EQ Bank has moved from on-premise servers to the cloud in an effort to save money and easily share banking data with third-party apps. The bank, which completed the migration in late November, said it’s the first institution in Canada to move completely to the cloud. It’s doing so through Microsoft Azure’s platform.

Dan Dickinson, chief information officer at EQ Bank, told Bank Innovation the move helps it scale when large numbers of customers are using digital banking tools. EQ declined to provide a specific figure that represents the value of the cost reductions that will be realized through cloud migration. However, it said the cloud eliminates the need to buy expensive servers for worst-case scenarios.

“In the old days, I would have had to spend a bunch of capital to buy enough hardware to handle my worst possible moments, and then I would not make efficient use of that hardware otherwise,” Dickinson said. “The analogy I use is you have to pay for a tank for one day a year, when most of the time you just need a lawn mower.” 

In addition to cost efficiencies, which EQ said it would pass on to customers, the bank said speed is another reason it’s moving to the cloud. According to Dickinson, scaling up and down with EQ’s previous servers used to take months, but now it takes minutes or even seconds.

EQ Bank is also using the cloud to better accommodate third-party apps that want to access banking data at the request of EQ customers. With cloud migration, data transfers can happen more quickly, Dickinson said. Legacy technology can get bogged down when a large number of third-party apps are requesting customer data, but EQ can scale up during these high-volume periods with the cloud.

EQ Bank launched in 2016 as the digital-only brand of Equitable Bank, a Canadian bank founded in 1970 with more than C$32 billion ($24 billion) in assets. EQ offers savings accounts and guaranteed investment certificates. Dickinson said the fact that EQ is relatively young and has a simple product suite made it easier to switch to the cloud compared to legacy institutions in Canada. Temenos, EQ Bank’s software provider, helped the bank move to Microsoft Azure. According to the bank, EQ has more than 90,000 customers and C$2.5 billion ($1.9 billion) in deposits.

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Microsoft Azure counts names like TD Bank, MUFG and Redwood Bank as clients. In addition, Microsoft Azure has worked with JPMorgan Chase to develop a blockchain solution for clients.

EQ isn’t the only Canadian financial institution relying on digital strategies to win customers. Scotiabank-owned Tangerine, for example, boasts more than 2 million customers and C$40 billion ($30 billion) in assets. Digital-only Koho, meanwhile, offers a suite of banking products and personal finance tools. Koho currently has 200,000 customers, CEO Daniel Eberhard recently told Bank Innovation.

Jason Malo, a director at Gartner, said banks are becoming more open to cloud migration as providers have aligned closely with banking regulations and security requirements. According to Malo, EQ Bank’s move to the cloud might help the bank function better when customer volume increases. “Smaller banks, in particular, are starting to leverage the cloud, and it’s a good way to create that scale and compete functionally with other banks that might have deeper pockets,” he said.

Stephen Greer, senior retail banking analyst at Celent, said the cost savings resulting from a move to the cloud might not be as beneficial as they sound. “It’s kind of like cell phone or a cable bill in that there is a bit of opacity around how much you’ll be paying at the end of the month,” he said.

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