How Cloud Will Accelerate Economic Recovery From Covid-19 & Growth For India's Banking Sector
Ciaran is an expert in both the issuing and merchant acquiring space of global payments, with a focus on how banks, processors, fintechs and merchants can navigate the evolving payments ecosystem to generate new revenues.
2020 has been a whirlwind year. Among the profound changes the pandemic has ushered in, the mass adoption of digital payments and banking platforms is likely to be long lasting in nature. As we adapt to a world shaped by physical distancing, banks and financial institutions are adapting and innovating. For firms looking to recover in the short-term and accelerate their growth trajectory in the longer term, technology fuelled experiences can help them compete, ramping up services and profitability while reshaping customer experiences.
Additionally, Banks must focus on internal IT operations and systems to ensure operational integrity. This is where the power of the cloud will come in. In 2021, cloud will power vital infrastructure for India’s banking and payments sector, enabling agility, improved remote collaboration, and faster application development and deployment.
Outlined below are the three big cloud trends that ACI Worldwide sees having the biggest impact on India’s BFSI sector in 2021:
Revaluation of operational control processes: One of the big challenges of cloud adoption pre-COVID-19 was the amount of operational overhead and risk acceptance knowledge required to migrate workloads from on-premises to the cloud. This was coupled with the fact that many banks had in place arduous control processes that were difficult to overcome. Due to the pandemic, banks have realized that many offshore resources that were maintaining systems could not log in from home,
causing a risk issue. Banks were forced to re-evaluate these processes to ensure they were fit for purpose in this new world, where physical distancing quickly became the norm. As a result, in 2021 we will see banks increase expenditure on process simplification and improvements – something that the cloud can deliver.
Changing relationship between data regulation and innovation: With changing geopolitical dynamics, we will see increased focus around data sovereignty and consumer safety, as consumers seek to understand how precisely their data is being used and governed. As a result, we can expect more countries to follow the likes of Poland, setting up national clouds, where banks can enjoy the benefit of cloud computing, shifting from capital expenditure (CAPEX) to operational expenditure (OPEX), even as the data remains in the country. Big cloud providers will continue to canvas and work with regulators to find common ground on the best way to run their infrastructure long term.
Regulators in the past have stood in the way of innovation, in part due to a lack of understanding of the competitive landscape. Banks would end up spending more on maintaining the status quo to placate regulators. While it will be a gradual shift over the next five years, I would hope banks can reduce overheads, which restricts their ability to innovate, by working with cloud providers and regulators to automate and simplify activity through increased transparency.
As the industry moves further into its cloud journey, we will see more bank leaders and CIOs recognize the need to get machine-human collaboration
Long live the marketplace platform: One of the greatest drivers of cloud within the BFSI sector will be the need for banks to diversify their revenue models from fee-based transactions (where it is a race to zero) to new client-based services. Banks will also realize how much easier it is to drive partnerships and gain meaningful data insight in the cloud. Another critical trend to watch for will be the continuing demand for use of hybrid and multi-cloud environments, where banks avoid being locked into a single vendor by using a mixture of private and public cloud offerings. Following in the footsteps of Spanish multinational BBVA, we will see a lot more banks embracing a hybrid cloud approach to build a platform of services, which customers and partners can easily access as they diversify their business models.
As the industry moves further into its cloud journey, we will see more bank leaders and CIOs recognize the need to get machine-human collaboration right. We will see more investment in employee reskilling and upskilling, as banks begin to unlock the value that lies at the intersection of employees and technology. There will be a more top to bottom approach to “applied intelligence” – combining intelligent cloud technologies and solutions with human ingenuity – across all areas of banking business, reshaping core banking processes and transforming customer experiences.