Cloud Computing for Core Banking System
Fitting Cloud Computing for Core Banking Business
Core banking system(CBS) is the collective pack of Trade finance, Treasure, Credit Card, Mutual Funds, Stocks, Bonds, External System, Payment gateways, SWIFT, Shared ATM network, World Wide credit card networks and World Wide ATM networks plus. CBSs are the back bone of product and services for any bank or financial institutions. To achieve the entire banking enterprises CBS should be highly robust, automated, flexible, Regulations and compliance (Basel ll norms), scalable, highly secured, Responsible vendors and at the end of day general ledger should be perfectly balanced (i.e. Financial Calculations).
Indeed, there are several benefits Cloud computing over a traditional CBS. It makes easy to do cross company reporting. It has ability to run reports that cross companies for multi-entity environments. Intercompany accounting for multiple entities will be improved. It has ability to do inter-branch transaction without logging in and out of each entity to record the entry, so branch reconciliation will be easier. Interfaces with other systems will be boost up, which will be going to increase business automation. It leads to higher utilization of the computing power and lower consumption of resources from idling due to virtualization environment that helps to protect environment effectively. It requires lesser resource from bank’s IT Department as well as other IT firms, which is an unethical fact about cloud computing.
Data integrity, control issues, regulations, Security and risk are the biggest concern about cloud computing for banking business scenario. According to survey of banking executives conducted by independent research firm TechMarketView in conjunction with core banking systems provider Temenos. 44 per cent of bank executives see the lack of data security as a significant barrier to the adoption of cloud computing. Furthermore, only 15 per cent of respondents are currently running cloud applications. The survey showed that 80 per cent of respondents could not name a leader of cloud computing in the banking sector.
For many years banks are providing data security and applying strict regulatory act for each and every customer’s transactions information. There are genuine reasons for banks to retain internal security around their architecture, data and applications. There is an increased risk that may be used for purpose not originally specified, including data search and profiling as data is stored outside of company boundary so Cloud computing raises concerns for data security, integrity and control issues. It has arises the concern about Implication of data privacy regulations and laws. In a cloud data may be transferred and stored across different international locations. Various governments, especially those in the European Union (EU), have privacy regulations that prohibit transmission of some type of personal data outside the EU. Additionally, the legal jurisdiction of the data is often defined by the jurisdiction of the hosting country, which may have legal implications.
In cloud computing various different database are going to be clubbed into one cloud. So, if a cyber criminal or hackers comes into one cloud, they are going to have access not to one client’s database but hundreds. It’s quite difficult to stop the cyber crime because its growing parallel with the same velocity as technology is growing.
Access of internet/WAN is another critical concern, especially for the peak hour of business. Cost of bandwidth and other services will be higher which depends on type of application and data intensity.
Disaster recovery and system failure is again an important concern because in cloud computing we will have “Single-Point-Of-Failure” and will effect multiple systems at same time.
Core banking systems are very complicated by business point of view, it varies nation to nation. There are lots of flavour of banking business like Islamic banking, Asian, American, European, Chinese, African and lots more. That is mostly because of their regulations and laws. For example, in fund transfer itself has zonal clearing system like RTGS, SWIFT, FEDWIRE, CITAD, NFT and so on, which require a flexible system and prospects for further customization and upgrade. Cloud computing is narrowing down the aspects of customization and upgrade of application because of predefined functionalities through standard interfaces.
There are more than 80 players are came into cloud including major players like IBM, Salesforce, Amazon, Oracle, Microsoft, Google, SAP.
Polaris software lab is offering cloud computing solutions for rural and co-operative sector banks and going to build data center in Bangalore.
TCS has already started “Bank-In-A-Box” solution, targeting smaller cooperative and rural banks.
Amazon’s Elastic Compute Cloud (EC2) and their computing on demand.
Amazon AWS, Microsoft Azure and Google App engine that provide Cloud Computing Infrastructure as public cloud.
Oracle, HP, and IBM are moving aggressively to keep up with the needs of global banking and financial institutions eager to lower their costs of infrastructure and devote more of their IT time and money toward higher-value initiatives.
Cloud computing is a very emerging technology trend and key IT players are providing several kind of cloud like pivot, private, public and storm clouds which meets the basic requirement of Core Banking Solutions(CBSs) ,especially for SMEs. Most of the banks are already using private clouds for credit card and money transfer via SWIFT. Security is going to be improved day by day because many financial institutions and banks will have the central cloud area. It is still new technology and progressing rapidly which require redefining the regulation system and then it’s going to rock in space.