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Banking on Public Cloud

April 3, 2019 - Sandeep Joseph Mathew Senior Consultant

Customer delight is the key to success in business, and cloud is one of the foundational building blocks and enablers for the digital technologies like analytics, machine learning and artificial intelligence that can serve to enhance customer experience significantly. Instead of spending time on concerns about infrastructure and resources, enterprises can shift focus on their core business by using the public cloud. As per the sixth Cloud Native Computing Foundation survey, the top three benefits of cloud native technology include faster deployment time, improved scalability and cloud portability.

The public cloud is defined as computing services offered by third-party providers over the public Internet, making them available to anyone who wants to use or purchase them. They may be free of charge or sold on demand, allowing customers to only pay as per usage for the CPU cycles, storage or bandwidth they consume. Multi-clouds or multiple public clouds are also being used by banks to avoid vendor lock-in and reap the benefits of competition among cloud providers.

The main benefits of using a public cloud for banks are:

  • Reduced cost of ownership by avoiding investment in and maintenance of on-premise resources and switching to an affordable subscription model. It is prudent to invest for average peak load, and manage unusual capacity with cloud bursting.
  • Scale up and scale down the right capabilities for flexible and efficient workload management thereby handling unusual peaks efficiently. There is minimal to no lead time with instant provisioning of resources in the cloud.
  • Agility in application delivery to offer engaging experience and innovative products to customers.
  • Readily available ecosystem ‘connect’ with multiple public cloud providers, FinTechs with cloud native applications and experienced cloud service providers. Communication and information exchange through APIs allows banks to innovate with partners, FinTechs and extended developer ecosystems.
  • Operational efficiency by automating the development lifecycle, provisioning etc. on the cloud.
  • Localized data centers are being set by public cloud vendors which ensures regulatory compliance.
  • Enhanced encryption practices and security controls of vendors such as AWS are far superior to bank’s own infrastructure and data center security. What’s more, AWS also provides the necessary tools to assess and meet regulatory compliance. The vendor is also working with regulators in various countries to advance the case for public cloud adoption.
  • Support from regulatory bodies to embrace cloud with a number of guidelines emerging in countries around the world to guide and support banks in their journey towards public cloud adoption.

Security concerns with respect to adoption of public cloud is misplaced. With inbuilt identity and access management and other design considerations for securing applications and secure DevOps processes as part of public cloud infrastructure, bank users and customers don’t need to worry where the application is deployed regardless of location. An end user advocacy group body called Cloud Customer Standards Council has come up with a reference architecture for securing workloads on public cloud which can standardize security on cloud.

Banks need to keep the following aspects in mind while assessing readiness towards Public Cloud:

  • Cloud vendor selection and working with them
  • Requirement for upskilling, training and support
  • Evaluation of the application portfolio and decision on what to re-architect, replace and directly source from cloud as a service (SaaS)
  • A thorough understanding of how cloud will be deployed, managed and used within the organization

Banking Visionaries’ Council in a paper on Banking on Public Cloud – Reimagining Business Agility, lists the key cloud migration strategies and Cloud Governance and operating model that can be adopted by banks. Cloud migration strategies that can be adopted by banks include Rehost, Replatform, Repurchase, Refactor, Retain, Retire where “Rehost” can be used when change required is minimum and “Replatform” or “Rearchitect” when change required is significant. According to the paper, a bank must design its cloud architecture to be flexible enough to support both its infrastructure and banking applications at different stages of evolution, with the bank using public cloud and SaaS for its IT needs in its final stage of cloud journey.

The journey towards cloud and cloud native technologies makes a real difference to the profitability of a bank. Keeping an open mind towards these technologies ensures business success.

References: https://medium.com/aws-enterprise-collection/6-strategies-for-migrating-applications-to-the-cloud-eb4e85c412b4

Sandeep Joseph Mathew

Senior Consultant

Sandeep Joseph Mathew is a product owner in Finacle Loans ART at EdgeVerve Systems Ltd. His areas of interest include product management and credit monitoring. He is a Chartered Associate of Indian Institute of Bankers. He holds Post Graduate Diploma in Management from LIBA, Chennai and BTECH from CUSAT, Kochi.

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3 thoughts on “Banking on Public Cloud

  • Good 360 degree analysis of Cloud services for Banks, Sandeep.

  • Well articulated. Good weekend read.

  • Cloud is always a challenge to use in banking domain

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