Challenges remain, but India better equipped to move to Cloud: Experts

Cloud, generative AI (artificial intelligence), hyperscalers, high-redundancy data centres. Technology jargon like these have become a common lexicon for the banking and fintech industry in India. At the Business Standard BFSI Insight Summit, a panel discussed how Cloud and data centres have allowed banking, financial services and insurance (BFSI) and fintechs to ride the challenging wave of Covid-19.

The discussion, titled ‘Using cloud & data centres to mitigate disruption and address security challenges’, involved top industry players — Ranjeet Bellary, partner, EY; Raghavendra Singh, Global Head - Cloud Security Centre of Excellence of Cyber Security Practice, Tata Consultancy Services; Prakash Bharath, director Freshworks, India & SAARC; Sujeeth Williams, director of sales, NTT Global Data Centers; and Rajesh Mirjankar, managing director and chief executive officer, Kiya.AI. Edited excerpts:

Have disruptions reduced as data has moved to Cloud and has the emergence of data centres (DCs) reduced the complications of the tech landscape in the banking and fintech sector?

Ranjeet Bellary: When you look at how things have evolved over the past four-five years…pre-Covid the digital transformation was picking up pace but I think post-Covid it just accelerated and we’ve had a lot of clients quickly adopt platforms like Cloud where they had to obviously enable remote ways of working.

That also meant cybersecurity had to take a back seat because business was more important and that’s where we’ve seen the emergence of ransomware as a potent tool now. Cloud has disrupted the ways in which customers can access data anywhere and allows quick scale up.

While the Cloud gives a lot of flexibility there are challenges too because the pace of transformation has been at a very different level and which meant security had to play the catch-up game. Cybercriminals are always looking for newer ways of disrupting systems.

Sujeeth Williams: We have been in India for two decades. Post-Covid, there has been a jump in the adoption of outsourcing either on-premise workloads or to the Cloud, or data centres. The transition in the last 2-3 years has grown in leaps and bounds.

DCs have always been a mission-critical service for any business, but post-Covid what we have realised or what clients have been saying is that they want to focus on their main business, and leave the specialised services to special providers.

Prakash Bharath: We have been a Cloud-first company and perhaps been seeing all the changes that tech disruption is being talked about. What we are doing with fintechs or other businesses is phenomenal. We have redefined how customer and employee experience should look even in the area when regulations are changing.

Rajesh Mirjankar: Many banks were not disrupted much when Covid hit and business continuity was not impacted. In some ways, Covid has been a litmus test for the Cloud. When we look at the next generation of cloud adoption, we typically see aspects like the web3 environment, and AI-driven decisions then Cloud is the way to go. The aspect of scale of data and decision, that’s the way to go.

Raghavendra Singh: Some of the reasons for organisations to adopt the Cloud were speed, scale and resilience. To unlock the full potential of data, Cloud was the way. Businesses never had access to compute power, which is now available due to the Cloud.

Also, it's not the Cloud that has brought change, the whole ecosystems around Cloud or enterprises have changed. The platform where data is processed has changed. The regulatory landscape also changed to support this. All these aspects have made the Cloud very conducive for enterprises. Of course, data breaches and cyberattacks have also gone up.

How do you see Cloud-based solutions helping BFSI and fintech players improve their rich-customer experience?

Bharath: We went to PhonePe six to seven years ago when digital payments just started in India. When we started they had about 1,200 support agents on the floor and delivered about 40 million transactions. Then demonetisation happened. In the case of PhonePe, the 40 million transactions moved to over 400 million overnight. The original discussion we had with PhonePe was that they wanted to make themselves an omnichannel solutions platform, and wanted to make sure agents are ramped up quickly, and they wanted to deliver at scale.

But with demonetisation it became complex. We brought in the automation part with a chatbot, as transactions had skyrocketed. Within no time, PhonePe was able to automate 85 per cent of its queries that were coming into them without any human intervention. This reduced cost, but importantly it brought efficiency.

Is it really difficult for Banks to move to a digital/agile ecosystem?

Mirjankar: When someone says that banks are 20 years behind or such things…it is not necessarily about technology. It is about the design of the systems and the SOPs that they currently have due to all the banking processes they follow. I would ask what was the last time they changed their core banking systems…it was at least two decades back. The same system in terms of design is probably working here.

But from a digital adoption point, right from 2016, we have had huge shifts in the payments systems. The kind of disruptions the banking ecosystem has seen and the ability to have no down time in services is commendable. The credit goes to the bank for maintaining the technology and keeping up with disruption.

Cloud adoption is something which will be beneficial to banks. One is that there is a need for scale and Cloud provides that. Second, regulatory pressure on data security etc. can be handled faster in Cloud adoption.  

How do you make sure that DCs provide resilience to banks, fintechs and others?

Williams: There are three things crucial for customers as they look for DCs — power, network and operation skills. These are three basic things every client looks at when they look at their DC strategy. We just signed a memorandum of understanding with the government of Maharashtra and we will invest $3.5 billion into the state.

What are some learnings in Cloud adoption among the banking and fintech space?

Singh: To give an instance, we work with a global German bank and they decided to move to a big hyper scaler and we were the service provider. This case study is an exercise in what should be done and what should be avoided as companies look at their Cloud journey.

One, the business alignment and sponsorship came through right away. How they are moving, what are the near-term, medium-term and long-term goals and what moves to Cloud? This allowed clarity in decision-making. When we see customers move to Cloud in a hurry, a lot of technical investment goes. Cloud gives a one-click type of enablement and by the time you get the next bill, you realise how expensive it is. Hence the alignment of FinOps and SecOps is important.

Three, when to start moving data to the Cloud also has a time. You cannot move data and security comes as an afterthought. An organisation has to come as one, there is a strategy part to it, and future-proofing is key.

Mirjankar: India is better equipped to make the move to Cloud. One of the reasons for India having a more stable ability to move across tech is the gradual responsible method by which regulations have been brought in. It is a fact that regulations make the banking community adopt. When Cloud adoption was an opportunity, the regulation came into determining the regulation for IT data and risk assessment methodology.

The other clear aspect is client mandate, and how they want to adopt it. There is an opportunity as well as a risk. Opportunity is for the fact that banks and fintech can now look at a common master data approach which helps them comply with regulations more easily. Either in terms of onboarding or in terms of various rights of consumers to be managed. As long as there is a singular source of customer data it helps in managing and securing it better.

Second aspect is how banks would look at their processes. That is a clear need for reassessing the processes part of it. Cloud adoption does not mean that all the data has to go out of the bank’s premises. There is a hybrid option available, too.

Bellary: In 2023 almost 80 per cent of breaches involved some form of Cloud data. I was curious, while we were talking about digital transformation etc…security is an area where a lot of challenges are emerging. Organisations are doing enough, but what we have seen in some of the large cases we have dealt with is, that when there is a hybrid environment and then they are transitioning to a complete Cloud scenario, they need to have a shared responsibility in terms of security.

How do you see GenAI  being adopted?

Williams: We are investing $3.5 billion in R&D globally. A lot of this investment goes into driving sustainability and AI. About 40 per cent of global network traffic flows through NTT data centres. This gives us a lot of data to look at. AI for us helps in bringing power efficiency. We try and look at predictive monitoring on downtimes, power efficiency and how power gets distributed in the DC in a better way. Optimised cooling is another use case of AI usage.

Bharath: We have been investing in AI since 2018. Our core idea is to give the best customer experience but to do this first we need to solve employee experience. GenAI is playing an important part in putting these together. We did a report which says that by using GenAI features in the tool that we have, customers get to save $2.1 million in just about two years. If this is a saving upfront, why would customers not be interested in it? A second important thing about GenAI is implementation: How much time will it take to roll it out? Some of the features we have or rollouts we have done take just about 10 minutes.

Mirjankar: In terms of the benefits of GenAI, it is phenomenal. I think it is the smartphone moment for the AI segment. The ability to scale adoption is far more easy. We have been using AI in regulated technology for over a decade now.

Singh: AI has been around for quite some time and we have been ahead of the curve in adoption of AI and investments. In the cybersecurity segment, there is a talent crunch.

Bellary: We are using the tech to predict malicious patterns and identify threat actors. Using it to quickly detect incidents which could potentially become large.  Phishing has been a large issue for a lot of organisations. GenAI has been useful and there are a lot of use cases coming up.