Building a Scalable Banking Infrastructure with the Cloud

In a conversation with Asia Business Outlook magazine, Ajanthan Sivathas, CIO of Standard Chartered Bank, shared his views and thoughts on how to build a scalable banking infrastructure with the cloud. He has fifteen years of professional experience, is passionate about leveraging technology to inspire both individuals and organizations to reach their full potential. His mission is to drive positive transformation by aligning technological solutions with the goal of empowering people and businesses to become better versions of themselves.

In today’s rapidly evolving financial landscape, how can cloud technology help banks achieve scalability while maintaining operational efficiency and compliance?

Today, the biggest obstacle in being able to digitalise and automate at speed is meeting the scale of computing resources it demands. Cloud computing by design allows us to be location-agnostic, ubiquitous and scalable.

A McKinsey study suggests that effective cloud use could boost Fortune 500 financial institutions' annual profitability by $60-80 billion by 2030.  In 2023, Gartner predicts that public cloud services spending will hit almost $600 billion, up from $490.3 billion in 2022.

All modern systems are now built for the cloud, utilizing modern computing paradigms and architectures that are container-based and service-based. As a result, adopting Cloud for our workloads allows us to be agile and client-focused so our customers have better experiences and faster access to innovative new products. At the same time, organizations are improving their operational efficiency and resilience by using the best-in-class security, privacy, and compliance delivered through cloud infrastructure.

At Standard Chartered, our continued work with our Cloud Service Providers demonstrate our commitment to putting innovation and security at the heart of the Bank’s digital transformation strategy.

With the rise of digital banking, how does cloud technology address the challenges of security and scalability in digital banking?

Whilst Scalability and ease of migration used to be the key selling factors for Cloud Service providers, now the key differentiator is nothing but Security. Security is the top benefit of cloud computing, according to C-Suite executives — ahead of cost savings, scalability, ease of maintenance, and speed.

Whilst it is a fact that the threat landscape has become more sophisticated and the number of cyber attacks on companies regardless of Cloud or not has increased, the biggest root-cause for these attacks has not been the fact of the systems being on Cloud, but is actually misconfiguration of services due to shortages of cloud specific skills.

It's widely acknowledged that if configured, provisioned and managed correctly, public cloud services offer more security and resilience. It also provides physical and geographical redundancy which basically means that data or applications, are maintained between different physical locations (data centers).

With the increasing trend of an always-on digital economy, commercial and consumer clients are looking for applications and services that empower them to do online banking from anywhere, flexibly, efficiently but with utmost security that they can trust.

The cloud service providers (CSPs) have been investing heavily in their Security proposition and evolved to provide better security, resilience, availability and efficient use of data on cloud to meet regulatory and customer demands.

Regulatory compliance remains a top priority for banks. How can banks ensure compliance with industry regulations while leveraging the scalability of cloud infrastructure?

This will remain an ongoing exercise, as regulations evolve with emerging threats and vulnerabilities of technology. However, regulations on Cloud Computing are mature across many markets now, and regulators provide a clear framework which the major CSPs are also aligned to – be it providing options in terms of hosting locations to address data sovereignty concerns or configurable security features.

It is also pertinent to note, that we see a trend where now regulators are being very progressive in some markets with even experimenting with sandboxes, blockchain solutions, CBDC and other open-banking solutions that leverage on Cloud. For example,Bank of Japan (BoJ) published the results of its Proof-of-Concept of CBDC(Central Bank Digital Currencies) built in a public cloud environment based on a CBDC ledger.

A Cloud Governance Framework should address all necessary regulatory considerations from a data privacy, data sovereignty and also overall security perspective. At Standard Chartered, having the right Cloud Governance Framework ensures an International Bank like us to be compliant across all our regulators across the Globe.

In what ways does cloud infrastructure support real-time data processing and analytics in banking, and what impact does this have on decision-making?

Most organizations are using multiple public or private clouds, and the world creates quintillion bytes of data every day. Cloud providers have invested massively in the reliability and automation of infrastructure and platforms.

All modern Machine Learning and other AI models are born in cloud, and the real power of parallel processing, handling large amounts of data streams and real time problem solving can be realized only with distributed computing architectures such as the Cloud. Another key area to watch for is embedded finance and co-innovation or partnerships using open banking application programming interface (API) and Internet-of-Things for real-time payments that unlock new banking experiences for clients.

What emerging trends and innovations in cloud technology are likely to further impact the scalability of banking infrastructures in the coming years?

40% of organizations in developing regions are currently evaluating and planning cloud strategies. The cloud computing industry is not just booming in developed economies. Findings also state that cloud computing is rapidly developing in Sub-Saharan Africa as well as in the Central and Eastern Europe regions.

At Standard Chartered we use the breadth and depth of Cloud services, including database, containers, compute, networking, storage, and security, to reinvent the digital banking experience, accelerating thedesign and deployment of new applications and digital services for our individual and corporate clients.

However, the critical focus would be on how we derive the best VALUE out of our Cloud strategy and investments. This is not just me talking, close to half of our business leaders cite measuring value as a major barrier to achieving cloud ROI according to PWC. As companies invest more in the cloud, only around 40% have their cloud costs around where they expect. Cloud waste is the key reason that stems from complex cloud pricing models, lack of visibility into cloud costs and lack of expertise to manage cloud configurations to get the most efficient return on investment.