Addressing Banking Concerns and Opportunities in Cloud Adoption

In this exclusive interview, we sit down with Sanjay Gupta, Partner at Deloitte India, to delve into the key concerns and requirements traditional high-street banks face regarding the adoption of cloud services. Gupta shares insights on how the Reserve Bank of India's guidance plays a crucial role in addressing these concerns, along with the advantages and strategies for effectively leveraging cloud-based solutions in the banking sector.

What are the key concerns and requirements expressed by traditional high-street banks regarding the adoption of cloud services, and how does the RBI's guidance play a crucial role in addressing them?

Banks are primarily concerned around cost transparency, cyber security, and data privacy. The key requirements are compliance to regulatory requirements like data residency and RBI outsourcing guidelines.

These concern to a large extent can be mitigated by following RBI guidelines like establishing organization policies, procedure, and frameworks for cloud adoption. The emphasis is on following elements.

•         Development of a cloud adoption policy that convers cloud governance and risk management.

•         Considerations for the selection of a cloud service provider and the due diligence.

•         Disaster recovery and cyber resilience to ensure continuity in cloud services

•         Exit strategy with minimal impact on the continuity of business.

•         Lifecycle of data covering entire span of data

•         Data security aspects to assess data classification and protection control

•         Review of data lifecycle and encryption controls for data at rest, in motion and use.

•         Application security guidelines includes continuous security testing, DevSecOps and vulnerability management.

Further Banks also deliberate on how their operating model will change post cloud adoption and are their proper controls in place for cloud adoption. The other critical concern comes from Talent and Skill Gap in a cloud environment.

What advantages does cloud adoption offers in terms of compliance, governance, and operational efficiency?

On the back of a decade of Cloud transformations, we have learnt that organizations who focus on accelerating just one or two layers (e.g. infrastructure, data, channels) do not unlock the full potential benefits of their change. Cloud transformation success stories are made when the integrated set of changes are identified across all relevant layers to unlock the ultimate outcome.

Cloud adoption helps to standardize the technology environments rather leaving it to individual teams, projects, and transformations. Consistent best practices and repeatable building blocks are built into build and run aspects, increasing efficiency and productivity for developers, architects and IT administrators.

Automation is one of the biggest advantages which cloud adoption can bring. Manual Infrastructure management tasks can be broadly eliminated. Automated testing and self-healing features reduce manual intervention and minimize delivery risk. With proper definition, cloud adoption provides an opportunity to have mature SLAs and which can enforced as well.

In what ways can cloud adoption's impact on cost management and resource optimization for financial institutions?

With the adoption of cloud, organizations have the option to move to a pay-as-you-go model.

The pay-as-you-go model provides significant benefits for organizations; however, a proper governance mechanism needs to be in place to ensure financial control and management. Based on our experience of working with clients in this space, cost transparency appears a big challenge in cloud adoption. This is primarily due to a lack of financial governance. Deloitte recommends setting up a cloud operating model right at the start of an enterprise cloud journey.

As highlighted above, cloud financial management (or, FinOps) is a critical capability of the cloud operating model which is required to bring visibility into an organisation's cloud spend (including multi-cloud spend), identify areas of optimization, create a roadmap to implement these optimizations and support the organization in implementing the same over a period of time and also ensuring continuous improvement as the overall cloud journey matures.

How can cloud technologies address the evolving demands of digital transformation in the BFSI sector?

Cloud technologies present an opportunity to shift beyond capacity play into transformation, innovation and data agility mechanism. According to a survey BFSI sector is now investing more on cloud in transforming systems.

Cloud technologies lay the foundation for digital transformation among BFSI customers. With an on-demand, resilient and scalable service consumption model cloud technologies help organizations improve their productivity, adaptability to today's changing business landscape, ability to innovate and provide better services to their customers.

The pace of innovation in technology and associated practices is driving rapid adoption of cloud in banking industry. Traditionally, Banks have taken 3 to 5 years to embrace new technologies and ways of working – by a cloud first approach this can be reduced significantly.

How does multi-cloud adoption address compliance, vendor management, and quality control challenges face by banks in the fast-paced financial industry?

Today Banks are adopting multi-cloud for numerous reasons. An effective operating model can address these challenges and ensure streamlined operation between the various clouds within an organization. Appropriate cloud governance can benefit from the following considering:

• Clearly defined roles and responsibilities
• Providing an updated inventory of all cloud services and enterprise assets in a multi-cloud environment
• Ensuring compliance across all applicable standards and regulations
• Appropriate IAM controls for all users across the multi-cloud landscape
• Proper data management guidelines including encryption policies for data-at-rest and data-in-motion
• Capacity and capability map across the multi-cloud environment

How can banks benefit from cloud-based solutions, and how does Deloitte's Cloud Operation service assist banks in effectively leveraging these advantages?

Cloud is meant to enable organizational agility – not imply replace on-premises infrastructure. When we embrace change and adopt new ways of working, we can get the full benefits of cloud, from cost transparency to quicker speed of delivery and innovation. Cloud serves as a key link to realign IT setup with the business and ignite innovation by providing cloud native and self-service capabilities.

In practice, the burden of legacy ways of working, technology and management expectations often diminish the impact of Cloud. To realize these benefits and leverage them effectively, Cloud demands a material change to technology operating models. Deloitte’s Cloud Operating Model reimagines how enterprise can leverage cloud to drive transformation by addressing following: -

Delivery models which are meant to evolve when operating in the cloud - legacy on-premise management processes & security approaches do not work in a cloud first organization and will only slow teams down.

Structure to safely give more power to application and product teams and provides an opportunity to remove the disconnect between business and IT teams.

Manages level of complexity that can be hard to from figuring out workload disposition to long term operations. Especially for organizations with a diverse range of LOBs and products, requirements differ which leads to working in hybrid and multi-cloud models.

Strategies to manage cloud related niche skills and Talent to enable organizations for driving changes – including misalignment across senior leaders and budget challenges.

How is Deloitte's Cloud Operating Model tailored to the unique needs of the Indian banking sector, considering diverse customers, complex regulations, and a growing digital environment?

The Deloitte’s Cloud Operating Model Framework is aligned with industry-leading est practices and has a comprehensive set of capabilities viz. Cloud Strategy & Governance (includes Cloud BizOps and Architecture & Standards), Security Risk and Compliance (includes Cloud Security and Risk Management), Platform and Data Engineering (includes Cloud Migration, Consumer Enablement, Cloud Platform and Cloud Data Platform) and Platform Operations and Management (Cloud Foundation and Cloud Operations). The framework is very comprehensive and detailed, with details around L1, L2 and L3 capabilities and their interaction with overall Product Management and Service Delivery teams and other BUs within the Bank.

Deloitte’s Cloud Operating Model helps organizations to Meet New Expectations in a growing digital environment.

Need for Customer-Centricity – KPIs and Roles focused on customer engagement and success

Speed to Value – Accountability to deliver value in frequent increments.

Rapid Innovation - Reinvent offerings to evolve fast with technological advancements.

Revenue Generation – Enable products that grow top line and Time to market for new products

Cost-Effectiveness / Value Creation - Transparent cost structures and focus on reuse, quality and reduction in technical debt.