Navigating cloud adoption in banking: Anil Kuril, CTO, Union Bank of India

Navigating cloud adoption in banking requires a meticulous approach. The journey toward cloud integration in the financial sector is a strategic blend of embracing innovation while mitigating risks associated with data security, legacy systems, and evolving technologies. Anil Kuril, chief technology officer, Union Bank of India in an interview with Dataquest along the sidelines of the VMware Explore 2023 Singapore Event highlights the significance of a balanced strategy that leverages private and public cloud solutions.

The primary focus, he emphasizes, remains on ensuring data sovereignty and privacy, particularly for critical infrastructure, while gradually transitioning from traditional to modern IT systems. The challenges and opportunities in this transformative process involve managing legacy systems, addressing security concerns, and harnessing emerging technologies like AI and machine learning to enhance customer experiences while ensuring compliance and data protection. An agile and resilient infrastructure, as emphasized by Kuril, is pivotal for banking institutions to thrive amidst the evolving landscape of cloud technology.

DQ: Can you provide an overview of the current state of cloud adoption in Union Bank of Interview and its significance?

Anil Kuril: I believe that when we discuss cloud adoption, our primary focus is on on-premises solutions, even though we have a presence in the public cloud. However, there is currently no unified effort to integrate these two aspects. Our main strategy involves the adoption of a private cloud utilizing VMware technologies. Approximately 80% of our workloads are hosted on the private cloud, except for the proprietary workloads for which we need to provide dedicated infrastructure. This outlines our current cloud adoption strategy.

DQ: What are the primary drivers motivating banks to undergo cloud transformation initiatives?

Anil Kuril: When considering IT infrastructure, it plays a crucial role in any organization. For essential infrastructure, you require agility, resilience, and the optimization of resources. These aspects are particularly critical when dealing with cloud and critical infrastructure. Private cloud and cloud solutions, in general, offer these essential components. This transition from traditional server-based systems to cloud-based solutions is gaining traction because it not only provides these components but also enhances IT infrastructure management efficiency.

Specifically, when discussing private clouds, there are unique considerations, especially for regulated entities. Maintaining data sovereignty and privacy is paramount, ensuring that sensitive data remains within the organization's boundaries. These challenges are being addressed within private InfoSec cloud infrastructure. However, private clouds have their limitations, primarily related to the need for underlying hardware procurement and management. Some of these challenges are being mitigated by public cloud solutions. Nevertheless, many organizations, due to security concerns, are cautious about adopting public cloud solutions for their critical infrastructure. Hence, the focus remains predominantly on the private side of infrastructure, at least for now.

DQ: Security and data protection are paramount in banking. How are you ensuring the security and compliance of customer data when transitioning to the cloud?

Anil Kuril: If we examine it from a data perspective, whether it's personal identifiable information (PII) data or business data in general, it holds immense value in today's environment. Protecting this data is of paramount importance. Currently, we have reservations about venturing into the public cloud realm, which is why we stick to on-premises solutions for now. However, the landscape is evolving, and the security orchestration available in the private cloud is promising. If similar capabilities become accessible in the public cloud, it could simplify matters significantly.

Another crucial aspect to consider is culture. When operating within an organization, data protection at the edge is relatively straightforward. However, in the public cloud, where everything is readily accessible, a shift in culture becomes vital. Before embracing the public cloud, a cultural shift is necessary to make people understand the significance of the operating model, security measures, and the required skill set.

While the potential of the public cloud is discussed widely, not everyone is well-versed in its operation. Security is a major concern, as a single vulnerability can have serious consequences. Organizations must evolve from traditional to modern IT and ensure their IT professionals acquire the necessary skills for public infrastructure. This transformation is an ongoing journey, and as we mature in our approach, we will undoubtedly improve both the manageability and security of our cloud initiatives.

DQ: Legacy systems can be a challenge. How do banks address legacy infrastructure and applications during their cloud migration?

Anil Kuril: When you take a closer look, you realize that on one hand, you've been building your IT infrastructure for over a decade. In our case, our core banking journey began in 2002, and we've developed numerous applications around it. The challenge we all face is the transition from traditional IT to modern IT. How to navigate this transition is a question that still lacks a definitive answer. Gradually, we're making progress by modernizing certain systems. For instance, in our organization, we're in the process of creating a new digital business platform that's gradually replacing the challenges posed by our existing systems.  Another consideration is our dependence on ISPs and service providers due to the legacy systems. We can't simply discard them, so we're adopting strategies like 'hollowing the core.' This means systematically removing components from legacy systems while retaining essential elements and building the rest with modern technology.

Additionally, many organizations, including ours, have a considerable workforce dedicated to software development and in-house delivery systems. It's relatively easier for us to modernize these systems. Hence, we are embarking on an app modernization journey, updating our in-house applications to run on newer platforms using Kubernetes and microservice architecture. In summary, there's no quick fix for legacy systems. It's an ongoing journey where we address, reduce, or replace pain points as needed. The transition to modern infrastructure is a gradual process we're committed to.

DQ: What role do emerging technologies like artificial intelligence (AI), machine learning (ML), and blockchain play in banks' cloud transformation strategies?

Anil Kuril: Emerging technologies like Generative AI (Artificial Intelligence) are generating considerable excitement in the banking sector. While Generative AI is still in its early stages, its potential is widely recognized. However, the use cases for Generative AI are still limited, and there are numerous challenges to overcome. Generative AI is computationally demanding, requiring substantial infrastructure availability. Data protection is a paramount concern for all of us, and developing use cases that provide tangible business benefits is also challenging.

Despite these hurdles, I hold the opinion that the landscape is evolving. Over time, substantial public infrastructure and enablement have emerged, offering hope for progress in this field. Additionally, from a customer perspective, there's a noticeable shift in how customers interact with organizations. Instead of being constrained by an organization's preferred interaction method, customers are increasingly demanding the ability to interact on their terms. This trend suggests that conversational AI, possibly powered by Generative AI and related components, will become the norm.

This shift in customer interaction is already evident with technologies like GPT (Generative Pre-trained Transformer). Numerous use cases have emerged, and this trend is expected to continue. Furthermore, Generative AI has the potential to revolutionize internal communication and service fulfillment processes, particularly within the IT realm. Instead of rigidly structured procedures and FAQs, users will be able to express their queries in their own words and still receive accurate responses. This humanizes the interaction, making it feel more like a conversation. The extent to which Generative AI will drive these changes remains uncertain, but it holds the power to transform the way we communicate and provide services.

DQ: What are some common challenges and roadblocks that banks encounter during their cloud transformation journeys, and how do you overcome them?

Anil Kuril: I believe that every technology undergoes its own journey, and the challenges we face today may not persist tomorrow because technology itself is constantly evolving. Technology-driven solutions like VMware adapt and refine their products based on the problems we encounter. While it's true that no solution is entirely problem-free, even those in use for decades, we've witnessed how these solutions, such as VMware's private AI and NSX Plus, respond to challenges. Customer feedback plays a vital role, and it's clear that every system takes time to stabilize.

In my experience, I can confidently say that cloud computing, specifically private cloud solutions, has significantly contributed to enhancing operational resiliency within our organization, Union Bank. While no infrastructure is entirely free of issues, private cloud solutions have played a crucial role in addressing and mitigating these challenges.

DQ: Looking to the future, what trends and innovations in cloud technology do you foresee reshaping the banking industry?

Anil Kuril:  The FinTech industry stands out as a hub of constant innovation, and this trend holds immense potential for organizations. By embracing these innovations, organizations can break free from the constraints of their own thought processes. It's crucial for both IT teams and organizations to adopt a customer-centric approach, but gaining insights from the broader community can be even more advantageous. Another significant area of focus is AI, where organizations are increasingly relying on data, both their own and from external ecosystems, to drive decisions, streamline customer experiences, and facilitate credit processes. This reliance on AI is expected to grow further.

Moreover, open frameworks like account aggregators and ONDC, while in their early stages, are promising movements in the industry. They have the potential to benefit the financial sector substantially. Lastly, the transition to cloud technology is a prominent trend. This shift promises to simplify IT infrastructure management by making it more transparent and user-friendly. Organizations can shift their focus from day-to-day system management to leveraging these cloud services, ultimately improving overall IT management. These trends collectively have the potential to drive long-term benefits for organizations in the financial industry.

DQ: How VMware has helped the Union Bank of India with your digitization journey?

Anil Kuril: Our partnerships, including our collaboration with VMware, have been instrumental in our digitization journey at Union Bank of India. These partnerships have delivered the advantages and benefits we were aiming for. In summary, VMware's server virtualization solutions have played a pivotal role in providing cost-effective, scalable, and secure IT infrastructure for our bank. This has resulted in improved operational efficiency, enhanced disaster recovery capabilities, and strengthened compliance with regulatory requirements. These advantages make VMware an attractive choice for financial institutions seeking to modernize their IT infrastructure.