Digital Transformation with Cloud Migration
When cloud computing was first introduced, cloud maturity levels were low and cooperative banks were apprehensive about migrating to the cloud as they are governed by standards, data pri-vacy and regulations. The cloud space has now become more mature and most of the standards and banking regulations have been amended to accommodate cloud computing, which is paving the way for banks to adopt cloud services. And in a bid to stay relevant, cooperative banks are fast turning to technology, providing a business opportunity for leading information technology ser-vice providers.
RBI has mandated the banks to have a cloud strategy in place. Cloud is the way forward, and banks, according to the experts from the field, has to adapt a strategy that involves 2 steps. One is to migrate the current applications to cloud and second is to explore how the new application can be designed to be cloud native and cloud supported. It is also equally important for the banks to develop in house skills on those microservice architecture and cloud native applications so that the cloud transition is seamless.
Cloud migration in the last year has grown leaps and bounds. Cooperative banking segment has now started catching up. There are several early success stories of cooperative banks adopting cloud computing for optimizing their processes, reducing their costs, and building the capability to scale rapidly. In fact, some of the banks have already put the non-financial operations on to the cloud. With robust infrastructure, the cloud offers accelerating their growth. Cloud, they say, has given the agility that banks were looking for both in business and technology adaptation.
Dhimant Turakhia, DGM, Kalupur Commercial Cooperative Bank, touched upon how technolo-gy played a crucial role in the bank’s growth. He said: “We are 100% digital bank providing 24x7 services. The lockdown allowed us to drive the digital initiatives that helped us to sustain our market position. The growth in deposits is a clear sign of it (deposits grew by 20%). Many of the cooperative banks are in the cloud space. As for our bank, we are using cloud for the debit card and ATM switch in an ASP model. During the pandemic, to better the service, we have imple-mented automated monitoring tools. We have the PRTG tool, which tells us the health of all your devices including the servers and the endpoints. Those responsible for managing the systems can get the updates on their mobiles. There are other tools for remote working that enabled the critical IT staff to work from home thus ensuring security for those working from home with the bank’s own devices where the use of local drivers is disabled while they’re connected to the corporate network.”
A art iD hole, CI O, Cosmos Cooperative Bank, shared her experience: “I certainly think that cloud computing promises shorter commissioning time, lower initial cost and reduced maintenance costs. Optimizing the existing system is possible through the cloud solution. Cloud comes handy when you look to get rid of IT scalability issues. It is also an economic solution. When we switch from the legacy server, there needs to be continuous refreshes, which involves capital expenses and admin efforts. If we move to the cloud, the environment itself reduces the need for IT staff. It also allows us to scale to the hardware according to our needs. Coming to disaster recovery, the on-premise solution requires IT staff to rectify the issue. Whereas on cloud, we will always be more disaster resistant, because the data will be available on cloud and with a clone version.”
The cloud computing has its own unique security and compliance challenges which must be un-derstood thoroughly before embarking on it, she says, adding: “At the same time, migrating to the cloud presents the opportunity to transform security practices and improve defenses. Trust obvi-ously plays a key role in the decision on cloud migration. There are also advantages like availability of retrieving data, the data is safe and secure, and the data is exclusively maintained so on and so forth.
Rajesh Awasthi, Head of Cloud and MHS at Tata Communications, said: “This industry still is driven by a regulator who defines some boundary lines to set up the IT systems. The good part is that RBI has come out with very specific guidelines for cooperative banks for cloud migration. One should look for a cloud provider who has a data center inside the country so that data remains under the purview of the law of land. From a cybersecurity perspective, in the data privacy part, there is a clear fallout when the data is stored. If it is a very critical data, then it should be en-crypted in the cloud arena, even the backups.”
Dr Jatin Naik, Head IT, The Surat People’s Cooperative Bank, said: “Outsourcing is one of the key strategic proactive plans to prevent and minimize downtime network outage instead of operat-ing within a reactive break. Fixed responsibilities that contribute towards a preventive plan out-sourced from a professional IT outsourcing company include 24/7 with 365-day support. This means downtime situations are handled immediately.”
He said with digital transactions being the order of the day and with new norms in place, it is im-perative to look for forward looking and innovative products. Visibility and awareness creation also has to move hand in hand to increase the customer base. However, cloud migration poses 2 major challenges to banks - security and compliance.
Yogesh Walunjkar, IT Head, Dombivli Nagari Sahakari Bank, said: “A lot of technologies are coming in and the customer touchpoints are increasing. In a brick-and-mortar model, the customer was expected only to be at the branches. But now we are expecting them at multiple levels and it is increasing across all dimensions. The infrastructure requirement is growing exponentially, and having our own data center and coping with all these changes, is next to impossible. So, we adopt-ed a cloud migration in a phased manner, primarily
to gauge the comfort. Coming to the compli-ance part, what we see is a that culture is getting built in this area.”
He added that the perennial doubt that crops up in the minds of a banker is whether the cloud ser-vice provider is able to support the banks in compliance tasks. In fact, service providers must demonstrate the existence of effective and robust security controls, assuring customers that their information is properly secured against unauthorized access, change, and destruction.
Rajesh Awasthi responded saying: “We are working towards creating a banking community cloud which is a multi-tenant environment. But we ensure that this is complying with the RBI guidelines. We are also taking into account the industry knowledge which could be used in creating this kind of environment. While doing this, along with creating the infrastructure, the focus should al-so be given in creating a proper cybersecurity framework around that.”
Srinivas Rao CIO, The Kalupur Commercial Bank, added: “Cloud migration has a few riders that accompanies it. To cite an example, if one puts the analytics, sunset system or net banking or mo-bile banking on cloud, you need to secure all the interfaces that are required with your core bank-ing. So, it is advisable to take those applications, which are standalone. The lesser the number of interfaces, the lesser the complexity of implementation.”
While Aarti Dhole asserted how cooperative banks should work on the cloud security model, Yogesh Walunjkar, pointed towards the significance of getting the cloud strategy ready with an incremental approach. As a way forward
Dr Jatin Naik said, as the bank is in the process of changing its CBS, cloud should definitely be part of the strategy.
Dhimant Turakhia and Srini-vas Rao touched upon the focus of their banks. They said while infrastructure upgrade is definite-ly on the cards, upgrading skills also tops the priority list. Rajesh
Awasthi added that cloud adop-tion within cooperative banking would be a journey that is not limited to a single time process. Integration between the existing infrastructure and cloud infrastructure is key. And as a technolo-gy provider, they should aim to become a digital ecosystem enabler for the banking sector.