Financial sector cloud adoption slowed down by privacy issues

PHILIPPINE financial institutions’ adoption of cloud technology has been slower than other industries amid privacy and security concerns, according to Rocket Software, Inc.

“I think the adoption that we have noticed while we engage with the other sectors has been equally high. The financials have been a little more constrained because of the privacy as well as the security rules that have been set up by the central bank,” Praveen Kumar, vice-president for Asia-Pacific at Rocket Software, said in an interview.

Financial firms without local data centers face challenges when transitioning to the cloud, he said.

Rocket Software has been operating in the Philippines since 2008 and mostly deals with banks and other financial institutions. The Philippines is a big market for the company as many businesses in the country are still using mainframes or legacy systems such as banks, insurance, healthcare, and more, Mr. Kumar said.

“The financial sector’s adoption has been a little slower compared to the other industries because for the other industries, operational expenses are a huge chunk of their cost and that is not something that they can recover easily,” he said.

Still, increased demand for electronic banking among younger individuals has led to hybrid cloud adoption among Philippine banks, he added, especially for those banks with legacy infrastructure that mainly cater to branches and clients who do in-person transactions.

“The Gen Z is all about mobile — it’s less about branches. It’s more about self-service, whereas the elderly population is all about ‘I need someone to assist me to do anything, whether it be deposit money, withdraw money, update my statement, look at my passport,’ ” Mr. Kumar said.

“Legacy infrastructure need not always to run on-premises but can be on the cloud as well. While Rocket is all about protecting legacy, most of the cloud service providers can provide security as well,” he added.

One of the benefits of moving to the cloud is the digitalization and safe storage of old documents such as invoices and receipts, Mr. Kumar noted.

“If you keep all of that stored in a production storage environment, your costs may go up, even if you don’t need them. So, you can move them to a virtual storage environment in the cloud itself and make it cheaper in terms of how you store them and retrieve them in real time, whenever you want to,” he said.

Rocket Software provides solutions for unstructured and structured documents so that invoices and receipts that are 10 years old that were scanned and stored can be moved to the cloud, leading to cheaper storage costs, he added. — Aubrey Rose A. Inosante