Cloud facilities for financial institutions will enhance data security and privacy, RBI Governor Shaktikanta Das said while announcing a proposal to establish data storage facilities for financial institutions (FIs) in India on December 8, 2023.
“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,” read an RBI statement.
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Das proposed the cloud facility during the Reserve Bank of India’s Monetary Policy Committee (MPC) announcement. At the concluding parts of the press conference, Das spoke on the establishment of a cloud facility for the financial sector in India. The central bank maintained a status quo on repo rate at 6.50 per cent for the fifth consecutive time.
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The proposed facility is expected to enhance the security, integrity and privacy of financial sector data. It is also likely to enable “scalability and business continuity”.
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“98 per cent of organizations right now are using some form of cloud computing, up from 91 per cent in 2020. Also, 57 per cent of organizations use multiple cloud providers for their IaaS/PaaS needs,” Somdutta Singh, said, Advisor Govt of India (Core Committee Member of WEP – Niti Aayog).
The cloud facility will be set up and initially operated by Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of RBI, according to the statement. In the future, the cloud facility will be transferred to a separate entity owned by participants in the financial sector. This cloud facility is intended to be deployed in a phased manner in the medium term, as per the RBI governor.
“The phased rollout strategy, involvement of IFTAS, and eventual transfer to a sector-owned entity indicate a thoughtful approach that fosters collaboration and aligns with global fintech trends,” said, Edul Patel, CEO of Mudrex.
How will cloud facility help FIs?
Harsh Dugar – Executive Director at Federal Bank, said, “Framework on Web Aggregation of Loan products and setup of Fintech Repository is a welcome move to enable responsible growth in digital lending by ensuring fair practices, customer protection and transparency . Cloud facility for Financial Institutions (FIs) is a step in the right direction for ensuring data privacy, date security and integrity.”
“Cloud can facilitate innovations around regulatory reporting, exchange of credit information amongst regulated entities through a credit registry built on to the same cloud and integration of e-kyc into the cloud,” said, Vivek Iyer, Partner, Grant Thornton Bharat.
“It implies that at some point, banks, NBFCs, and other participants might be nudged to store their data on this cloud rather than on third-party services that are currently in vogue,” said, Rajat Deshpande, CEO and Co-founder, FinBox
Additionally, cloud migration in the financial sector on a global level has moved up to 91 per cent in August 2023, from 37 per cent in August 2020, according to a report by Capgemini on “Cloud in Financial Services.” The adoption rate indicates that cloud is the future of financial institutions.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
