The cloud market and talent pool has matured: Maiya

Finacle is a digital banking suite of solutions created by EdgeVerve Systems, a wholly-owned subsidiary of Infosys. Banks in more than 100 countries use Finacle’s software.

The banking and financial services industry has been increasingly moving from the traditional on-premise software that was deployed on banks' IT infrastructure—to cloud, where banks use the infrastructure and additional services managed by a third party.

In this interview with EnterpriseStory, Rajashekhara V Maiya, Global Head of Business Consulting and Product Strategy, Finacle, describes the reasons banks are choosing cloud over on-premise solutions, and the maturing of the cloud services industry.

(Edited excerpts)

EnterpriseStory: What are the criteria banks look for while choosing between an on-premise solution and a cloud offering?

Rajshekhar Maiya: There are multiple angles to it, and it varies from region to region, and from bank to bank within the region.

If you look at the large banks, they are still not looking to move to the cloud in a comprehensive way from an on-premise (solution). This because the data is too heavy, (and) they have too many customers, too many branches, and too many products being managed.

While cloud makes sense for them, it takes some time, and they don't want any disruptions in the whole process. Hence, they're taking a progressive modernisation towards the cloud. That means banks are moving towards the cloud module by module, (and) component by component, so that on a given roadmap, they will ultimately move their applications to the cloud.

From the perspective of the newer banks, which are ready with digital-only offerings from Day 1, they want to be launching operations on the cloud. Because, it provides them scale, cost-effectiveness, and it also provides them in terms of the agility required to respond to market changes in a much faster way.

Even though some of the banks would like to move towards the cloud, they may not have regulatory permissions for it. In most countries, the regulators have asked banks to move their data to the cloud only if the cloud-services provider and cloud database resides within the geographic jurisdiction of the country.

Cloud requires bank applications to also be cloud native. The real advantage comes into play when all of a bank's applications from its solutions landscape and IT landscape are on the cloud, and are cloud agnostic.

This means a bank cannot put a legacy application on cloud, and expect to derive the benefits of cost-effectiveness, elasticity, provisioning and agility.

EnterpriseStory: So, what is the actual demand like in the cloud market?

Rajshekhar Maiya: In the financial services industry, the adoption of cloud is increasing. We expect it to pick up in a much bigger way. Since the pandemic began, there has been a lot of demand and traction around cloud conversations, which has to do with three things.

First and foremost, the cloud industry itself has matured. Seven years ago, when we started (offering cloud solutions), there were hardly one or two cloud vendors that had the scale to offer the cloud operations. But today, we have many hyperscalers (Amazon Web Services, Google Cloud, Oracle Cloud, IBM Cloud, Microsoft Azure, etc).

The cloud industry itself has matured, now with a lot more technology landscape and more fine-tuned offerings. There is a chance for customers to pick and choose which hyperscaler they want to run their applications and operations on.

The second reason is from a cost-effective perspective. In the past seven years, the cost of computing has come down almost 30 percent every year. The cost of networking has come down 33 percent every year, and the cost of storage has come down around 38 percent every year.

So, a combination of cost reductions across communication costs, networking costs, storage cost and the computing costs are making sure that the cloud is an effective way of moving to a more cost-efficient environment. This is one of the important considerations for banks.

The third reason is, seven years ago, we couldn't find the cloud-enabled skillset or talent. Now, we see a lot of cloud-certified talent. Cloud-certified skillsets are available in the market globally.

EnterpriseStory: What percentage of Finacle's customers have moved to the cloud?

Rajshekhar Maiya: If I look at the (customer) pursuits we are managing right now that will culminate into businesses in the next 24 months, there is a significant shift of demand for cloud.

More than 60 percent of the pursuits and 60 percent of Finacle's prospective customers look at cloud as the first preference.

EnterpriseStory: How does Finacle align the requirements of different banks in different geographies?

Rajshekhar Maiya: Our solution has been running across all six continents, and across 100 countries. A lot of requirements regionally and locally go into the product, and make it the best global product with the best practices collected from across the globe.

Finacle's architecture is such that there is a base product, a localisation layer, and a customisation layer. So, banks should be able to get their local requirements in the localisation layer. If there are specific bank requirements, that will come for that specific bank in the customisation layer, so that it can retain that uniqueness and novelty of its service.