Why Cloud Computing for Banks?

Cloud computing can help financial institutions improve performance in a number of ways.

Cost Savings and Usage-based Billing

With cloud computing, financial institutions can turn a large up-front capital expenditure into a smaller, ongoing operational cost. There is no need for heavy investments in new hardware and software. In addition, the unique nature of cloud computing allows financial institutions to pick and choose the services required on a pay-as-you-go basis.

Business Continuity

With cloud computing, the provider is responsible for managing the technology. Financial firms can gain a higher level of data protection, fault tolerance, and disaster recovery. Cloud computing also provides a high level of redundancy and back-up at lower price than traditional managed solutions.

Business Agility and Focus

The flexibility of cloud-based operating models lets financial institutions experience shorter development cycles for new products. This supports a faster and more efficient response to the needs of banking customers. Since the cloud is available on-demand, less infrastructure investments are required, saving initial set-up time. Cloud computing also allows new product development to move forward without capital investment. Cloud computing also allows businesses to move non-critical services to the cloud, including software patches, maintenance, and other computing issues. As a result, firms can focus more on the business of financial services, not IT.

Green IT

Organizations can use cloud computing to transfer their services to a virtual environment that reduces the energy consumption and carbon footprint that comes from setting up a physical infrastructure. It also leads to more efficient utilization of computing power and less idle time.

Cloud service models offer financial institutions the option to move from a capitalintensive approach to a more flexible business model that lowers operational costs.

The key to success lies in selecting the right cloud services model to match business needs. In this section we review various models for cloud computing services, operations and deployment.

Cloud Service Models

Business Process-as-a-Service (BPaaS). The cloud is used for standard business processes such as billing, payroll, or human resources. BPaaS combines all the other service models with process expertise.

Software-as-a-Service (SaaS). A cloud service provider houses the business software and related data, and users access the software and data via their web browser. Types of software that can be delivered this way include accounting, customer relationship management, enterprise resource planning, invoicing, human resource management, content management, and service desk management.

Platform-as-a-Service (PaaS). A cloud service provider offers a complete platform for application, interface, and database development, storage, and testing. This allows businesses to streamline the development, maintenance and support of custom applications, lowering IT costs and minimizing the need for hardware, software, and hosting environments.

Infrastructure-as-a-Service (IaaS). Rather than purchasing servers, software, data center space or network equipment, this cloud model allows businesses to buy those resources as a fully outsourced service.

Cloud Deployment Models

There are three ways service providers most commonly deploy clouds:

Private clouds. The cloud infrastructure is operated solely for a specific company. It may be managed by the company or a third party and may exist on or off the premises. This is the most secure of all cloud options.

Public clouds. The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization that sells cloud services.

Hybrid clouds. The cloud infrastructure is composed of two or more clouds (private or public) that remain unique entities but are linked in order to provide services.

Cloud Operating Models

The third aspect of choosing the right cloud services delivery model is determining the appropriate operating model for the required mix of resources and assets.

We have identified three operating models for cloud services:

Staff augmentation. Financial firms can gain cloud expertise by hiring people with the right skill sets from service vendors. The additional staff can be housed in the firm’s existing offshore captive center. This operating model allows for flexibility and lets firms choose the best resource for each specific requirement.

Virtual captives. Virtual captives have a dedicated pool of resources or centers to help with cloud operations and meet demand. This operating model is a good alternative to a complete outsourcing approach.

Outsourcing vendors. This approach uses offshore centers, facilities, and people from a third party vendor to handle cloud operations. The model combines resources and investments to cater to cloud services for multiple banks.

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