What is 'auto-scaling' in cloud computing?

Auto-scaling monitors metrics (CPU utilization, request count, response time) and triggers scaling actions — scale out (add instances) when demand rises, scale in (remove instances) when demand drops. This ensures high availability during peak loads (e.g., end-of-month salary processing, festive season transactions) without over-provisioning during off-peak hours. Vertical scaling means bigger instance whereas Horizontal scaling means more instances (preferred for cloud). Auto scaling saves significant infrastructure costs for banks.