Why urban cooperative banks are turning to cloud solutions

Introduction

Technology advancements have a direct impact on customer experience enhancements. The banking industry must keep up with technological and regulatory advancements while maintaining a modern customer experience. The best cloud-based banking solutions are required not only to control legacy costs but also to maintain a competitive advantage.

In India, UCBs account for 60 percent of the total banking business and are under immense pressure to provide ever more efficient services. RBI closely monitors UCB's improved performance, primarily due to its framework upgrade geared towards strengthening UCB's financials.

To comprehend the need to modernise systems and processes, it is essential to keep in mind that customer expectations are evolving. Customers anticipate prompt banking and payment options, expedited service, and reduced prices. All of these are aspects of traditional banking, but they also indicate that banks must adopt new technologies to remain competitive in a world that is becoming increasingly digital.

By identifying fraud and enhancing credit risk management, data analytics is a potent tool that can be used to improve customer service. Banks are increasingly turning to cloud solutions due to the flexibility, scalability, and cost savings that come with an online model. In addition, they favour a robust IT infrastructure having real-time access to data rather than storing it on hard drives or servers in their own offices.

Urban cooperative banks are moving to cloud-based banking solutions to thrive and transform. Cloud computing is the future of banking because it can help urban cooperative banks deliver services more efficiently, serve customers more effectively, and save time by moving data across multiple locations.

Recent RBI guidelines have a significant impact on the UCB market. The Reserve Bank of India (RBI) has mandated certain technological guidelines for upgrading the IT infrastructure of both large and small UCBs. Larger UCBs are already providing smaller UCBs with IT infrastructure support.

In the past, banks were hesitant to deploy core banking solution (CBS) on a software-as-a-service (SaaS) basis. Now, however, smaller UCBs are approaching larger UCBs to deploy core banking solutions on a monthly/annual subscription basis. The primary reason why many small banks choose to implement the best cloud solution is because it includes hiring staff and consultants, establishing infrastructure, etc. In addition, they may not have the time or knowledge to construct a CBS from scratch. Deploying cloud services from larger UCBs is therefore the simpler option.

RBI also mandates a robust cloud security framework. UCBs must plan for IT cyber security in the same manner as commercial banks by enhancing protection, detection, and proactive incident response in accordance with RBI regulations. This can be accomplished by establishing a centralised board-level decision-making body that monitors all aspects of cybersecurity across the organisation. In addition, banks are required to promptly report to RBI any cyber security breach or threat.

This is consistent with the Financial Sector Information Sharing and Analysis Centre (FS-ISAC) and National Cyber Coordination Centre (NCCC), which work closely with RBI to ensure that cyber-attacks do not affect financial system operations.

One of the most attractive aspects of cloud computing for UCBs is its cost effectiveness. The UCBs can take advantage of traditional physical data centres at a lower cost, while also enjoying the flexibility, scalability, and availability of cloud computing.

Adoption of technology has become a leading priority for financial institutions. To ensure efficient and effective banking operations, the Reserve Bank of India (RBI) has mandated that all banks adopt the latest technologies.

Consequently, a task force has been established under the leadership of the RBI's deputy governor to study, develop, and recommend guidelines for the adoption of technology-enabling solutions to facilitate digital payments and enhance customer experience.

UCBs also need to implement a robust banking IT ecosystem. This includes creating a centralized financial management system that links all branches and subsidiaries, as well as providing critical business intelligence tools and analytics capabilities to make informed decisions on behalf of their customers.

In addition, it is important for UCBs to have a strong IT security architecture in place that protects critical information from cyber attackers. Cloud computing adoption ensures growth by opening new revenue streams, scalability of operations, product innovation to elevate customer experience, mitigates business risks and optimises banking applications performance.

Adoption of a new set of IT operations introduces a new set of difficulties. Innovation entails the introduction of novel practises and procedures that must be questioned in order to produce best practises. Adoption of the cloud is also accompanied by cyber security complexities, updated regulatory compliances, migration issues, and network bottlenecks.

The Tata Communications IZO™ Financial Cloud enables banks to leverage technology to engage with customers, build a stronger brand, drive digital adoption and increase engagement levels through multiple touchpoints across channels. IZO™ provides a platform to help UCBs integrate their current core banking systems with their digital capabilities as well as build new applications for both internal and external customers. Tata Communications also offers a suite of integrated consulting services that assist UCBs in leveraging this platform to meet their business goals.

FAQs

Which type of cloud do banks use?

As their audience is vast and diverse, banks employ a hybrid approach. As they develop and implement new features, banks require the ability to migrate resources between on-premises, private cloud, and public cloud infrastructures. It is ideal for banks to adopt a hybrid cloud strategy in order to effectively manage customer data, security, and experience.

Why banks are moving to the cloud?

Cloud computing is the future of banking because it can help urban cooperative banks provide services more efficiently, serve customers better, and save time by transferring data between multiple locations.

How secure is cloud banking?

Cloud banking has become very popular over the past few years due to its convenience and security benefits. Cloud baking is the most secure and efficient technology for the banking industry to adopt. Cloud security safeguards your data, applications, and systems.