Cloud Banking

by Partho H. Chakraborty

Overview • Cloud Computing is defined as an on demand Internet based computing environment

where you pay only for resources that you use

• Users need not own anything apart from a browser and an internet connection and do all the required transactions without actually owning the software

• It is an evolution in the way computing can be done and the journey started from Mainframes to Cloud today

• As per Grail research, what was a joke for CIOs a year back is now number 2 on their plate

• Cloud can be private, public, community or hybrid

• Cloud based delivery can be classified as Saas, Daas, Paas, Iaas

• Cloud can be hosted or custom developed or it could be a combination of both.

• Key Issues in Cloud is Security as many head Honchos are still not sure how secure it is, as the hackers are getting better and sophisticated

• It is not New nor is the concept Alien but it is certainly a Hotly discussed topic

Partho H. Chakraborty Cloud Banking

Cloud Taxonomy Courtesy - TCS

Partho H. Chakraborty Cloud Banking

Financial Cloud • When Financial Institutions such as Banks use Cloud for their

financial requirements it is called as Financial Cloud Computing

• The biggest challenge in Financial Cloud is the perceived notion that the data could be compromised

• It looks to be a trade off between costs and security

• Financial Institutions are joining Open Data Center Alliance, which is vendor agnostic

• Banks have started using Private Clouds but it is limited and it needs a lot more to be done

• Central Banks need to take the lead in Cloud Computing as it will then give the impetus for other banks to follow

Partho H. Chakraborty Cloud Banking

Current Problem • Disparate Systems need integration

• Need to upgrade software periodically

• Need to be BASEL II and IFRS compliant

• Need to adapt to Regulatory Requirements

• Scalability issues

• Risk a major issue

• Software costs and implementation costs going up and so are support costs

• Banks also have costs in IT staff and maintaining hardware, software and network

• Mergers and Acquisitions become a major challenge especially with large banks

having many lines of business and branches

Partho H. Chakraborty Cloud Banking

Challenges • Banks not keen to adopt Cloud

• It looks like a wait and watch game

• No support from Central Banks

• Issues of Regulation and Compliance

• Product Companies averse to lose revenue as it will be Pay and Use

• Customization a Challenge

• Location of Cloud could be a major issue

• Service oriented companies could see a substantial dip in their revenues

• Smaller companies could become non-existent in this new scenario and service

oriented companies looks to bear this brunt.

Partho H. Chakraborty Cloud Banking

Proposed Solution • a company like Google hosts

various applications from various product companies.

• All access will be through Google UI • Product companies can be in any location • All products will be updated with the latest

releases • Data stays in bank. All they do is access various

services as required • All transactions will be encrypted

Partho H. Chakraborty

For example

Cloud Banking

Proposed Solution - Architecture

Partho H. Chakraborty

Bank A Laptop Desktop ATM Bank B Handset

Google Interface

Google Interface

Data

Data

SAP Oracle Misys

Mobile

Telephone

Central Bank

Note: Google is just mentioned as an example. It can be any company which can host the service such as TCS, Wipro, etc.

Cloud Banking

Cloud Banking • Process flow by client to establish limits

Partho H. Chakraborty Cloud Banking

Cloud Banking

Partho H. Chakraborty Cloud Banking

Cloud Banking • The entire process could be done through the Cloud,

especially if both buyer and Supplier are banking with then same bank

• Cloud Banking enables the customer and bank to move on to paperless transaction with a host of benefits such as: • Any Time and Saves Time • Any Where • Instant Cash • Error Free Documentation • Empowering Customers • Transfer of Money in Moments

• Cloud Banking generates Carbon Credits Partho H. Chakraborty Cloud Banking

Revenues • Let us take a sample case: • Product: SAP FICO • Users: 10 • License Fees: ` 100,000 per user/per annum • ` 1,000,000 per annum • Banks: 10 • Users: 20 • Hours : 6 • Days: 200 • Revenue: ` 5,000,000; ((100,000/24)x6x200) • Sharing: 20% to Google • Net Revenue: ` 1,000,000 This is a very simple case but it highlights the savings to bank and that

this business would earn in volumes Partho H. Chakraborty Cloud Banking

Proposed Road Map

Partho H. Chakraborty Cloud Banking

Summing Up • Brand value of company would increase • It would truly be a pioneer in Cloud Computing

with others emulating it • The beginning would be from non-core products

but eventually handling all the bank’s requirements • Smaller Banks would be trendsetters and the

bigger ones would follow • Pricing, Convenience, Security, Customization and

Robustness would be the key issues

Partho H. Chakraborty

Cloud Banking generates Carbon Credits thus greening the environment

Cloud Banking

Thank You Partho H. Chakraborty A – 305, DSR Spring Beauty Apts., 124/1, ITPL Road, Brookfield, Kundalahalli, Bangalore – 560 037 INDIA Tel: +91 - 80 – 420 50293; Cell: +91 - 99863 22504 Email: parthohc@airtelmail.in; parthohc@rediffmail.com