Anunta Tech - Sep 5, 2018

Banking on technology, Part 4: To be or not to be (on cloud infrastructure)

It is common knowledge that cloud infrastructure adoption by businesses in India is seeing an encouraging trend. According to a recent study by EMC Corporation and Zinnov Management Consulting, the cloud computing market in India is expected to reach $4.5 billion by 2015, a little more than ten times the existing $400 million market. Also, the same study states that the cloud industry in India alone is expected to create 1 lakh additional jobs by 2015.

Additionally with the rollout of the UID programme, the technology has also found its way into the Government sector. This would lead one to think that cloud infrastructure has entered mainstream and is getting increasingly preferred over the legacy IT model. Yet, industries such as BFSI that have strong regulatory and compliance requirements have understandable reservations about cloud infrastructure.

Per a latest research by ValueNotes on behalf of Anunta, to study the application performance management in the Indian BFSI sector, 76% of the respondents surveyed still have physical delivery architecture. Of them, insurance and financial institutions are open to considering cloud infrastructure in future, but banks appear to be hesitant. The study further found that only 12% of respondents had some applications on cloud. But the core applications were still maintained in physical architecture. Why so? Resistance to change, security concerns, lack of reliable vendors et al were some of the reasons cited for not moving to cloud infrastructure.

But the benefits of cloud infrastructure, in this case for the BFSI sector, far outweigh the concerns. Banks and financial institutions, for many decades, have made use of service bureaus or outsourced core banking platforms. The ever increasing range of cloud computing options provides an opportunity for them to reduce their internal technology footprint and gain access to technology built and operated by third party experts. Also many investment banks and buy-side firms such as hedge fund houses have their private grid infrastructure for functions such as Monte Carlo simulation and risk analysis hosted in a third party data centre. Yet more often than not, they are required to add capacity in a jiffy at critical points. Cloud can prove more than handy at such moments.

Apart from the near halving of costs, applications like customer relationship management (CRM) and risk management can be brought to market relatively quicker. Banks can focus on their core business as opposed to concerning themselves about infrastructure scalability. Not to mention, the disaster recovery issues. I could go on about more advantages in the form of rapid provisioning and scaling of services alongside the chance to go green and contribute to the environment. But you get the point.

It’s not that the financial services industry is completely averse to cloud computing and its charms. In the survey, 43% have opted to take this decision in the next 5 years. Some of the premier private banks in our country have already adopted both private and public cloud, although, most of these banks have only hosted the peripheral applications on the cloud. But that in itself is hopeful.

According to the data collected from various industries, IT/ITeS is the top contributor to the total cloud infrastructure market in India with 19 per cent, followed by Telecom at 18 per cent, BFSI at 15 per cent, manufacturing at 14 per cent and government at 12 per cent. So BFSI has done well. But this post suggests that the data can be bettered.

Written by Anunta Tech