That’s because an airport shuttle called the Los Angeles FlyAway offers a contactless, tap-on-phone payment option. Mastercard tested a cloud-powered pilot program with the bus service to make contactless payments more accessible. “There are a lot of features that cloud commerce can help merchants with,” says George Maddaloni, executive vice president and chief technology officer of operations at Mastercard.

Banks, payment providers, and private equity firms have recently accelerated their embrace of cloud computing. But the early adoption often lacked intentionality. In the initial rush to get their workloads onto the cloud, financial firms would often get frustrated as costs soared and business needs weren’t met. Millions of dollars were spent adopting cloud computing without fully taking advantage of the benefits the tech has to offer. 

“It’s not just about moving workloads to the cloud,” says Kathy Kay, CIO of Principal Financial Group. “It’s finding the right technology solution that is more modern to solve a business problem and serve our customers. And if that happens to be cloud, then so be it, we’ll be leveraging cloud.” 

Kay steers all technology decisions for the 144-year-old financial services company, adding diverse and more modern technologies to the system where legacy technology can be shut down to allow space for tech that can better serve Principal’s customers. Cloud providers are selected to match the solution they best offer Principal. Data sits with AWS, while Salesforce is leveraged for CRM and Google Cloud Platform is used for analytics. But Principal aims to avoid the idea of “lift and shift,” i.e., merely moving to the cloud just to say the data lives there. 

“Depending on the problem that we are solving, we try to look for, do we have technology already that we can leverage and if not, how do we leverage the right technology,” says Kay, “and we do tend to lean to cloud first.”

Howard Boville, head of IBM Cloud Platform, agrees. “Intentionality is becoming more mainstream now,” says Boville. “We’re at that point where how cloud is used as a tool amongst other tools is being thought through in a more business-context way than perhaps previously.”

Experts say the pivot to start thinking through business problems before jumping to leverage cloud haphazardly has been underway the past two years. That said, altitude remains high for the cloud.

Banks moved 15% of their workload into the cloud by 2022, nearly double the prior year, according to research conducted by Accenture, which studied nearly 100 banks. The workloads that have moved to cloud represent relatively “easy” wins, including systems for IT, sales and marketing, human resources, and finance. But the opportunity remains massive, with 85% not yet migrated and stuck in legacy systems. Accenture says the biggest untapped bucket is for core functions—consumer and commercial banking, payments, and risk and compliance—which are hampered by concerns about security and compliance risk as well as legacy systems.

Industry insiders say some of the greatest potential for cloud in banking lies in the democratization of the tech. Cloud, when done right, can help reduce expenses and also power A.I. technologies to allow for greater tech advancements like smarter chatbots or greater functionality for mobile banking. 

“Even the midsize banks, or smaller banks, can compete with the largest banks because now they can buy these capabilities by the drink,” says Mike Abbott, Accenture’s global banking lead. 

Maddaloni says all industries are working through how they are going to use cloud and for the financial sector, he sees a focus on three areas. The first is how to leverage the cloud and run applications and software more efficiently. The second method is focused on how companies innovate and can test new concepts rapidly. And the third, which is explored most at Mastercard, is using cloud to extend the company’s large network ecosystem. 

Public clouds, which allow companies like Mastercard to rent computing and storage without having to build their own data centers, can help empower so-called edge computing. Edge computing is a way for Mastercard to tap users just outside of its network and give customers a new way to connect to the payment provider. This year already, 1 billion Mastercard transactions have been processed via edge computing. The company also launched Cloud Commerce, to enable the processing of contactless transactions from smartphones to the cloud.

And while security remains the top barrier holding back adoption of cloud for financial institutions, those concerns are lessening. “On the cloud, security is engineered into the applications,” says Abbott. “So when you set up the cloud foundations, you set up the security patterns of how the compute environments are going to work.”

“We always see that the highly regulated sectors, like financial services, tend to be leaders in deploying best practices,” says Jim Reavis, CEO of Cloud Security Alliance, when discussing data security. He views cloud’s relationship to the internet as similar in how electrification supercharged the industrial revolution in the 1800’s.

“A.I. and cloud go together like a horse and carriage,” says Boville. “You need the compute capability to be able to train the models.”

For banks, A.I.-powered chatbots must be trained with large data sets so the tech that talks to people can become more efficient over time. Five years ago, Boville said, customers disliked the experience of talking to a chatbot to answer questions such as how to open an account or order more checks. But today, consumers are warming up to A.I.-enabled conversations in lieu of long hold times and getting bounced around to different human representatives to get a simple question answered. 

“There are a lot of processes that are invisibly getting transformed that improve the customer experience,” says Boville.

Mark Benaquista, managing director at THL Partners, has been an early advocate for cloud. In his role at the Boston-based private equity firm, Benaquista helps ensure the tech aspects of the businesses THL may acquire are well understood as part of the overall investment thesis. 

A little over a decade ago, “cloud was still for the upstarts, certainly not embraced by enterprise,” says Benaquista. “But the minds started shifting and people started getting their toes wet.” 

The bullishness for cloud solutions has impacted how THL steers the businesses it buys. Take the example of Fastaff, a travel nursing company that THL invested in back in 2015. The temporary staffing agency had a solid database of nurses willing to travel, but their credentials were stuck in manila file folders piled in offices. THL and Fastaff leveraged cloud to create a mobile app that would allow nurses to self-register their information and provide updates to their certifications, creating a model that better linked hospitals with staff. 

When hurricanes battered Florida and Texas in 2017, that cloud-enabled tech gave Fastaff the ability to respond quickly. Cloud has also lowered back-office costs, improved margins, and boosted morale among the nurses. 

“A lot of companies will adopt cloud-first as a mantra,” says Benaquista. “Unless they are bound by some regulatory requirement, a lot of technology leaders are thinking cloud-first.”