Banks still wary of Cloud

IBM’s Yaqub says that interest in cloud-based services has popped up very sharply since the start of 2013. However, he says, migrating to cloud should be considered a journey for bankers. “Banks should first transfer non-critical applications into the cloud. The second step is that banks should transfer disaster recovery to the cloud instead of relying on huge, expensive data centres which they have to spend large sums of money running. In the cloud, the data is secure, reliable and highly available,” says Yaqub.

IBM is offering IBM Cloud Managed Services which have strong guaranteed service availability – Service Level Agreements uptime is at 99.95%. The service also offers numerous advantages associated with a private cloud such as possibilities for dedicated storage and servers –“while providing flexible scaling and the benefits of cloud economics”.

Another private cloud option that IBM offers is Virtual Server Recovery, a backup that also “gives customers a private cloud scenario”. Virtual Server Recovery was developed with the aim of reducing recovery time to minutes for a server and under an hour for a machine – due to the fact that server images and data are continuously replicated.

The low recovery time is a significant shift. In contrast, traditional server recovery can take anything from a couple of hours to a couple of days. It is also easier to test Virtual Server Recovery more frequently, whereas with traditional servers it is not unusual for them to go untested for several months. Thirdly, traditional servers undergo several changes because of the downloading of updates and patches on the different servers and applications, and this may ultimately have an impact on recovery time.

In contrast, Virtual Server Recovery is a managed service which ultimately means that the synchronisation of the system images is managed. According to Yaqub, IBM is also in talks with a few telecommunications companies that are interesting in taking on IBM’s software solutions in Africa and then reselling them to the banking sector.

However, according to Yaqub, making the case for cloud computing to the banking sector in Africa has its difficulties. “It is not so easy to make the business case. It is under that logic that we tell bank CEOs and CFOs to see cloud as a journey – because with that you are killing arguments about risk and costs.”

Yaqub cites the regulatory environment in Africa as another big challenge. “In Africa – but it should also be noted that this is a trend internationally and not just in Africa – the regulations don’t allow banks to haul customer-related data outside of the country,” he says.

Yaqub also points to network latency as a hurdle, although he regards it as a “positive challenge. We need to look at technical ways we can address that. It’s something we have to try and identify the solution to when we are pitching cloud to bank CFOs and CEOs,” he says.

Chet Kamat of Oracle also identifies challenges to the adoption of cloud technology. “It’s important to consider Africa as 58 separate countries, each with different levels of maturity when it comes to technological development, connectivity and cloud infrastructure. The challenges for banks and other companies is how to develop a cloud strategy that is consistent across the region, while cloud providers are still grappling with how to span the continent with a consistent service,” he says.

“There are also a number of complexities when it comes to service delivery. Technology infrastructure needs to be able to handle high volumes of transactions due to rapid urbanisation and growing population density across the region.”

In countries like Nigeria, for example, he says, the challenge is how to create a good experience for customers that have greater access to mobile banking technology rather than in-branch banking.

“At the same time as developing and rolling out cloud strategies, banks must also develop products ranging from wealth management at one end of the scale to financial inclusion at the other.” Kamat also identifies providing low-cost but scalable solutions as a major challenge.