Cloud: Turbocharging Digital Banking

Prime Minister Narendra Modi lauded the Indian population for recording a huge six billion UPI transactions a few days ago. He had congratulated the citizens of the country for their resolve in embracing newer technologies.

The past four years have seen digital payments burgeoning significantly from Rs 3,134 crore in FY 2018-19 to Rs 5,554 crore in FY 2020-21. In FY 2021-22, 7,422 crore digital transactions were reported by the end of February. These statistics don’t just indicate the overwhelming positive outlook for personal digital payments but also show how digital banking is becoming a more preferred mode of undertaking banking services for citizens and businesses alike in India. 

While the jury is still out on how big demonetisation was for cleaning up India’s corruption, it did provide the necessary push to pursue cashless economy. In 2022, it’s safe to say that India is one of the foremost countries with regards to cashless transactions. According to Statista, the number of digital transactions in India is expected to go over 214 billion in financial year 2026. And the BFSI sector is aware of this and leveraging the power of cloud to cater to the businesses and people. 

“Over the last four to five years, we have seen a huge spurt in the digital infrastructure, as well as the digital banking. This was actually led by digital payments or the UPI introduction. And then that actually caught on with payment banks”, said Shabeer Kozhakkaniyil, Cloud Senior Sales Director, Oracle India.

“Your traditional banks, all of them have started getting onto the bandwagon and we are seeing lot of traction”, he added.

But banks and financial institutions in India have had to rapidly innovate to keep up with the changing demands of their customers and incorporating cloud computing has become a big part of the puzzle.

Cloudifying Digital Banking

Cloud provides the necessary elasticity which allows organisations to scale rapidly to cater to the demands. “All the banks have already started moving their non-critical workloads onto cloud, and also using the newer cloud technologies including the serverless architecture, microservices, to develop applications efficiently”, explained Kozhakkaniyil.

But while adopting cloud solutions is relatively easy, looking for providers that adhere to the evolving government guidelines at speed could be a challenge. On June 23, Indian government released guidelines for regulated entities in conjunction with cloud service providers.

“Oracle cloud division immediately responded with a white paper wherein we published a white paper stating that we adhere to all the conditions. This was actually pretty easy for us because Oracle Cloud is a grounds-up developed public cloud system that has been developed with security as its base”, said Kozhakkaniyil.

Helping Banks Handle Traffic Spikes

Certain public events cause a huge uptick in transactions and banks have to cater to such a surge to deliver the best digital banking experiences. But it’s easier said than done. We have all gone through the dread of transaction failures just as we were trying to avail an exclusive discount! 

This is where ‘cloud bursting’ comes in to the rescue. Through this configuration, the oncoming traffic bursts onto a public cloud and helps the service access computing resources – providing added muscle on demand to banks when traffic spikes happen. “Oracle has this concept wherein we help the banks to have a hybrid cloud structure. Your core infrastructure will be maintained on-premise but while enduring a demand it'll burst automatically to cloud”, informed Kozhakkaniyil.

Most banks and financial institutions today utilise cloud bursting to maintain their infrastructure during unusual traffic spikes.

Leveraging OCI

Shivalik, a Small Finance Bank began its journey in 1998 from Saharanpur (U.P) as an urban cooperative bank (UCB). Today, it is one of the biggest proponents of cloud solutions. The bank has leveraged the power of cloud to reduce costs by optimising resources, which has allowed the easy scaling and improved its cyber resilience. This has enabled Shivalik Bank to focus on its core business and push for innovation while building new products and services to improve the overall banking experience for its customers.

“We are serving over 4.5 lakh customers based in tier 2 and 3 cities in Uttar Pradesh, Madhya Pradesh, Uttarakhand and Delhi via 31 branches and 4 BC centres. We are also taking banking services to our customers’ doorsteps in remote areas with our network of 300+ field agents via a Tab/HHDs-based banking application”, said a Shivalik spokesperson. 

In fact, 65 per cent of Shivalik Bank’s overall customer base transact through the bank’s digital channels: Internet banking, Mobile Banking, Bank portal and SMS Banking. More than 80 per cent of its transactions happen through digital channels. Adding to the ease of the customers, features like customer on-boarding, account opening (savings/deposits), loan eligibility checks, loan applications, payment of loan EMIs, service requests etc., have been made available on our digital channels. This has substantially added to Shivalik Bank’s outreach. Nearly 95 percent of new savings accounts are being opened via digital platforms.

Before leveraging cloud solutions, Shivalik had to endure challenges like high cost of ownership, tightly coupled hardware components, which made upscaling or downscaling difficult and expensive. On top of this, there were significant information/cyber-security overheads and complex and inefficient integrations.

“Oracle Cloud Infrastructure offered a high-performant, cost-effective solution, where we can use industry-leading Oracle products - API Gateway, Integration Engine, Database - to name a few. The concept of IaaS and PaaS universal cloud credits makes it simpler for us to use any of Oracle’s cloud offerings, beyond what we have subscribed to upfront. The ease of switching between subscription/billing models without the need for a redeployment has been very helpful”, said the Shivalik spokesperson.

With OCI by their side, Shivalik was able to roll-out phase-1 of its API Gateway and Integration engine (via Oracle Integration Cloud service) within a short span of three months. 

“We also managed to save substantially on costs owing to the ease of switching between OCI’s various subscription models”, added the spokesperson. In the long-term, the bank expects a reduction of 25-30 per cent in terms total cost of ownership (TCO) and 10-15 per cent improved efficiency owing to superior application performance and faster turnaround times.

The bank is now looking forward to strengthening its integration capabilities, and start using other Oracle Cloud offerings specifically in the areas of Data Analytics, Identity and Access Management and Business Process Modelling. “We are also evaluating moving our existing on-premises applications as well as other applications running on other clouds to OCI for better price-performance-security benefits”, revealed the spokesperson.

Shivalik Bank continues to focus on building a performance-oriented architecture to support its business growth. 

“Cloud will remain our primary choice for new application deployment. We are focused on launching an API developer portal - using OCI and Oracle’s API Management offering - to facilitate a smooth integration journey for the FinTech companies and neo-banks,” said the spokesperson.

The Great Leveler 

While major banks of the country have deep pockets and can avail state-of-the-art database appliance machines, replication technologies, banking software, and data centre facilities, how can smaller banks measure up to cater to its customers? “Cloud is the great leveler”, answered Kozhakkaniyil. “This is where cloud is helping.”

Kozhakkaniyil insists that banks can now put their core infrastructure in the cloud with ease. He further said that most of the banks, whom Oracle has tied up with are doubling or tripling their investment on cloud. 

Also Read: Serverless Computing And The Changing Paradigm Of Cloud