Chapter 8 Cloud and Its impact on Banking

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Table of Contents
Chapter - 8 Cloud and its impact on Banking ....................................................................... 4
8.1 Introduction to cloud computing................................................................................ 5
8.1.1 Cloud Computing ................................................................................................... 5
8.1.2 First Movers in Cloud ............................................................................................ 6
8.1.3 Cloud Components ................................................................................................. 7
8.1.4 Cloud Types ........................................................................................................... 9
8.1.5 Cloud Computing Challenges .............................................................................. 14
8.1.6 Differences between grid Computing, Cluster Computing and Cloud Computing
15
8.2 Cloud Computing in Banking ................................................................................. 17
8.2.1 Benefits of cloud computing to financial firms .................................................... 18
8.2.2 Areas of banking for cloud computing implementation ....................................... 18
8.2.3 Challenges banks face in moving to the cloud ..................................................... 19
Summary .................................................................................................................................. 22

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Chapter - 8 Cloud and its impact on Banking

Introduction

Many business/industries large and small use cloud computing today in order to ensure
flexibility in switching between the applications and to reduce the upfront cost in investing IT
infrastructure. Banking industry is not an exception. Implementation of cloud in business
would help organizations to focus more on their business objective and less on IT
infrastructure. Adoption of cloud computing in banking would help both the customers to
easily access the data from anywhere, employees to process the transactions quickly and
easily and maintain a reliable data log. In this regard, it is essential for an individual to know
about cloud computing architecture and benefits of it to maximize the profitability and to face
the growing competition.

Learning Objective

At the end of this chapter, you would have learnt about:

We would get clear idea cloud computing and its components about AA
Learn about different cloud types like service models and deployment models
Get an idea about grid computing, cluster computing, cloud computing
Know about the benefits and challenges of implementing cloud in banking
Various areas of banking helpful for cloud implementation

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8.1 Introduction to cloud computing

Cloud is about how you do computing, not where you do computing - Paul Maritz,
CEO of VMware
Microsoft has had clear competitors in the past. Its a good thing we have museums to
document that.- Bill Gates
You can get more out of your cloud investments if you strategically position and prepare
your company for cloud. One way to do this is to incorporate cloud into your integrated
business and IT strategy. Cloud Tweaks
Now-a-days, cloud computing has become a buzzword everywhere. If asked about the
definition of cloud computing the answers vary widely. Now lets begin with the
understanding of what cloud computing is, how it works and other aspects

8.1.1 Cloud Computing

The National Institute of Standards and Technology (NIST) puts it this way:
"Cloud computing is a model for enabling convenient, on-demand network access to a
shared pool of configurable computing resources (e.g., networks, servers, storage,
applications, and services) that can be rapidly provisioned and released with minimal
management effort or service provider interaction." [Source: Cloud computing made
easy, Cary Landis, Dan Blacharski]

Cloud computing refers to computing on internet, as opposed to computing on a desktop

[Source: Cloud computing made easy, Cary Landis, Dan Blacharski]
OR
Cloud Computing refers to applications and services that run on a distributed network
using virtualized resources and accessed by common Internet protocols and networking
standards [Source: Cloud computing Bible, Barrie Sosinsky]
Moving ahead, the word cloud makes reference to 2 concepts:
Abstraction
virtualization

Abstraction:
Cloud computing separates the system implementation details from users and developers
which invariably means

Applications run on physical systems that are not specified

Data stored in unknown locations called data centers

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System administration is outsourced i.e., infrastructure is managed by some third

parties

Users have ubiquitous access

Virtualization:
This refers to pooling and sharing resources in terms of systems and storage.

Systems and storage can be provisioned as needed from a centralized infrastructure,

Costs are assessed on a pay- for-use(metered) basis,

multi-tenancy is enabled,

Focus on agility with scalable resources.

Fig: Cloud computing hosting organizations applications

Source: Cloud Computing A Practical Approach, Antony T. Velte, et al.

From the above figure, technically cloud computing is a construct, where another company
hosts our application (or suite of applications, for that matter)and we pay for the service as per
the contract. This means that they handle the infrastructure (i.e., costs of servers, managing
software updates etc)and we access applications that actually reside on a computer other than
our computer or other internet connected devices
I only use my mobile phone to run Salesforce. All my analytics, all my customer data,
all my custom analytics are on the phone.- Marc Benoiff, chairman and CEO,
Salesforce.com
Cloud Computing: renting what we need

8.1.2 First Movers in Cloud

Many companies are delivering services from the cloud. Some of the examples include:

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Google: Google uses a private cloud for delivering many different kinds of services to the
users like email access, maps, web analytics so on and so forth
Microsoft: Microsoft uses SharePoint, an online service that allows for content and business
intelligence tools to be moved into cloud. Currently, all the office applications of Microsoft
are made available on cloud
Salesforce.com: They run all the customer applications on cloud, and its Force.com and
Vmforce.com products helps the developers by providing platforms to build customized cloud
services

8.1.3 Cloud Components

Fig: Components of cloud computing solution

Source: Cloud Computing A Practical Approach, Antony T. Velte, et al.

Cloud computing solution is made of several components as shown in the above figure.
Each element has a specific role and purpose in delivering cloud services
i. Client: Devices that the end users interact with to manage their information on the
cloud are called as clients. Clients are classified as follows

Mobile clients:
Mobile devices like PDAs, smartphones, laptops, iPhone come under mobile
clients
Mobile clients can connect to cloud and access applications from any location
Mobile clients have issues with respect to speed and security. Mobile clients
may not get optimized connections as they may not put tons and tons of
information into the database, so they can simply create an application and
access it

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When it comes to security, it is a two - sided coin, as, when the device is lost
all the information on device may be compromised, whereas on the other
hand, if the data is stored on the cloud and only a specific set of files are
accessed by the mobile client, then in that case the loss is limited only to that
set of files.

Thick clients:
Regular computer which uses a web browser like Firefox or Internet Explorer
to connect to cloud are considered as thick clients
Here applications are installed on the end users machines as there would be
some critical applications which the organizations want them to stay in
house and offload other applications
These clients are more vulnerable to attacks compared to thin clients
As the data is stored on the machines hard drive,if the thick client fails , all
the operating system along with other settings are lost and user must be
configured with new system

Thin clients:
Thin clients are computers that just display the information and do not have
internal hard drives, DVD-ROM, and thus depends on server to do all work.
If the clients needs to access cloud based services or is accessing virtualized
servers then thin clients is a good option

Among the three, thin clients are becoming increasing popular because of the following
factors:
Lower hardware costs: Thin clients are cheaper because they do not require much hardware
and also they last longer before they need to be upgraded or become obsolete
Lower IT costs: These are managed at the server and there are few points of failure
Security: It offers high level of security as data resides on the data center or on the cloud and
nothing is stored on the thin client. So the threat of physical breach is less
Less Power consumption: These are less expensive than thick clients and easy to maintain as
they use less energy
Ease of Repair and replacement: If thin client fails, it can be easily replaced
Less noise: Without a spinning hard drive, less heat is generated and quieter fans can be used
on the thin client.

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ii. Datacenter: Datacenter is the collection of servers where the application of the user
is housed. It could be a large room of servers somewhere in the organizations
building or could be servers lying on the other side of the world accessed through
internet(Usually called as virtual servers)

iii. Distributed Servers: This refers to a scenario where all the servers need not be
housed in same location rather they can be placed in geographically separate
locations. This give the service provider more flexibility in options and security. All
the geographically dispersed servers always work hand in hand

Example: Amazon has cloud solution in servers all over the world. That means if something
went wrong at one suite, the service would still be accessed through another site.

8.1.4 Cloud Types

Cloud Computing is best explained with the help of two distinct set of models

Source : http://blog.thehigheredcio.com/2011/02/22/cloud-deployment-models/

Service Models: This refers to specific kind of services that can be accessed using cloud
computing platform (IaaS, PaaS, SaaS)
Deployment Models: This refers to location and management of clouds infrastructure
(Private cloud, Public cloud, Community cloud, Hybrid cloud)
Service Models:
The success of implementation of cloud lies in choosing the right model that suits the
business needs and objectives. Various cloud service models are as follows:

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Enduser application is delivered as a service. Platform and

SaaS infrastructure is abstracted, and can deployed and managed with

less effort. Examples: Email, CRM, Virtual Desktop,
Communications, gaming

Application platform onto which custom applications and services

PaaS can be deployed. Can be built and deployed more inexpensively,

although services need to be supported and managed. Examples:
Database, Webserver, Development tools, Execution runtime

Physical infrastructure is abstracted to provide computing, storage,

IaaS and networking as a service, avoiding the expense and need for
dedicated systems. Examples: Virtual Machines, Servers, Network,
Storage

Source: Introduction top cloud computing, Dialogic, 2010

Software as a Service (SaaS) SaaS is the widespread technique for delivering the
technology. Here the ability to use and access an application or service which is hosted in the
cloud is purchased by the consumers i.e here a single instance of service runs on cloud and
multiple end users are serviced. Services and data are accessed via web browser of the
consumers. Services offered as SaaS include email system, Facebook, CRM, ERP, HRM,
accounting, content management, Payroll processing and the like
Today SaaS is offered by companies such as Google, Salesforce, Microsoft, Zoho, etc
This model provides benefits both to the customer as well as the provider in way as :
Customer need not shell out any investment in servers or software licenses
Provider enjoys benefits of lowered costs as only single application needs to be
hosted and maintained
Platform as a Service (PaaS) PaaS offers a complete platform for application, interface,
database development, storage, and testing. In other words it means that a development
environment is offered as a service upon which other higher levels of service(applications) is
built by the customers, but the applications runs on providers infrastructure
Example of PaaS: Client uses application server (Java, .Net framework) and Database server
(My sql, oracle to make their own applications to meet its specific needs
Benefits: This model provides benefits like
It helps to streamlining the development, maintenance and support of custom
applications
It helps in lowering IT costs(by creating web applications easily on computing
platform)and minimizing the need for hardware, software, and testing environments

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Infrastructure as a Service (IaaS) This cloud model allows the customers to utilize the
resources as a outsourced service which means that the operating systems, applications,
storage, and network connectivity are controlled by the consumers but not the cloud
infrastructure. Here the customer could deploy his own software on the infrastructure. The
customers are billed as per the usage, similar to electricity or utility billing
Examples include Amazon Web Services, Microsoft Azure, Go Grid, 3 Tera etc.
Benefits: Some of the benefits would be
This cloud model has full scalability
In this model, multiple users or customers can access on same hardware
Deployment Models:

The following are four deployment models each with specific characteristics supporting the
users and services of cloud:
Fig: Cloud Computing Deployment Models
Used for single organization; Shared by several organizations;
can be internally or externally typically externally hosted
hosted

Private Community
Cloud Cloud

Hybrid Public
Composition of two or more
Cloud Cloud Provisioned for open use
for genral public by a
clouds that remain unique particular organization who
entities but intended to cater also hosts the service
to one single organization

Source: http://www.appcore.com/types-cloud-computing-private-public-hybrid-clouds/

Private Cloud
This is a cloud infrastructure which is deployed, maintained, and operated exclusively
for an organization. This offers high degree of control on performance, reliability and
security.
Variations to private cloud: Operations may be in-house or can be outsourced to
third-parties

Internally hosted private cloud

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This is also known as on premise private cloud where clouds are managed
within ones own data center
It offers more standardized process and protection but limited in terms of
size and scalability
Capital and operational costs are incurred to manage the physical resources
Suitable for applications that require complete control on infrastructure and
security

Externally hosted private cloud
This is cloud type where cloud is hosted by external cloud provider, who
facilitates exclusive cloud environment with full guarantee of privacy
Suitable for enterprises which do not prefer sharing of physical resources
rather prefer exclusiveness

Public Cloud
On commercial basis, the cloud service provider sells the cloud infrastructure to the
general public or large industry group
All the customers on public cloud share the same infrastructure pool with limited and
variations in configuration, security protections and availability.
As the customer requirements of cloud services vary, the quality of service provided
also varies where the service providers have to be flexible with regards to service
delivery. Thus, the quality of service provided mainly depends on Service Level
Agreement, which is a contract specifying consumers requirements and service
providers commitment to them
This model entices consumers because it enables them to use the services
(deployment, maintenance etc.) of the cloud with a little financial outlay compared to
other deployment models because the cost is spread among multiple users. So it can
be called as Pay-as-you-go model
In this model, the risk is shifted to infrastructure provider(like costs etc)
Effectiveness of the service may be hampered in this model as the customer lacks
control on the data , network and security settings
Generally, public cloud providers like Amazon AWS, Microsoft and Google, they
own and operate the infrastructure and offer access over the Internet.
Advantages:

Data availability and continuous uptime

24/7 technical expertise

On demand scalability

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Easy and inexpensive setup

No wasted resources
Disadvantages : Data Security, privacy, reliability are some of the disadvantages

Community Cloud
It can be considered as an extended variant of public cloud model.
It has all the features of public cloud model and features like security, regulatory
compliance associated with private cloud as a topping.
It is shared among multiple organizations with similar shared concerns like mission,
security requirements, policy , compliance considerations etc
This model can be managed in - house or by third parties
Some of the pros of the model includes:

Cost of setting up community cloud is cheaper than private cloud as costs are shared
among multiple customers

Here the service provider would be impartial to any third party as all the clients are
bound by contracts
Some of the cons of this model are :

This model costs higher than the public cloud,

fixed amount of bandwidth and data storage are shared among all the community
members

Hybrid Cloud
Hybrid Cloud is a composition of two or more clouds bound together by standardized
technology that allows data and application portability
Hybrid cloud services are explicitly intended to one specific organization
Hybrid cloud is typically offered in one of the two ways:

A vendor has a private cloud and forms a partnership with a public cloud provider,
or

A public cloud provider forms a partnership with a vendor that provides private
cloud platforms
In hybrid cloud, an organization provides and manages some resources inhouse and
some out-house.
For example, organizations that have their human resource (HR) and customer
relationship management (CRM) data in a public cloud like Saleforces.com but have
confidential data in their own private cloud [95].
Advantages of hybrid cloud include:

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This model provides the benefits of scalability and cost-effectiveness

Helps optimize the infrastructure spending during different stages of the application
lifecycle. Public clouds can be tapped for development and testing while private
clouds can be used for production

This model helps organizations to reduces capital expenses
However, on the flip side of the coin there are some risks associated with security
policies and malicious attacks

8.1.5 Cloud Computing Challenges

Following are some of the challenges which if given due care and attention enables
smooth delivering of cloud services.
Security & Privacy: There is a great level of uncertainty surrounding cloud computing
relating to storage, security of data and monitoring the use of cloud by service providers.
One of the major challenges organizations face is to protect the privacy of individuals
information, and it is not clear (i.e., not yet established) whether the cloud computing
model provides adequate protection of such information, These challenges can be
addressed, for example by storing information internal to the organization but allowing it
to be used in the cloud, For this to occur security mechanisms need to be robust.
Lack of Standards: Clouds have documented interfaces; however, no standards are
associated with these, and thus it is unlikely that most clouds will be interoperable. To
resolve this issue Open Cloud Consortium is working on cloud computing standards and
practices.

Continuously Evolving: As user requirements are continuously evolving so as the

requirements for interfaces, networking and storage. This emphasize on a point that
public cloud doesnt remain static and it is evolving continuously

Interoperability: Many companies have made considerable progress toward

standardizing their processes, data, and systems through implementation of ERPs. This
process has been enabled by scalable infrastructures to create single instances, or highly
integrated connections between instances, to manage the consistency of master and
transaction data and produce reliable consolidated information. Even with these improved
platforms, the speed at which businesses change may still outpace the ability of IT
organizations to respond to these changes. To handle this challenge, SaaS applications
delivered through the cloud provide a low-capital, fast-deployment option.

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Economic value: The growth of cloud computing is attributed to the return on investment
it accrues. For any organization going for cloud services need to balance the benefits
associated with it both in long terms and short terms. Hidden costs could include support,
disaster recovery, application modification, and data loss insurance. To resolve these
issues there may be threshold values whereby consolidating investments or combining
cloud services makes sense. There is a risk that the business transition costs from one
solution to another may change the cost and benefit equation, and hence the solution that
should be employed
Integration: Sometimes it is difficult for the organizations to integrate the existing cloud
applications with the existing enterprise applications and data structures

8.1.6 Differences between grid Computing, Cluster Computing and Cloud Computing

Cluster Computing: This is a type of computing architecture where several nodes are
connected and made to run as single entity. Here, nodes are connected through local area
networks (LAN).
Reasons for deploying clusters instead of single computer are:

Performance: Real time applications requires high computation power in terms of
response time, memory, and throughput. Thus, cluster computing is one such
computing model available which uses parallel programming to optimize the
performance of the system.

Fault Tolerance: Fault tolerance refers to the ability of a system to operate even in the
presence of a fault. Clusters help in overcoming the fault as clusters are the replicas of
components and fault in one node will only affect clusters power but not its
availability.

Grid Computing: Grid Computing is more concerned about sharing, collecting, hosting and
providing services to various clients. Formally, it can be explained as segregation of resources
from multiple sites that can be used to solve a problem instead of depending on one single
resource (or computer) for processing.
Example: We use electricity for running our electronic appliances at home without being
concerned about the fact where the electricity is coming and how it is being generated

Cloud Computing: Cloud Computing as discussed above is the computing model to offer
computing, storage and Software as a service(SaaS) through large pool of dynamically
scalable, and virtual resources

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Following are some of the differences between cluster computing, grid computing, cloud
computing
Cluster Computing Grid Computing Cloud Computing
Characteristics: Characteristics: Characteristics:
1. Systems are tightly 1. Systems are loosely 1. Computing
coupled coupled infrastructure is
2. Single System image 2. Systems possess lot of dynamic
diversity and are of 2. Self-service
dynamic nature based usage
model
3. Consumption
based billing

A bunch of similar
Here the computers are not Here computers need not
computers are connected physically connected in the same be in same physical
locally in the same physical
location but operate location
location, to operate as a independently. Each computer on
single computer the grid is considered as a distinct
computer
All the computers in the Here, all the computers can have The memory, storage
cluster have same hardware different hardware and OS device and
and OS Network communication
run on same operating
systems as that of basic
physical cloud units.

More than 2 computers are For effective utilization of This allows multiple
connected to solve a single resources, a large project is smaller applications to
problem divided among multiple run at the same time
computers
Areas where cluster Areas where grid computing can Areas of cloud
computing can be used: be used: Computing:
1. Educational resources 1.Predictive Modeling and 1.Banking
2.Commercial sectors for Simulations 2.Insurance
industrial promotion 2.Engineering Design and 3.Weather Forecasting
3.Medical research Automation 4.Space Exploration
3.Energy Resources Exploration 5.Software as a service
4.Medical, Military and Basic 6.Platform as a service
Research 7.Infrastructure- as -a-
5.Visualization Service
Limited Service negotiation Service Level Agreement (SLA) SLA based service
based service negotiation negotiation

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8.2 Cloud Computing in Banking

A research carried out by IDC estimates that cloud software market would be of worth more
than $100 million by 2018, which is approximately 5 times faster than the traditional
packaged software. This high estimate depicts the rapid advancement in cloud based
technologies throughout the business world. So it is becoming crystal clear that cloud
computing is proliferating into every vertical in the market across varied sectors that
companies operate in the digital economy, and banking is no exception. Following are some
of the challenges that banks face today:

Capital Inadequacy: capital inadequacy affects the banks bottom lines

Unpredictable demands: Customers are expecting more personalized offerings and
services

Changing Business models: Today, there is a transformation from product centric
business to customer centric business

Enhanced regulations: In todays world, regulatory compliance has become a major
focus

Increasing social and government pressure: Today Government with an initiative
called financial inclusion pressurizing banks to focus on unbanked segments and
bring all the people of the country under the umbrella of banking

To maximize profitability and to face the growing competition, now banks are looking at
investments in IT for transforming business model and respond to this customer driven
environment.
As per the statistics given by leading market research firm Gartner, it is estimated that by
2016, nearly 60% of the global banks will use the services of cloud to process the
transactions. Today, however most of the banks are trying to unleash their value by adopting
cloud computing strategies for their core operations.
By taking the advantage of cloud computing, banks would be better positioned to respond to
economic turbulences, interconnected global financial systems and increase in demand of
customer needs.
Cloud computing is tremendously attractive as it enables a fundamental shift from capital
intensive focus to a flexible operational management model.

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8.2.1 Benefits of cloud computing to financial firms

Cloud computing helps financial institutions to optimize their performance in a number of

ways:
Cost-saving and Usage based billing
Cloud computing would help the financial institutions to reduce operational costs thereby
reducing the initial outlay. Financial institutions need not invest in new infrastructure
(hardware & software). In addition, this strategy helps banks to follow pay-as-you-go
payment approach where the financial institution can select a service of their choice and make
payments accordingly as per the contract.
Business Continuity
As we know, with cloud computing, the sole responsibility of managing the technology lies
with the service provider thereby helping financial firms to achieve higher level of data
protection, fault tolerance, disaster recovery and management. On the other side, cloud
computing provides high level of redundancy and back-up at lower price when compared to
traditional managed solutions.
Business Agility and Focus
To respond efficiently to the unpredictable demands of the customers, financial institutions
should have shorter product development life cycles. This is facilitated by cloud computing
technology as cloud based operating models offers flexibility, on demand service and less
infrastructure investments. Thus, Cloud computing helps organizations to move their non-
critical services to the cloud like maintenance, software patches etc, also allows new product
development without huge initial capital outlay so that firms can stay focused on their
business of financial services rather than IT and stay comptetive in the industry
Green IT
Green IT is a major cause compelling organization to move towards cloud computing. As the
disadvantage of setting up a physical infrastructure comes in with high energy consumption
and carbon footprint, nowadays organizations are trying to overcome this problem by
transferring their services to virtual environment. This is helping organizations to have more
efficient utilization of computing power and reduced waiting times.

8.2.2 Areas of banking for cloud computing implementation

Following are the areas where banks can take advantage from cloud computing:

Analytics: As real time huge volumes of data is easily accessible using cloud , it is necessary
for the banks to integrate customer data across banking platforms and to glean insights.

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Collaboration: Adopting cloud technology across distributed branches enable employees to

access trading and banking systems in a highly secured manner.
Desktop and devices: Greater remote flexibility and scalability is ensured through
centralized management of desktops. Thus, this centralization is achieved by deploying
private cloud enabling banking employees to access the data and applications as and when
needed.
Development and testing: Cloud computing also increases the agility in development and
testing as it help banks development teams to quickly and easily create virtual environments
Industry Applications: Cloud computing allows payment providers to standardize and
modernize transaction processing systems
Infrastructure storage: Deploying cloud infrastructure also provides storage scalable
solutions to ensure that demands of trading and analytics processes are well maintained
Managed backup: Cloud computing helps banks to back up their critical business data for
the unforeseen events ensuring effective disaster management

8.2.3 Challenges banks face in moving to the cloud

As the saying goes, every coin has two sides, banks also face some challenges when
implementing cloud computing. Following are the primary challenges that bank need to
address:
Security: Major challenge that banks face is that the security breach, as confidentiality and
security of financial data and customer data along with mission critical applications is of
utmost importance
Regulatory and compliance: Banks must have a clear understanding of where their data
resides in the cloud because many banking regulators require that their data not to be
intermixed with other data, such as databases or on other shared servers and need all their
customers financial data to stay in their home country.
Reliability: While implementing cloud, banks majorly face challenges in availability of data
in case of natural disasters and unpredictable events. So, to ensure reliability of data banks
need to have stringent Service level agreements (SLAs) in place with all scenarios and
remedies that the provider has to cater.
Cloud Management: Most of the banks outsource their cloud services to several providers
which requires banks to have and handle multiple security systems as it is needed for the
banks to keep a check on how various parts of their businesses can communicate safely.
Thus, this challenge of using different technology infrastructure with a mix of several cloud
platforms compels banks to develop fully -fledged cloud management platforms. These cloud

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management platforms are necessary for banks to ensure that they fully reap the benefits of
cost savings and flexibility provided by cloud computing
To address these challenges, financial institutions must choose a right service model, right
deployment and operating models. In the initial phases of cloud computing implementation,
banks are expected to own and operate the cloud themselves. During these times, service
providers take the ownership and control of cloud infrastructure. As cloud computing
matures, more rigorous controls become available to the service providers
Following figure depicts what are the areas of banking that would be suitable for cloud
adoptions and their propensity
Delivery Channels
Client Sales & servicing

Enterprise Resource Planning (ERP)

Customer Analytics and CRM
Enterprise Content Management
Core Business Functional Areas
Retail banking Corporate Banking Investment Banking

Corporate Functions
Payments Asset and Wealth Funds Management
Management
Treasury Reconciliation Collections
Enterprise Data
IT Development
Application Infrastructure

HIGH MEDIUM LOW

Source: Cloud Computing, Capgemini, 2011

Following case study shows how cloud services are helping banks in driving sales and
profitability:
A mortgage company launched a cloud based integrated collaboration solution for mortgage,
so that it provides more personalization through cloud services where customers can apply
and complete loans electronically, instead of going to branch and going through a tedious
traditional approach. This solution helped the company to realize to benefits that are improved
customer satisfaction and reduced loan application processing times (from 7 days to 24
hours). It also helped to improve loan process time thus providing the company competitive
advantage. As per the numbers, the solution contributed to thirty-four percent increase in loan
volume, reduced errors on mortgage

Recently, some of the banks have started adopting cloud computing in their services:

De Nederlandsche Bank uses public cloud of Amazon Web Services(AWS) for
storage and management of all levels of data

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Recently, Barclays partnered with Access Pay to implement cloud based contingency
services for corporate. This was a strategic move for risk mitigation

ANZ have signed an agreement with IBM to access their platform and infrastructure
and develop their cloud services

TCS core banking solution, Bancs provides cloud services that helps the rural banks and
cooperative banks to go online. This is possibly the first cloud computing example in India

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Summary
Now-a-days, cloud computing has become a buzzword everywhere. Cloud
Computing refers to applications and services that run on a distributed network
using virtualized resources and accessed by common Internet protocols and
networking standards
Cloud refers to two concepts:

Abstraction : Cloud computing separates the system implementation details from
users and developers

Virtualization: This refers to pooling and sharing resources in terms of systems and
storage.
Cloud computing solution is made of several components:

Client: Devices that the end users interact with to manage their information on the
cloud are called as clients

Datacenter: Datacenter is the collection of servers where the application of the user
is housed

Distributed Servers: This refers to a scenario where all the servers need not be
housed in same location rather they can be placed in geographically separate
locations
Cloud Computing is best explained with the help of two distinct set of models
Service Models: This refers to specific kind of services that can be accessed using
cloud computing platform(IaaS, PaaS, SaaS)
Deployment Models: This refers to location and management of clouds
infrastructure (Private cloud, Public cloud, Community cloud, Hybrid cloud)
Software as a Service: End-user application is delivered as a service. Platform and
infrastructure is abstracted
Platform as a Service: Application platform onto which custom applications and
services can be deployed.
Infrastructure as a Service: Physical infrastructure is abstracted to provide
computing, storage, and networking as a service, avoiding the expense and need for
dedicated systems
Private Cloud: Used for single organization; can be internally or externally hosted
Public Cloud: Provisioned for open use for genral public by a particular
organization who also hosts the service
Community Cloud: Shared by several organizations; typically externally hosted

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Certificate in Digital Banking TCS Business Domain Academy

Hybrid Cloud: Composition of two or more clouds that remain unique entities but
intended to cater to one single organization
Some of the challenges of cloud computing include: Security and Privacy, Lack of
standards, Continuously evolving, Interoperability, economic value, integration
Cluster Computing: This is a type of computing architecture where several nodes
are connected and made to run as single entity. Here, nodes are connected through
local area networks (LAN).
Grid Computing: It refers to segregation of resources from multiple sites that can be
used to solve a problem instead of depending on one single resource (or computer) for
processing.
Benefits of cloud computing to financial firms include: Cost-saving and Usage based
billing, Business Continuity, business agility and focus, green IT
Areas of banking for cloud computing implementation include: Analytics,
collaboration, desktop & devices, development & testing, industry applications,
infrastructure storage, managed backup
Security, Regulatory and compliance, reliability, cloud management are some of
challenges that banks face in moving to the cloud
Recently, many banks started adopting cloud computing in their services like
Barclays banks, ANZ banks etc.
TCS core banking solution, Bancs provides cloud services that helps the rural banks
and cooperative banks to go online. This is possibly the first cloud computing
example in India

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