they need and only pay for what they use. This can result in immense savings during slower periods of activity, such as non-banking hours.

These savings have far-reaching effects on the overall bottom line. Research conducted by Capgemini shows that 83% of cloud-native leaders consider themselves ahead of their peers when it comes to financial performance. Similarly, 84% stated that going cloud-native has helped them increase revenues and cut operating costs.

Stronger Compliance and Security

Compliance and security are two of the most-significant impediments when it comes to digital transformation in the financial services industry. Cloud-native digital banking simplifies data security and compliance by automating the integration of new threats and regulations for seamless protection. 

Data analytics enable the detection and prevention of anomalous behavior and other threats in real time—before they can develop into serious security issues. Cloud-native architecture proactively and automatically builds updated, real-time compliance and security into the infrastructure and applications. Cloud-native applications also support modern data storage, processing, usage, and sharing, making it easier for stakeholders and regulators to access and examine information.

Enhanced User Experiences

A 2017 study from the World Retail Banking Report found that fintech firms are outpacing financial institutions that have maintained a more-traditional approach to growing their digitally native user base of Gen Y.

Older generations are also becoming increasingly tech-savvy, making it imperative for institutions to expand and improve their digital offerings to meet the demand for personalization, comprehensive services, and speed.

The recent events regarding the global pandemic have accelerated these needs even more. Many users find themselves relying on app-based and online banking more than ever before. A cloud-native infrastructure allows banks and credit unions to be more agile when developing and implementing new services for users or improving existing ones.

Banks and credit unions can simplify their services by using the cloud. This allows them to offer a personalized and smooth experience on one platform. 87% of respondents in Capgemini’s study said that a cloud-native infrastructure has helped them improve the experience for their users.

Development Speed

Simply put, legacy and cloud-hybrid systems can be slow to evolve and often have lengthy production cycles. This makes them inflexible and unable to adapt quickly. Many of these issues arise from inconsistencies and incompatibilities between the various physical and cloud-based elements.

Cloud-native applications enable faster, more flexible, and more agile development through a fully integrated system. In fact, 88% of cloud-native leaders say that it has improved the agility of their organization

It’s clear that banks and credit unions that take advantage of this speed can obtain a significant competitive advantage in a rapidly changing environment. Applications can go from development to testing to approval to production in a matter of days or even hours, rather than weeks or months. This means less lead time for developing new products and services, as well as an increased ability to be rapidly responsive to the fast-changing needs of users. 

The cloud has become the go-to space for building applications and streamlining business operations. However, unlocking the full benefits of cloud computing in banking requires a cloud-native infrastructure and cloud-native applications that allow banks and credit to build new applications, get more value from existing applications, and adapt to modern best practices in a digital world. 

Ready to discover how your financial institution can benefit from Lumin Digital’s cloud-native banking platform?


  1. World Banking Report. 2017.
  2. Cloud Native Comes of Age in Banking. Capgemini. 2018.