Striking the Balance: Cloud-Based SCF, RBI's DPDP, and Cloud Adoption Realities for FIs in India

In today's dynamic business landscape, the efficient movement of capital within supply chains is a linchpin of success. For generations, financial institutions (FIs) have been the stewards of Supply Chain Finance (SCF) solutions. Yet, we find ourselves at an intriguing juncture, as cloud-based SCF infrastructure emerges as a game-changer, redefining industry norms.

Cloud-Based SCF Infrastructure for FIs

Scalability: Cloud platforms offer FIs the ability to scale SCF operations based on demand, ensuring efficient handling of varying transaction volumes while preserving customer satisfaction.

Accessibility: Cloud-based solutions provide universal accessibility, allowing FIs to serve clients from anywhere, enabling global operations and real-time decision-making.

Cost-Efficiency: Cloud auto-scaling and optimization tools enable FIs to achieve cost-efficiency by paying only for the resources they use, eliminating the need for costly on-premises infrastructure.

Data Insights: Cloud-based SCF infrastructure facilitates robust data analytics, enabling FIs to extract valuable insights from financial operations, improve risk management, and make data-driven decisions that benefit both FIs and clients.

Challenges to consider while migrating to cloud

Vendor Selection: Choosing the right cloud service provider is critical, as migration away from one vendor can be challenging and expensive. FIs should conduct thorough vendor assessments to ensure alignment with their objectives.

Data Security: Maintaining the security and privacy of sensitive financial data is paramount. FIs must implement robust security measures and comply with data protection regulations.

Integration Complexity: Integrating cloud-based SCF solutions with existing systems and workflows can be complex and requires careful planning to avoid disruptions.

Cost Management: To fully realize cost efficiencies, FIs must actively manage cloud spending to prevent unexpected expenses and optimize operations continually.

Understanding the RBI's Digital Personal Data Protection Bill (DPDP):

The Reserve Bank of India (RBI) has introduced the Digital Personal Data Protection Bill (DPDP) to regulate the usage and protection of personal data, including Personally Identifiable Information (PII). This bill aims to establish guidelines for the responsible handling of sensitive information within the financial sector, ensuring data privacy and security.

Consideration for DPDP compliance and control over Data:

• Vendor Selection with Compliance Focus: Align cloud service provider selection with DPDP requirements, ensuring compliance including data minimization, purpose limitation, and ensuring data accuracy.
• Data Security Measures: Implement stringent security measures and encryption protocols to meet DPDP standards, including secure storage, data access controls, and regular security audits.
• Integration Complexity and Data Privacy: Ensure integration processes adhere to DPDP guidelines, such as lawful and fair processing, and prioritize data privacy throughout the data lifecycle.
• Cost Management and DPDP Compliance: Actively manage cloud spending in a way that complies with DPDP regulations, including transparent data processing practices and clear consent mechanisms for data usage.

Strategic Adoption of Cloud-Based SCF within DPDP Framework:

As financial institutions embrace cloud-based Supply Chain Finance (SCF), the convergence with the Reserve Bank of India's Data Protection Bill (DPDP) is pivotal. Beyond being a regulatory mandate, DPDP compliance serves as a guiding force through the intricacies of cloud adoption.

In this journey, from vendor selection to data security and cost management, every step aligns with DPDP guidelines.

This delicate balance between technological innovation and regulatory adherence not only meets standards but also addresses concerns, ensuring an uninterrupted flow of capital fortified by trust and resilience. FIs, in this paradigm shift, pioneer a new era where the synergy of cloud-based SCF and DPDP compliance is the foundation of financial success.

Some Cloud Adoption Insights

Cost Savings: Over 80%* of organizations in India who adopted the cloud have achieved cost savings through hybrid cloud strategies. Auto-scaling capabilities in the cloud have played a significant role in these savings.

Observability: Around 67% of organizations in India who adopted the cloud use observability tools, with 42%* in the predictive adoption phase, highlighting the growing importance of real-time monitoring.

Optimization: Nearly 49% of organizations in India who adopted the cloud analyze telemetry data, while 30%* utilize machine-learning algorithms for self-healing and efficient cloud resource sizing.

The Cloud's Role in Data Monetization

In a recent EY-FICCI survey, 63% of companies have adopted the cloud for data monetization and insights. The cloud has become the preferred platform for data initiatives like,

• Enabling Data and Analytics: 80% of organizations leverage the cloud to enhance data and analytics capabilities, supporting data-driven decision-making.
• Data on the Cloud: A substantial 78% of companies store more than 30%* of their data in the cloud, reflecting trust in cloud platforms for data management.
• New Workloads: Over 58% of organizations prioritize migrating new workloads to the cloud for innovation and agility.

Reference and Source:

EY-FICCI survey

India’s cloud and data revolution - August 2023

THE DIGITAL PERSONAL DATA PROTECTION BILL, 2022