Perspectives on

Cloud Adoption
in BFSI

WHITE PAPER

Abstract
Cloud computing, a critical element of the digital revolution, is transforming
the banking, financial services, and insurance (BFSI) industry. The cloud-first
paradigm has the potential to drive business excellence and deliver benefits
such as innovation, speed to market, and savings on infrastructure and
operational spends. This is driving many BFSI firms to incorporate cloud
migration into their digital transformation strategies. This white paper studies
the key drivers for cloud adoption and business value and benefits. The paper
also analyzes the different cloud models and their suitability and highlights
aspects that must be considered for different business functions before
embarking on adoption.
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Cloud: An Integral Part of the

Digital Transformation Journey
Cloud native architecture and models infuse business agility, provide a competitive edge,
facilitate innovation, and optimize costs. Given their potential to deliver such crucial
benefits, it is hardly surprising that cloud adoption is set to grow exponentially with
organizations leaning toward software-as-a-service (SaaS) models.1 In the BFSI industry,
however, security concerns, legacy architecture, country-specific regulations, and
challenges in managing the complex transition have inhibited cloud adoption. However,
the need to embrace new business models, infuse agility to respond swiftly to market
shifts, and reduce total cost of ownership (TCO) coupled with evolving regulations that
support cloud deployment is motivating BFSI firms to adopt cloud technologies.
Moreover, cloud adoption will enable traditional banks to compete effectively with fintech
players that are embracing cloud models rapidly in a big-bang model. The business case
for cloud migration (see Figure 1) is clear and cloud must form an integral part of the
digital transformation strategies of banks and insurers.

Scalability and quick Fintech embrace of cloud and innovation

provisioning capabilities afforded by cloud
Market agility Competitive
and pressures
modernization
Ease of adopting open
banking, ability to provide
Automated disaster Regulations personalized products
recovery capability Resilient and intelligent leveraging cloud
driving resilience service financial cognitive services
services
Business
Case Infrastructure and license
Technology currency and Technology Cost and cost saves and compliance
availability of modern modernization security with data protection
technologies regulations

Figure 1: Business Case for Cloud Adoption in BFSI

[1] Gartner, Gartner Forecasts Worldwide Public Cloud Revenue to Grow 6.3% in 2020, July 2020, Accessed January 2021,
https://www.gartner.com/en/newsroom/press-releases/2020-07-23-gartner-forecasts-worldwide-public-cloud-revenue-to-grow-6point3-percent-in-2020
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Influencing Factors for

Cloud Adoption
BFSI organizations tend to initiate the cloud journey by adopting
infrastructure-as-a-service (IaaS) models and evolve to embracing platform-as-a-service
(PaaS) and software-as-a-service (SaaS) models as cloud solutions and products mature. In
our view, the business and technology strategy of an organization and the business
functions and their demand for security, scalability, and different performance attributes
play a role in cloud model selection.

Business Value and Technology Strategy

Applications that are critical and built on legacy technologies often entail high costs to
migrate to the cloud and can prove to be a deterrent. Systems built on legacy technology
would require a revamp before migrating to the cloud. Consequently, the cloud strategy
becomes a key aspect.

Functional Uniqueness and Product Maturity

Cloud adoption, especially through the IaaS and PaaS models, is fast emerging as a critical
factor in customer experience differentiation. BFSI organizations must therefore consider
building customer engagement functions by leveraging either PaaS or IaaS models.
Commercial off-the-shelf (COTS) or SaaS offerings can be procured from the market for
standard and core functions to infuse agility and ease management.

Privacy, Security, and Regulatory Requirements

Government regulations often require data and systems to be well protected and
controlled. This may limit organizations to host such systems on-premise or on private
cloud. However, as cloud security and government regulations evolve, this could change.

Costs, scalability and performance

Public cloud offers scalability to accommodate the growing user or transaction base while
delivering the expected performance. This model enables organizations to scale with
agility, while controlling costs.
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Guidance Maps for Choosing Cloud

Deployment and Service Models
Business and technology priorities vary across financial institutions. Further, the products
and cloud solutions available for different business functions are continuously evolving. To
select the right cloud service and deployment models, we recommend using guidance
maps (see Figure 2) that have been designed considering the key influencing factors.
These guidance maps will help business and technical teams in feasibility analysis, cloud
migration assessment, and decision-making when choosing the right deployment and
service models for specific business functions.

Cloud Service Model Cloud Deployment Model

Contemporary High tech
(low tech debt) or debt.
low business
criticality SaaS On-prem On-prem
PaaS or SaaS On-prem or or
PaaS Private Private
technology strategy

technology strategy
Business value and

Business value and

PaaS or SaaS or SaaS or

PaaS or Public or Public or
laaS laaS private Private
laaS Private

Legacy (high tech laaS laaS laaS Public Public or Private

debt) or high private
business Low tech
criticality debt

Business Functional uniqueness and Standard Low privacy Security and compliance High privacy
differentiator or industry product maturity function or need need
products mature
evolving products

Figure 2: Guidance Maps for Selecting Cloud Service and Deployment Models
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Figures 3 and 4 depict suitable cloud service models and deployment models for key
functions. For example, the guidance map recommends the PaaS model for the customer
on-boarding function with a public or private cloud deployment. For the know your
customer (KYC) function, the guidance map recommends PaaS or SaaS model with a public
cloud deployment.

CLOUD SERVICE MODEL – GUIDANCE MAP

Contemporary (low tech debt)
or low business criticality

PaaS PaaS or SaaS SaaS

Retail and mortgage: Onboarding Retail and mortgage: internet banking, Wealth and investment banking:
teller, KYC corporate actions
Wealth and investment banking: portfolio
management, market analysis Enterprise and corporate functions: Enterprise and corporate functions:
contact center operations, payments, KYC, sales and servicing, customer relationship
Commercial banking: trade issuance and governance and compliance, anti-money management, onboarding, enterprise
Business value and technology strategy

insurance laundering, audit, legal and reporting, resource planning (ERP) systems
payments

PaaS or IaaS SaaS or IaaS

Retail banking and mortgage: Product Enterprise and corporate:
management, default management risk management

Wealth and investment banking: Order

management, depository services, client
processing, funding, purchase and sale options

Commercial banking: treasury applications, cash

management, lockbox, credit line, default
management
Legacy (high tech debt) or
high business criticality

Enterprise and corporate functions: underwriting,

collections, settlement

IaaS IaaS IaaS

Wealth and investment banking: Fee and Retail and mortgage: transaction management
margin management, issuance  and
financial advisor compensation Wealth and investment banking: core
processing, security and trade processing, Customer
engagement
Enterprise and corporate functions: general
ledger and bookkeeping Core
functions
Functional uniqueness and industry product maturity
Business differentiator or Standard function/
products evolving mature products

Figure 3: Guidance Map for Cloud Service Model

CLOUD DEPLOYMENT MODEL – GUIDANCE MAP

High tech
debt

On-prem On-prem or Private On-prem or Private

Commercial banking: treasury applications, Retail and mortgage: transaction
cash management, lockbox, credit line , management, product management,
default management default management
Business value and technology strategy

Wealth and investment banking: core

processing, security and trade
processing,

Public or Private Private

Retail and mortgage: teller, internet banking, onboarding Enterprise and corporate functions:
underwriting, collections, settlement, risk
Wealth and investment banking: portfolio management, order management, depository
services, advisory services, client processing, funding, purchase and sale options, corporate
actions, market analysis

Commercial banking: trade issuance and insurance

Enterprise and corporate functions: sales and servicing, customer relationship management,
onboarding, enterprise resource planning (ERP) systems, contact center operations, payments

Public Public or Private Private

Enterprise and corporate functions: Customer
Low tech

KYC, governance and compliance, engagement

anti-money laundering, audit, legal and
debt

reporting, payments Core

functions
Security and compliance
Low privacy/ High privacy/
compliance need compliance need

Figure 4 Guidance Map for Cloud Deployment Models

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Case-in-point
 A large North American bank specializing in cards, wealth management, and
investment services, embraced cloud to modernize its channels by enabling features
like digital identity, behavioral biometrics, push notifications, e-wallets, and QR
payments using the IaaS and PaaS models on private cloud. The bank improved
time-to-market by 40%, reduced annual infrastructure cost by 15%, and expanded
active mobile user base by 20%.
 A leading Norwegian bank adopted the PaaS model on public cloud to transform its
peer-to-peer mobile payment application. The bank built a DevOps based
microservices on the cloud. With this, the bank was able to capture almost 80% of the
market, facilitate innovation, optimize TCO, and ensure high application availability and
scalability to service approximately two million customers. Transaction processing
throughput increased by 10x, infrastructure setup time dropped from 60 to 6 days, and
release cycle time fell by 3x.
 A large global bank transformed its legacy core by implementing microservices based
private cloud through the IaaS and PaaS models. This initiative enabled a universal
architectural approach across applications. It also helped the bank to increase the
number of features delivered by 3x year-on-year, move from quarterly to monthly
release cycles, and reduce payment execution effort by 60%.

Cloud Adoption Trends in Customer Engagement Functions

Several banks have adopted PaaS and SaaS models to modernize channel and teller
applications to provide unique experience aligning with changing customer preferences.
Web and channel compatible apps and self-service portals are increasingly being
deployed on cloud to drive operational cost efficiencies.
Mature, configurable, and low code SaaS offerings are available for sales, servicing,
customer relationship management, onboarding, enterprise resource planning systems,
and prospect management. Adopting these SaaS offerings increasing business agility,
developer productivity and speed to market. Communication-platform-as-a-service
(CPaaS) and contact-center-as-a-service (CCaaS) solutions help save infrastructure costs
and time besides being easy to set up.

Cloud Adoption Trends in Core Banking Functions

Core applications are hosted on-premise or on private cloud IaaS models due to functional
complexity and compliance and security mandates. Core modernization is planned after
diligent business evaluation and risk mitigations. In these scenarios, cloud migration is
complex and entails big investment and must therefore be approached in an incremental
manner to reduce transition risks.
Core banking platforms and products are evolving and are offered both on public and
private cloud (IaaS) deployment models. Many organizations are considering moving their
large and complex data onto the cloud (big-data-as-a-service, data lakes) to reap the
benefits of cloud storage, compute power, and cost-efficient operations. Data first and last
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approaches are evaluated based on the application. On-premise and private cloud with
PaaS based application programming interface (API) management systems (secure
gateways) as interface are suited for inhouse financial systems.
For some capabilities like payments, banks are innovating with cloud power. Functions like
KYC, corporate actions, application processing, and market analysis platforms are banking
on cloud for infrastructure, platform capabilities, and storage while leveraging machine
learning (ML) capabilities to gain a 360-degree customer view. End-to-end automated
processing and rule-driven and configuration-oriented offerings in SaaS and
business-process-as-a-service (BPaaS) models are on the rise. BPaaS solutions for treasury
applications is an emerging trend. Storage and ML capabilities offered by cloud providers
are instrumental in transforming risk and pricing functions.

An Approach to Adoption
Besides selecting the right cloud model, BFSI firms must choose the right service provider
after performing a thorough due diligence exercise. In addition, firms must meticulously
plan the implementation to ensure hassle-free migration keeping in mind the following
considerations:
 Evaluate cloud-agnostic and poly-cloud models to mitigate risk, ensure audit
compliance, deploy the required features, and manage disaster recovery scenarios.
 Implement cloud-based microservice architecture and API frameworks for internal and
external functional services, interfaces, and dependencies; complement this with
serverless and PaaS services.
 Adopt lift-and-shift method to migrate simple applications; subsequently, move to
complex applications considering the dependencies.
 Adopt cloud-based development and test environments for rolling out minimum viable
products, pilot applications, content-rich websites, workplace on cloud, and
desktop-as-a-service (DaaS).

In a Nutshell
Given the benefits of IT scalability, security and agility coupled with the emergence of
mature cloud services to support business functions, cloud adoption will soon gain
traction in the BFSI industry. Firms must embrace this technology to deliver innovative
services and compelling value propositions to their customers. Going forward, we foresee
cloud becoming integral to IT strategies for banks and insurers. However, firms must adopt
a careful approach with focus on maximizing the benefits and minimizing the risks during
cloud transformation programs.
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About The Authors

Aparna Jiddu

Aparna Jiddu is a platform architect with

TCS' Banking, Financial Services, and
Insurance (BFSI) business unit. She has
more than 17 years of experience with
expertise in Microsoft technologies and
Azure. She has predominantly worked in
the cards and payments domain. Aparna
has a Master’s degree in Computer
Science with specialization in Software
Engineering from JNTU, Hyderabad, India.

Sripada Sarma

Sripada Sarma is a solution architect with

TCS’ Banking, Financial Services, and
Insurance (BFSI) business unit. He has
more than 20 years of experience across
delivery, consulting, and presales. He has
predominantly worked in retail banking,
cards, and investment banking. Sripada
has a Master’s degree in Manufacturing
Technology from NIT, Trichy, India.

Contact

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please visit https://www.tcs.com/banking-financial-services or https://www.tcs.com/insurance

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