The Reserve Bank of India Governor Shaktikanta Das in its monetary policy announcement today announced some additional measures, of which a significant development is that the RBI is set to establish a cloud facility for the financial sector for enhanced data security.
Banks and financial entities are maintaining an ever-increasing volume of data. Many of them are utilising various public and private cloud facilities for this purpose.
“The Reserve Bank is working on establishing a cloud facility for the financial sector in India. The proposed facility would enhance the security, integrity and privacy of financial sector data. It is also expected to facilitate scalability and business continuity,” the Reserve Bank of India Governor Shaktikanta Das said on Friday.
He added that the cloud facility is intended to be rolled out in a calibrated fashion over the medium term.
“The cloud facility will be set up and initially operated by Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI. Eventually, the cloud facility will be transferred to a separate entity owned by the financial sector participants,” the RBI said in a press release.
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The Reserve Bank deputy governor T Rabi Sankar in a press conference elaborated on the purpose behind setting up the cloud facility.
“Data storage, data processing efficiently is a major issue. Currently, data is sometimes kept in-house and sometimes on other clouds, so we thought the basic driver behind this is to provide a structured, scalable data storage and data processing facility, which is why the cloud has been thought about. The idea is to ensure security, integrity and safety of data, it has nothing to do with data sovereignty,” he said.
He further added that all services provided will be data led, whether it is infrastructure-as-a-service, or whether it will be platforms which will be provided or softwares which will be provided.
“This provides a lot of efficiency in terms of scale because for each one to maintain their database requires alot of investments, skills, etc which this cloud is expected to provide,” the Apex bank deputy governor added.
He asserted that going forward, this cloud will be owned by financial sector entities.
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Sanjay Gupta, Partner, Consulting, Deloitte India asserted that this move by RBI will significantly boost cloud adoption within banks and financial institutions in India.
“This move not only provides the industry with clear regulatory guidelines on cloud usage but also addresses their primary concern regarding data security. While banks and financial institutions acknowledge the benefits of cloud technology in their digital transformation journey, concerns related to cybersecurity, data localization, and cost transparency have been primary inhibitors. The RBI’s cloud initiative is expected to address these issues comprehensively. With this announcement, it is anticipated that banks and financial institutions will now prioritize the development of a cloud operating model within their IT setup,” he said.
Ankur Tripathi, Chief Information Officer, AU Small Finance Bank believes that RBI’s recent announcement on Cloud Facility is a commendable forward-looking initiative.
“Banks are currently modernizing their technology infrastructure, leveraging the cloud to enhance agility, scalability, and performance. This move is expected to empower the entire banking ecosystem to utilize next-generation tools and technologies, including AI, platform automation, and DevSecOps,” he said.
He added that the aim is to provide an enhanced customer experience, ensure resiliency in technology infrastructure, and reduce the risk of cyber frauds.
Shilpa Mankar Ahluwalia, Partner, Head-Fintech, Shardul Amarchand Mangaldas & Co believes that RBI’s new cloud facility will become a critical pillar for future product growth.
“Data has been the power house behind digital payments and lending product growth in India. As the online footprint of consumers increases, the volume of data generated multiplies. Securing this data is critical to building consumer trust but involves high spend in infrastructure. The RBI’s announcement on a cloud facility offering will help banks and financial institutions manage data efficiently and safely, preserve consumer trust in the digital financial ecosystem and will become a critical pillar for future product growth,” she said.
(This is a developing story. Keep checking for updates)
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