Financial Institutions Embracing Cloud-based Solutions To Navigate Data Surge
The amount of data produced and its consumption in the banking system is increasing exponentially. Consequently, banks are incrementally migrating to cloud-based services for the benefits they offer. The size of the data generated is significant and therefore, the Reserve Bank of India(RBI) is in the process of setting up a new cloud facility for the financial sector in India.
“Banks and financial entities are maintaining an ever-increasing volume of data. Many of them are utilising various public and private cloud facilities for this purpose. The Reserve Bank is working on establishing a cloud facility for the financial sector in India,” RBI stated in a press release.
There could be multiple reasons for this shift of financial institutions towards cloud-based systems. Financial institutions face multiple challenges beyond regulations and competition. There is a disruption with new players entering the landscape, geopolitical situations, environmental factors and a changing customer demographic. This necessitates financial institutions to look for solutions that can help them innovate, increase productivity, become more customer-centric and at the same time, manage costs.
Rajesh Sabhlok, Managing Director(MD), Asia Pacific, Vymo said that cloud-based solutions play a huge role in helping financial institutions(FIs) solve all the issues where cloud-based solutions are provided to financial institutions in the mode of Software as a service (SaaS).
“Financial institutions are using SaaS to help them do away with non-core processes to vendor partners and focus on core banking and insurance activities,” Sabhlok said.
Artificial Intelligence (AI) and Machine Learning (ML) work as an add-on to cloud-based services.
“FI leverage tools that are built on AI and ML technology to effectively use the large amounts of data that they have, for more meaningful utilisation towards customer relationships and seller empowerment,” Sabhlok added.
AI-ML along with the cloud service works as a safety net for financial institutions.
“Financial institutions work with partners who provide these tools and services with adequate security and compliance, ensuring that banks can comply with regulations,” Sabhlok further mentioned.
RBI in its statement has also mentioned that the proposed facility of establishing a cloud facility for the financial sector in India would enhance the security, integrity and privacy of financial sector data.
“Financial institutions are experts in providing financial services. By leveraging cloud-based SaaS solutions, they can focus on their core competencies instead of diverting resources to build and maintain complex IT platforms. This approach ensures that the primary business of offering financial services remains efficient and uncompromised,” said Ajay Setia, Founder and Chief Executive Officer(CEO), Invincible Meta.
Cloud-based SaaS provides a centralised infrastructure that consequently works as a central repository for financial institutions. “With cloud-based SaaS solutions, financial institutions can benefit from a centralised ecosystem where data from multiple branches across cities or countries can be collated on a single cloud platform,” Setia added.
A recent survey by O’Reilly has revealed that cloud adoption is increasing across the globe at a steady pace, with more than 90 per cent of organisations using cloud computing technology. This rise in adoption rate is evident from the previous year's survey, which reported that 88 per cent of organisations were using the cloud around the world.
“This shift in perception has prompted a revaluation of budgets, recognising that the cloud-based SaaS solutions are now more about driving top-line revenue growth and innovation rather than just bottom-line cost savings,” said Rajesh Mirjankar, MD and CEO, Kiya.ai.
RBI also stated that the cloud facility will be set up and initially operated by Indian Financial Technology and Allied Services (IFTAS), a wholly-owned subsidiary of RBI and later the cloud facility will be transferred to a separate entity owned by the financial sector participants.
“Most new-age lenders have built their core systems (customer relationship management, loan origination system, loan management system etc.) on cloud-based SaaS solutions. However, those large banks and financial institutions carrying the burden of legacy systems would take a longer time to migrate to a cloud-based SaaS ecosystem,” said Vikrant Narang, Deputy CEO, Ambit Finvest.
The surge in banking data prompts a significant shift to cloud services, acknowledged by the Reserve Bank of India's initiative. This transition, fueled by SaaS, AI and ML not only addresses current challenges but positions financial institutions for innovation, efficiency and enhanced customer focus in an ever-evolving landscape.
