Symbiosis Institute of Business Management, Bengaluru

Subject: Technology in Business

Topic: Cloud Computing in BFSI

Submitted to Submitted by
Ms. Anuradha Goswami Neeraj Garg : 19020841021

Nikhil Kandwal: 19020841022

Nishtha Gupta : 19020841023

Puja Samanta : 19020841024

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 Acknowledgement

We want to express our most profound appreciation to all those who provided the supervision, direction,
and guidance to us for this project.

We owe our most sincere thanks to our faculty mentor Ms. Anuradha Goswami for her guidance, along with
generous and sustained encouragement bestowed on us during the project.

This project would not have been completed without the effort and co-operation from the team
members, Neeraj Garg, Nikhil Kandwal, Nishtha Gupta, Puja Samanta.

Last but not least, we would like to express our friends and classmates for their unconditional love, patience,
motivation, and support.

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 Introduction

What is Cloud Computing?

Cloud computing is defined as the on-demand availability of computer system resources such as
computational capabilities, networking capabilities, and most of all storage capabilities. Typically businesses
enter into SLAs with vendors to get access to cloud computing services. The vendors usually include:-
Amazon Web Services, Microsoft Azure.

Figure 1: Cloud Computing

Cloud computing offers many benefits that can transform a business and help it grow more than what was
previously possible with strictly in house capabilities. Some of the benefits are given as follows.
• Cost: The main benefit and perhaps the most important one is the reduction in capital cost businesses
get when they opt for a cloud architecture over on-premise capabilities. The capital cost, which is
often very high to add a small server prevents many companies from scaling up to new, untapped
markets, thereby limiting businesses to only some sources of revenue.
o Reduction of cost of an upgrade, buy a new plan from your vendor as an when needed
o No maintenance cost incurred on the part of the business
o Energy costs are reduced drastically

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 • Scalability: The main USP of cloud services is the fact that they can be upgraded with a simple click.
This is particularly useful in times of unusually high demand spikes. In these times of demand spikes,
one can provide for additional capacities form their cloud vendor.
• Reliability: Cloud services are highly reliable and conform to many standards for security. All the
data, configurations, and transactions made on the cloud server is all kept backed up to ensure that if
anything goes wrong, the data can be restored along with all the other settings as well.
• Global-scale: The user data is mirrored globally across locations; this helps in providing better service
to the customers at any site.
• Performance: Cloud service providers always keep their hardware up to the latest standards which
are not possible for on-premise setup. The constant upgrades provide for a high-performance system
which translates into a perfect experience for the customer.
• Security: Cloud service providers give high priority to data security and implement measures such as
Biometric Security, laser detection systems, etc. , which are not available to businesses due to the cost
involved in implementing these measures. These measures coupled along with encryption of data
during transit ad while storage ensures that no unauthorized access to the data is possible.

How do the benefits listed above translate into advantages in the Banking, Financial Services, and Insurance
( BFSI ) domain, and why should these companies even migrate from their legacy systems to cloud systems.
That is because the changing customer preferences have demanded things from the BFSI sector, which were
previously not a consideration in the market. Some examples of such changes are-
• The rapid rise of internet banking and App-based banking, which requires a robust IT infrastructure
• Challenges to the existing BFSI players from the upcoming fintech players such as Paytm.
• The vastness of data accumulated in many of these companies. For example, LIC has the data of more
than 20 crore Indians, improper storage of this data can be harmful to the customers.
• We are changing the payment method of millennials.

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 The BFSI sector
BFSI stands for Banking, Financial Services, and Insurance. This sector encompasses the vast, interconnected
web of banks, regulators, insurance firms and the latest entry to the list fintech companies.

Figure 2: BFSI sector in India

The BFSI sector in India is particularly vast as there is a stark divide in the prevalent methods of using money
in India; urban areas are increasingly reliant on apps such as Paytm and also use Cards. The rural sector
primarily uses cash for the majority of transactions, with some shift towards electronic modes of money
transfer.

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 Figure 3: Banking in India
The government is a significant player in the BFSI sector with several large banks being public sector banks.
The largest bank in India, State Bank of India is a public sector bank. The RBI manages all the banks and
sets the policy rates as well. Securities and Exchange Board of India (SEBI) monitors the Indian stock markets
along with its two primary indices, Sensex and Nifty. The IRDAI controls the insurance side of this sector,
where LIC is the most significant player.

Challenges to the BFSI sector

• The sector is overburdened and is unable to, at times, even provide the necessary services to the
customers. This problem is even more severe in the rural areas, where sometimes even the ATMs are
not working which is very critical as rural areas run almost exclusively on cash.
• The rise of millennials has caused a paradigm shift in this sector, particularly with banking. Banking
has been affected the most by the tech-savvy millennial population. Earlier online banking and app-
based banking was viewed as an auxiliary function, something to which customers were mostly
indifferent, but now it has become one of the primary consideration for choosing a bank.
• The problem of data. Even the banks which have adapted to the rise of net banking have no clue as to
how to handle the data that is being generated. This data is very critical for the user as if this is leaked,
it could cause losses to the customer, for which banks are liable.
• Lack of personalized banking in many of the large public sector banks. While some banks have some
personalized banking, many of the banks have no personalized banking services available.
• Rising fintech players such as Paytm, have gained considerable market share as they provide ease of
transacting. Banks have such service, but the level of customization the newer Payments bank offer
is not yet matched by any of the banks. This had been a significant change for the banks as the
popularity of these payments banks is expected to surpass even the traditional banks.
• Even the largest insurance provider LIC is facing the heat as many foreign insurance firms are trying
to fight for the market share.

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 • E-filing of taxes becomes difficult as we get closer to the deadline date as many people are trying to
file the returns at the same time, leading to high network congestion.

Existing strategies and Technologies

• Many of the pains of the banking sector have been reduced due to implementation if IMPS, which
has helped in lowering transactions times, but IMPS (Immediate Payment Service) may itself be down
due to over traffic on the servers.
• Data protection laws have been placed on the BFSI sector demanding for localization of data, which
can help reduce security concerns to some extent.
• In response to the fintech sector gaining prominence, UPI (Unified Payments Interface) has been
launched by NPCI(National Payments Corporation of India), which is being widely accepted and
adopted by people.
• As of now, personalized banking still has no offerings by any player.
• E-filing deadlines are often extended to make up for the excessive traffic before the deadlines. This
decreases compliance with the filing norms and allows for certain loopholes to be exploited.
The emerging technology that can offer solutions for this is cloud computing. Cloud computing can be
implemented in 3 major forms: IaaS, PaaS, SaaS; Infrastructure as a Service, Platform as a Service, Software
as a Service respectively.

Figure 4: IaaS, PaaS, SaaS vs On-premise

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Depending on the requirement of the client, these three types of implementations of cloud computing can be
deployed for the client. Each offer is unique proposition to the customer, and the best advantage is that it is
very much possible to shift from one type of implementation to another type of implementation and it is very
easy as well and more often than not, it doesn’t cause any disruption to the services as well.
Depending on the customer requirements, vendors also provide public, private, and hybrid clouds as well.
This classification is based on the criticality of data and frequency of use of data.

Figure 5: Public, Private and Hybrid cloud

There are some differences between the two cloud implementations which are illustrated below.

Figure 6: Public Cloud vs. Private Cloud

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 How will Cloud Computing help?
• Cloud computing offers excellent data warehousing complete with the state if the art security
effortless which means BFSI sector which often has personal identifying information can easily store
the data that has been generated daily.
• ATMs are a crucial part of the rural area; however, when these ATMs don’t function, there is a severe
lack of cash. This can be overcome by using Cloud-based servers to handle all the ATMs. These
servers must be backed up at some intervals, and these backups will be ready in case there is any fault
on the primary server, thereby providing uninterrupted service to the customer, increasing the
availability of ATMs.
• Indian shopping trends tend to be clustered around festive seasons; the shopping season means a high
volume of transactions which many a time does not go through due to traffic on the server, resulting
in many cards getting declined as well as online net banking payments being rejected. The solution
to this is shifting to cloud-based servers to handle the transactions. Cloud-based servers are flexible,
meaning they can scale up in case of unusually high demands with no delay at all. This eliminates the
capital cost of buying a new server just for the festive season, which cannot be utilized to the
maximum after the festive season.
• The massive volume of data created per day from all the sectors of BFSI is an asset that has not yet
been utilized. The data can be used to get insights for the customers to provide more customized and
personalized services which can be used by banks to differentiate themselves and enhance the
customer service they offer. Cloud computing provides you with the service, where you can store the
data as well as use the computational power available at the data center to structure, analyze, and get
insights from terabytes of data quickly. Thus leveraging the powerful asset that is user data.

Case Study: Starling Bank

Starling Bank is a digital, mobile-based bank, based out of UK. It was started in 2014 and is headed by Anne
Boden. This bank is mobile-only, and it is a full-fledged bank offering service from current accounts to
business banking. It was the first bank globally to incorporate Apple Pay and well as Android Pay in its native
offerings. It can drive its unique model all based on cloud computing services provided by Amazon Web
Services.
The rise of the bank is a consequence of the customers demanding more and more of mobile banking
platforms. It was here that Starling bank positioned itself and made disruptive presence known and since then
it has been growing and is especially popular with the younger generations, who have come to accept more
out of their banks and want banks to be available to them anytime, anywhere.
Let us follow the journey of Starling Bank and evaluate the impact of AWS simultaneously.
• 2014: Foundations
o Anne Boden, Founder Starling Bank, “I saw a world where a company would do one thing
really, really well, then live in a marketplace with other services that together, fulfill every
banking need."
o This was the mission statement of the founder of the bank who envisioned a bank that could
fulfill the needs and demands of the new generation.
o Now they had five things that needed to be considered:

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 ▪ Scale: Having sufficient data centers and IT capability to keep customer information
on a level of millions.
▪ Security: Ensure that the information of clients is secure from cyber-attacks and
fraud.
▪ Innovation: Having the liberty to generate new digital services without wasting time
and money to construct a complete IT architecture.
▪ Cost: Maintaining the lowest possible upfront costs to keep investors happy.
▪ Regulation: Construction of an entirely new financial product while remaining fully
compliant.
o This initiative also found support from both EU and UK regulatory authorities as they both
were looking for ways to make banking more compliant and transparent, and the action
offered just that.

After all the encouragement, a platform for developing the bank was needed, and Anne turned to AWS for
this.
• 2015: Setting to Work
o Development was started on AWS cloud
o AWS was chosen for a variety of factors:
▪ Fast scalability and provision for ad-hoc demand management, which could be
arranged in a matter of minutes.
▪ AWS systems were already compliant with all the latest standards which saved the
trouble of regulatory hassles.
▪ AWS offered reliable and resilient architecture as a base to build upon.
▪ Low costs as no capital expenditure were needed for developing on-premise IT
infrastructure.
o EU regulators introduced RPSD(Revised Payment Service Directive) which was aimed at
democratization of payment infrastructure. Starling Bank incorporated it from day 1 of its
development stage.
o This flexibility of AWS to incorporate APIs gave Starling Bank an advantage over its would-
be competition.
• 2016: Up and Running
o EU and UK regulatory bodies grant starling Bank a provisional license.
o The bank also gains additional funding of £14.84 million from the investors.
o The first debit cards are rolled out after setting up of limited beta testing accounts to measure
the UX satisfaction. The team rolls out updates as and when necessary and also expand on
their computational power and storage on the cloud.
o Starling bank cloud infrastructure allows customers to send amounts of up to £250k in
seconds, the first bank to do so.
• 2017: Fully Licensed and Flying High
o Starling bank’s infrastructure is audited, and subsequently, the bank gains a full banking
license, the first full-fledged bank with no physical branches and complete cloud
infrastructure.
o Additional funding of £50 million from investors on the back of strong debut by the bank.
o The app is pushed on Google Playstore and Apple Appstore.

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Because of its unique architecture, the bank gained instant popularity amongst the British population. The
bank due to its complete cloud architecture was able to incorporate several unique features such as:-
• Ability to use Amazon Alexa for setting up of bank tasks just by voice commands with no interaction
needed.
• The bank was the first in the UK to incorporate both, Apple Pay and Android Pay into its banking
system for seamless payments without the need for a debit card.
• Account setup is done in just a few minutes.
• Efficient expense tracking with detailed records of spends, including location and bill receipts.
• Instant credit score checks with a shortage of time to get mortgages approved.

Learning and Conclusion

We have seen how Indian BFSI sector struggles to grapple with the increasing demands made by the
consumers and the high volume of data which it is struggling to secure as well as utilize to gain insights from
the same. Leveraging the advantages offered by cloud platforms, we can see a significant change in the
sector.
The advantages offered by cloud platforms compliments the challenges faced by the Indian BFSI sector to a
very great extent. Problems of the high volume of transactions, unavailability of services, network traffics in
online banking, time delays in the processing of certain functions and most importantly safekeeping of data
and analysis of data is not possible on-premise, due to the sheer scale of data generated by the sector daily.
The problems can be solved by leveraging the power of cloud platforms which offers advantages such as
flexibility and scalability along with data warehousing to prevent unauthorized access.
We have seen how Starling Bank leveraged the power and capabilities offered by cloud vendor AWS, to
create a fully cloud-based bank that has no physical branches and how it was able to achieve regulatory
compliances quickly due to the robustness of cloud platforms.

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 References
https://www.esds.co.in/blog/6-reasons-that-cloud-computing-is-transforming-banking-
sector/#sthash.P1Egtz5E.dpbs
https://www.stoodnt.com/blog/cloud-computing-banking-fintech/
https://internationalbanker.com/banking/the-impact-of-cloud-computing-on-the-banking-sector/
https://azure.microsoft.com/en-in/overview/what-is-cloud-computing/
https://aws.amazon.com/solutions/case-studies/starling/
https://bfsi.eletsonline.com/factors-driving-tech-revolution-in-indias-bfsi-sector/
https://en.wikipedia.org/wiki/Starling_Bank

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