Faced with increasing technology costs and under-utilised hardware, banks are increasingly looking at cloud computing as a means to improve efficiency and cut costs. Banks can scale up their operations without adding to their costs, either on manpower or on hardware and software.
Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility (like the electricity grid) over a network (typically the Internet).
Since the hardware and software are available on demand, the user has to pay only for what is utilised and need not make a huge investment upfront.
According to Mr D. Padmanabhan, Managing Director and Chief Executive Officer, Appnomic Systems, one of the common problems that large banks face is that of below-optimum usage of their computers.
Large banks often deploy a lot of capacity in-house and more than adequate hardware, which is then not used to the optimum. But with cloud computing, they could scale up and reduce costs.
So, for such banks, it would make sense to switch a function such as treasury applications, if not entire core banking services to cloud, he said.
Appnomic is currently working on a pilot project with some of the large private banks, Mr Padmanabhan said.
While the savings would differ from bank to bank, it is estimated that a bank could cut its costs by 60-70 per cent by switching over to cloud computing.
Cloud computing could also help banks re-allocate their resources, which they are not able to do now, Mr Padmanabhan said.
Infosys, which launched its banking software Finacle Lite (a modified version of Finacle) in April this year, is working with regional rural banks and co-operative banks. Over 8,000 RRB branches use Finacle Lite, said Mr Haragopal Manigupdi, Global Head, Finacle Infosys Ltd.
“For RRBs and co-operative banks, making an upfront investment on CBS could be difficult. This impacts their competitiveness. By getting into a subscription model, banks can pay per use, per branch,'' he explained.
Another problem for smaller banks is to get the right talent to manage the servers and hardware. By using cloud, they don't have to worry about talent, Mr Haragopal added.
This is a big advantage for smaller banks as the staff freed up can be used for other functions, Mr Padmanabhan said.
The private sector IndusInd Bank has implemented a watered down version of cloud computing, called Thin Computing, said Mr Paul Abraham, Chief Operating Officer. The advantages are a lower investment and better control over data.
“Most of our back-offices and even branches work in a thin computing environment. It allows data to be centralised and people can access it from outside. It is particularly useful for our sales force who can access data from outside,” he said.
Thin computing is similar to cloud computing as it delivers productivity at a lower cost than traditional methods — all without compromising security or manageability.
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