Adopting Cloud Computing In Bank Sector

Published Date: 02 Nov 2017

JONILDA BAHJA

Submitted to:

Dr. ARBAN UKA

EPOKA UNIVERSITY

February, 2013

ABSTRACT

Latest years cloud computing is gaining more importance in IT field .It is starting to be implemented in almost all the areas where technology is used like bank sector for example where data privacy and security is case sensitive. Mainly the issues faced when applying cloud solutions are data confidentiality, security, trust in the new system, storage and data sharing among data centres

Objectives: The main aim of this project is to explore opportunities and barriers among cloud computing and bank sector and come out with some suggestions, how to adopt cloud computing in this sector taking into consideration the concerns In the context of this project issues involved in the deployment of cloud computing, associates concerns and factors regarding adoption of cloud computing in bank sector have been studied At the end a few suggestions will be given about the future of cloud computing in this sector .

Methods: Up to now only literature review is done .Second step is conducted interview with responsible personnel in banks and associates of cloud computing finally will come out with a web-based survey from the associates of cloud computing and bank sector

Results: Finally after collecting information and process it, a guideline of suggestions will come out for deploying cloud computing in banks

Predicted conclusions: Most people‘s concerns can be due to lack of knowledge about cloud computing and the trust of vendor. However, data security, data integrity and too much dependency to the technology and vendors might also be big concerns.

Keywords: Cloud computing, banks, cloud security

TABLE OF CONTENTS

ADOPTING CLOUD COMPUTING IN BANK SECTOR................................................................I

ABSTRACT ........................................................................................................................... 1

TABLE OF CONTENTS............................................................................................................ 2

1. INTRODUCTION ................................................................................................................ 3

1.1 Background..........................................................................................................................3

1.2 Related work........................................................................................................................3

1.3 Motivation............................................................................................................................3

1.4 Research methodology.........................................................................................................3

1.5 Research expected outcome.................................................................................................4

2. THEORETICAL BACKGROUND..............................................................................................5

2.1 What is cloud computing ? ...................................................................................................5

2.1.2 Essential characteristics .....................................................................................................5

2.2. Delivery Models.....................................................................................................................5

2.3 Deployment models ................................................................................................................6

2.4 Cloud Computing benefits ........................................................................................................7

2.4.1 Technical Advantages ...........................................................................................................7

2.5 Limitations of cloud computing ...............................................................................................7

2.5.1 Data segregation: ................................................................................................................7

2.5.2 Deletion of data ..................................................................................................................7

2.5.3 The Offline cloud ............................................................................................................ 8

2.5.4 Privacy ............................................................................................................................ 8

2.5.5 Data Lock-In ................................................................................................................... 8

2.5.6 Data Confidentiality and Auditability............................................................................. 8

2.5.7 Network ...........................................................................................................................8

2.5.8 Software Licensing ...........................................................................................................8

2.5.9 Security ........................................................................................................................... 8

2.5.10 Control.............................................................................................................................8

2.6 Service providers ..................................................................................................................9

2.7 Advantages of bank sector.....................................................................................................9

2.8 Barriers to bank sector ...................................................................................................... 9

2.8.1 Ethical Barriers...................................................................................................................9

2.8.2 Technical Barriers ..............................................................................................................9

2.8.3 Legal Barriers.....................................................................................................................9

2.8.4 Operational Barriers .......................................................................................................10

2.8.5 Cost/Benefit Barriers ......................................................................................................10

3. RESEARCH METHODOLOGY ...............................................................................................11

3.1 Literature review................................................................................................................11

3.2 Interview.............................................................................................................................11

3.3 Online survey .......................................................................................................................12

4. CONCLUSION S AND FUTURE WORK..................................................................................13

5. LIST OF REFERENCES ..........................................................................................................14

1. INTRODUCTION

In this chapter, will be given detailed information about cloud computing and bank sector

1.1 Background

As today, world can be considered as an IT world. Since, everything is revolving around the development of IT, its role and scope is increasing day by day. Every day, there are new innovations evolving in the field of IT to make people life easier and effective. Among them, cloud computing is one of the future generation of computing, characterized by three entities- software, hardware and network, which is spreading its usefulness in every field (Manish et al. 2009).In cloud computing the services are offered ‗just-in-time‘ over the internet in very cost-effective and flexible manner. While increasing the productivity, cloud computing mainly intends to reduce the implementation, maintenance cost and complexity (Maria, 2009).Every definition of the cloud is based on three important factors; Characteristics, Delivery models, and Deployment methods. Increased use of bank sector services requires a legal and ethical environment that ensures data privacy, security and confidentiality. While exchanging data or customer account, there must be the respect for human rights and privacy Cloud computing in bank sector offers the potential of easy access to electronic customer records. In addition, the cloud makes it easier for the customer to locate and keep track of their own account history. However, on the other hand, customer also wants privacy and guarantees that their information is secure.

1.2 Related Work

As cloud computing is a new research area, there are only few researchers worked in the field of cloud computing and bank sector until now. Lejiang et al. (2010) developed a new intelligent management system based on cloud computing and the paper is mainly aimed to present defects of traditional bank management system. Ajay et al. (2011), proposed tight similarities between generic government functioning and the service oriented cloud approach. Ashish (2010), proposed model based framework to implement cloud computing and discussed how to overcome the e-Service problems faced by developing countries. Hans et al. (2010) discussed about general problems of current bank sector systems and provided a technical solution for the protection of privacy-sensitive data and usability of bank sector cloud systems. Osterhaus (2010), explained about cloud computing technologies and their impact on bank sector and implications for privacy. All the above authors described the defects in traditional bank management system, current problems in bank sector and how cloud computing act as an idle solution to face challenges in bank sector

1.3 Motivation

Cloud computing has many features like scalability, data storage, reduce in cost and sharing of resources. Because of these features, all other fields are implementing cloud computing in their work to make it efficient and effective in both cost and processing wise. But still, the bank sector is hesitating to implement cloud computing, even though it can get many benefits from cloud computing. So author want to identify the concerns delaying the adoption of cloud computing in bank sector through associate‘s perspectives.

1.4 Research Methodology

RQ1. What is the current state of art of cloud computing and the issues involved in the deployment of cloud computing?

RQ2. What are the associates concerns and factors regarding adoption of cloud computing in bank sector?

RQ3. What is the future of cloud computing in bank sector?

The purpose of this research is to explore and describe best practices. RQ1 answered through literature review. From there came through the concerns like privacy concerns, security concerns, availability, efficiency and cost factor involved in the deployment of cloud computing. Based on these facts, some interviews will be conducted in-depth semi- structured interviews following with online survey with associates (working in bank sector and cloud computing) regarding adoption of cloud computing in bank sector (RQ2). The respondents will be interviewed about their perspectives toward each of the services i.e. bank sector and cloud computing, their advantages, disadvantages, challenges and concerns about adoption of cloud computing in bank sector based on trust, privacy, security, cost issue etc. RQ1 and RQ2 will produce the associates concerns and factors in detail. Based on these facts,wil be proposed some guidelines for adopting cloud computing in bank sector in the future (RQ3).

1.5 Research Expected Outcome

By achieving the answers from the associates, will become able to propose guidelines for adopting cloud computing in bank sector. This research will provide following outcomes.

Brief and important information about cloud computing with a focus on issues involved in adoption of cloud computing.

The associates perception and concerns about cloud computing adoption in bank sector are identified.

The research will help to propose guidelines for adopting cloud computing in bank sector. These guidelines will be helpful for bank authorities in future to adopt cloud computing in bank sector.

2. THEORETICAL BACKGROUND

This section will have information about cloud computing today.

2.1 What is cloud computing?

―Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.‖ (Peter et al. 2009).

Cloud computing refers both hardware and applications, which are being delivered through services. These services marked as Software as a Service (SaaS). Cloud is a combination of hardware and software. When we made these clouds as pay-as-you-go manner then it is called public cloud. If we have internal data-centers then it called private cloud and it is not available for public.

2.1.2 Essential characteristics

There are five essential characteristics of cloud computing. Those are listed below (Peter et al. 2009).

2.1.2.1 On demand self –service

Consumer can increase or decrease computing capabilities like servers, networks or storage as require without need of human interaction. It will help consumer to concentrate more on business to get good results.

2.1.2.2 Broad network access

Consumer can access the applications using heterogeneous (thin or thick) client platforms like mobile phones, laptops, PDAs. We will use standard mechanisms for accessing these applications.

2.1.2.3 Resource pooling

Dependant on consumer demand, different virtual and physical resources (networks, storage, processing, bandwidth and virtual machines) dynamically assign or reassigns to the specific application. These resources will assign to the applications based on multi-tenant model i.e. computer resources are pooled to serve multiple consumers. Consumer does not know the exact location where the data is stored but consumer may have a choice to choose the location of data center where he wants to store the data by specifying country, state or location of data center.

2.1.2.4 Rapid elasticity

Consumer has the ability to increase the resources whenever the demand is high and he is also able to reduce the resources like servers, virtual machines if the demand is less. For example, one website has more traffic in weekends and less in weekdays then we can use the resources rapidly and elastically.

2.1.2.5 Measured service

Cloud systems can automatically measure the usage of resources by the type of service (storage, bandwidth, processing etc) provided and usage resources are monitored, controlled and reported by both consumer and cloud provider.

2.2 Delivery Models

There are three service models with different security measures at various cloud operational levels.

2.2.1 Software as a Service (SaaS)

Software-as-a-Service sometimes refers as ―on-demand software‖. This service provides software and associated data centrally, and easily access by the end users through thin client interface such as a web browser. Cloud provider rent software‘s to the end user as a service. Software delivers to the consumers in ―one-to-many‖ basis. Cloud provider maintains service level agreements to manage servers, operating systems, storage, individual applications as well as networks in infrastructure. Consumers do not require handling any upgrades or changes to the software and do not need to manage any servers, networks, operating systems as well as individual applications (Peter et al. 2009).

2.2.2 Platform as a Service (PaaS)

There is a capability that customer can deploy any type of application to the cloud infrastructure using any programming language and tools that are supported by the provider. The customer does not need to manage or control the cloud infrastructure including storage, networks, application, or operating systems but customer has control over the applications hosted configurations. Customer has a choice to use any type of operating systems and programming tools. In PaaS, we use multi-tenant architecture; by using this, multiple concurrent users can use the same development application (Peter et al. 2009).

2.2.3 Infrastructure as a Service (IaaS)

This service provides storage, provision processing, networks and other resources to the customer, where customer can deploys and run the arbitrary software like operating systems and applications. Customer does not manage or control the cloud infrastructure but the customer has control over operating systems, storage, applications and limited control on networking components. In IaaS, resources are distributed as a service. Customer does not need to buy servers; software, datacenter space and network equipment but he can use all these services for rent from cloud infrastructure as pay-as-you-use basis (Peter et al. 2009).

2.3 Deployment models

Clouds are classified into four models based on their infrastructure and these are distinguished by their architecture and functionality (Peter et al. 2009).

2.3.1 Private Cloud

Private cloud is operated for specific organization and it may be managed by the organization or third party. SLA‘s are based on mutual understanding of cloud provider and the organization.

2.3.2 Public Cloud

Public cloud is owned by specific cloud service provider. This public cloud infrastructure is available for large organizations and public. SLA‘s are same to all the customers those who are using public cloud.

2.3.3 Community Cloud

This cloud is shared by a group of organizations and supports a specific community that has shared concerns. This may be managed by organizations or third party.

2.3.4 Hybrid Cloud

This cloud is a combination of private and public cloud. These clouds are bound together by standardized technology that enables data and application portability. 17

2.4 Cloud Computing Benefits

Cloud computing benefits can be categorized under Technical, Users, Infrastructural, Companies and Environmental aspects and they are as follows:

2.4.1 Technical Advantages

Following are the technical advantages of cloud computing (Weiss, 2007).

a. Power Management: From the aspect of power management, it is easier to manage virtual server as compared to physical server.

b. Scalability: It is the one of the main positive aspects of cloud computing. If there is peak load or high traffic for a site, cloud can handle easily without need of any additional hardware infrastructure or equipments and without disturbing user's normal work.

c. Data Storage: There are various data centers spread throughout the world and it makes easy for the businesses to choose the datacenter as per their convenience to get fast and easy access of services with unlimited data storage.

d. Trouble shooting and Backup (Disaster) recovery: Hardware failure can also be easily traced out and rectified with ease. Similarly, the assessment of data can be done anytime and is highly beneficial for the IT industry in reducing workloads and whenever data needs to be recovered.

e. Efficiency and reliability: To find efficiencies many organizations are moving towards cloud and backup is another significant advantage to the cloud and it maintains backup for all remote sites and branch offices. It will remove many challenges like bandwidth allocation, security and disaster recovery (corevault, 2011). Applications in cloud are so vital and these are available and reliable for all services. One of the cloud industry executive stated that (Michael. H, 2010) ―Any business leader worried about the security and reliability of their data in the cloud should remember that they‘ve been trusting, saving, and storing their personal financial assets in an external, virtual banking cloud for years.‖

2.5 Limitations of Cloud Computing

Following are some limitations of cloud computing.

2.51 Data segregation:

As data of many users are stored in same data center and same server or same hard disks it will raise the question from the users about the problem of mismatch i.e. how cloud securely isolate users and differentiate the memory and storage of each users as this failure could lead to leakage of information from one customer to another (Victor, 2010).

2.5.2 Deletion of data

Many consumers‘data will be stored in same data center, server and hard disk. After completion of their task with cloud if the consumer want to cancel the contract and withdraw the SLA from the provider and want to delete his data i.e. completely remove from the cloud but it is very hard to do since deletion of data can only be done by erasing entirely, repeatedly re-writing the disk sectors with random data, and possibly formatting the server‘s hard disk which is not possible to do so there always remain the threat of recovering the erased data or if it is not perfectly overwritten or overlapped with random data then there will remain the chance of leaking information out (Victor, 2010).

2.5.3 The Offline cloud

As cloud computing is fully dependent upon internet connection. If the customer has a problem with internet connection then he/she is unable to access the application or data from internet (Victor, 2010).

2.5.4 Privacy

Privacy is one of the major issues in cloud as it needs high degree of trust among the users and it is fundamental human right not to privilege granted by authority (Weiss, 2007). Users are always concerned about their data so to overcome this issue provider should assure the users in following points (John, 2010):

• Employees are aware of their responsibilities related to the confidentiality, integrity, availability of data and information systems.

• The confidential and/or personal client data including system access credentials are protected (e.g. encrypted) from unauthorized interception.

2.5.5 Data Lock-In

Customers once stored their data in one data center and gone through SLA of one provider, then they cannot easily extract their data and programs from other providers. This concern about the difficulty of extracting data from the cloud prevents some organizations from adopting cloud computing. Data lock-in or customer lock-in is beneficial to cloud computing 19 providers but users will suffer if price increases, reliability problems, or even when the providers are going out of business (Michael, 2009).

2.5.6 Data Confidentiality and Auditability

This aspect concerns customer‘s worries that data kept in a public cloud is exposed to more attacks and could be intercepted by a third party to compromise data integrity in the absence of adequate security (Mather et al. 2009). Similarly, Auditability could be added as an additional layer providing facilities arguably more secure than those built into the applications themselves (Michael, 2009).

2.5.7 Network

For the proper utilization of cloud computing application/services there is a need of high speed internet connection. Lack of speed and high bandwidth are the causes for not accessing the cloud services, so still there are a lot of questions regarding the cloud computing. Similarly, network failures can result in loss to the company by causing extensive time delays (Weiss, 2007). It is possible in the countries like Sweden where there is high internet connection speed but in other countries where there is the problem of continuous supply of high speed of internet connection, this is a big issue in such places.

2.5.8 Software Licensing

Many cloud providers relied heavily on open source software because the licensing model for commercial software is not a good match to Utility Computing (Michael, 2009). Users first pay for the software and then pay for annual maintenance.

2.5.9 Security

If you are adopting cloud then the data which you store in data center is not under your direct control and it will be stored somewhere, where you cannot get physical access to it. Moreover, with the potential to leave your information will be exposed in some cases. Cloud computing providers support encryption and rudimentary identity management but still people do not want to place secrets in to the cloud (David, 2009).

2.5.10 Control

Control means that when you leverage a cloud computing provider, you are giving up control of all your data and file to them, so now you are at control of provider who could cause you a bunch of trouble like shutting down the account if you accidently violate some policy or in case your provider go out of business if the services are no longer profitable. You need to address these considerations into the case for cloud computing (David, 2009).

2.6 Service providers

This following are the top 10 cloud computing providers of 2011 who are dominating the cloud computing field (Search cloud computing, 2011)

Amazon (aws.amazon.com)

Rack space (rackspacecloud.com)

Sales force (salesforce.com)

Google (Google App Engine)

Microsoft (Windows Azure)

Joint (joyent.com)

Gorged (gogrid.com)

Terre mark (terremark.com)

Savvis (savvis.com)

ï‚· Verizon (verizonbusiness.com)

2.7 Advantages of bank sector

There are many advantages using IT in bank sector. Before there were used paper based system to record customer data. These paper based system may have errors while entering the records into system, that’s we look for cloud computing solutions

Benefits to staff: Staff has total control over customer ordering process

Benefits to customers: Bank sector improves the interdisciplinary communication towards customer because it avoids the prescription errors from hand written orders.

Benefits to management: bank sector helps to move the information quickly

2.8 Barriers to bank sector

The followings are the main barriers to the deployment and adoption of bank sector.

2.8.1 Ethical Barriers

If we design an information system for one category of customer it leads to considerable risk because it is ignoring the interests and goals of others.

2.8.2 Technical Barriers

If the technology innovation increases there will probably be increase in misuse of technology. As it is same to the bank sector and its security implications, which are widely discussed but still it remains as main threat and concern for all bank sector stakeholders. Key security issues in bank sector are not new but as same as any threats to information security.

2.8.3 Legal Barriers

Legal Barriers refers to the legal concerns faced by bank institutions when adopting bank sector solutions. The main problem faced by them in regards to this barrier is enforcing privacy of data (David, 2005 &Audie, 2007). As bank sector is customer centric industry, it is more important to ensure that the law of privacy is followed while adopting bank sector solutions. Privacy laws may differ from country to country but its main goal is to protect the rights of an individual. The main difficulty is to ensure that only authorized personnel have access to customer account data, which is relevant to their day-to-day work (Robeznieks, 2005). Furthermore, there is another problem to define who have the access rights on the data and how to differentiate the group as per the access rights.

2.8.4 Operational Barriers

This area of concern relates to the interoperability of systems which bank sector aims to provide (John, 2009). First, a system has to be developed with an interface allowing existing computer system to communicate with new system, which bank sector will introduce. Second, there must be a common standard electronic language to cross communicate between different banks about the customer data

2.8.5 Cost/Benefit Barriers

As the name suggest it is the barrier related to the cost in implementing bank sector solutions, whether it is feasible in-terms of cost wise i.e. do the benefit of bank sector outweigh the cost required to implement bank sector. From the technical side, the implementation of bank sector solutions is clearly advantageous in comparison with past methods such as the paper-based record keeping systems but from the bankcare organization side these benefits may not outweigh the cost of implementing bank sector solutions. The cost of implementing bank sector solutions can be tens of thousands of dollars and this does not even include the requirement of hiring teams of IT professionals to support and maintain the software throughout its life cycle (Mearian, 2010).

3. RESEARCH METHODOLOGY

There are different types of research approaches. These are qualitative, quantitative and mixed approaches. According to Creswell (2002), A qualitative research gives the complex, detailed understanding of the issue which can be established by talking directly to people, going to their place of work and allowing them to talk. While quantitative approach is one in which the investigator primarily uses post positivist claims for developing knowledge i.e. cause and effect thinking, reduction to specific variables and hypothesis and questions, use of measurements and observations and the test of theories, employees’ strategies of enquiry such as experiments and surveys and collects data on predetermined instruments that yield statistical data. In this project qualitative interviews and online survey will be done to find both the current state and concerns of cloud computing in bank sector which need to be explored. It has to be explored rather than uses predetermined information from the literature or rely on results from other research studies.

There are three principal ways of conducting exploratory research (Saunders et al. 2009):

a. A search of the Literature

b. Talking to experts in the subject (one-to-one Interview)

c. Conducting focus group interviews

Of the three principle ways,only first two will be followed, literature review and more importantly talking to experts in the subject (conducting one-to-one interviews) with associates related to both cloud computing and bank sector. In order to obtain detailed information, in-depth semi-structured interviews will be conducted with associates working in cloud computing and in bank sector. This was followed by survey among the related associates to support and get enough dimensions and perspective about subject matter. The respondents were interviewed about their perspective towards each of the services i.e. bank sector and cloud computing in terms of advantages, disadvantages, challenges, scope regarding trust, security, cost and agility.

3.1 Literature Review

It is the most important phase and step in every research as it plays a key role in the overall research process. Literature review helps in defining the undefined problem, that researcher intends to solve during his research work (Reed, 1998). Literature review for our research work will be chosen for two main reasons. First, because the problem can be defined in a better way and second, more areas of concern from the other related research can be identified.

Concerning information, literature review was performed at the initial phase. Deep studying about cloud computing and bank sector is done, their current working methods and what will be the situation or condition if one is used to help other and come through the new area of interest ―implications for adopting cloud computing in bank sector‖. Information is found from journals, eBooks, research reports, articles etc., relevant information and articles. Additionally, manual searched was also performed using Google and Google Scholar.

After obtaining sufficient articles and information, interview method was the best to explore the people perspectives on this issue.

3.2 Interviews

Interview is one of the data collection technique used in qualitative research approach

3.2.1 Source of Data Collection

Each interview will be conducted at the interviewee‘s convenient site, time and mode of interview i.e. some interviews may conducted face to face, some in phone They will be asked about their awareness, knowledge, previous use of cloud computing, bank sector services, the brighter side of cloud computing and its future prospects.

3.2.2 Population of the Interview

There will be two target groups, one who are familiar with cloud computing and its features and other are those who are linked or are working in bank sector and know something about cloud computing. They include IT-architects, business development manager, executive consultant, chief technical officer (CTO), program manager, business consultant, CEO and other persons who are either linked with cloud computing or bank sector. The respondents will be interviewed about their perspective toward each of the services i.e. bank sector and cloud computing, their advantages, disadvantages, challenges, scope regarding trust, security, cost and agility perspective.

3.2.3 Interview Question Formation

Each interview question with our research questions and after numerous iterations of work will be mapped. Author finally will be able to come up with a set of error free questions under the strict guidance and supervision of the supervisor.

3.2.4 Interview Process

The researcher will conduct the interviews and take notes and occasionally ask for missing information.

3.3 Online survey

Also an online survey will be done in order to collect the associate‘s (cloud computing and bank care employees) perspective about the cloud computing and bank sector focusing on security, trust, cost, agility, and issues involved in the deployment of cloud computing in bank sector. The survey comprised of three different types of questions i.e. open ended, closed ended and scaling questions. Those were designed to get concrete and discrete opinions of the associates.

3.3.1 Source of Data Collection

Microsoft Albania will be handling the online survey. Its learning is a web portal for professional people in IT area where they share information and updates.

3.3.2 Population of the survey

The population of this study focused on cloud computing and bank sector associates concerns. They include senior engineer, IT- architects, software engineer, general manager, and all other person who are directly or indirectly involved in cloud computing and bank sector.

4. CONCUSIONS AND FUTURE WORK

Cloud computing is an emerging technology in which every services are available but still there are some limitations which are restricting its usefulness in bank sector. Cloud computing adoption also requires prior understanding of human perceptions; human perception can be changed through series of training, workshop and demonstration of system security to personnel and other stakeholders.

In the context of project, issues involved in the deployment of cloud computing, associates concerns and factors regarding adoption of cloud computing in banks are studied. In order to identify and to get a deeper understanding of those issues, literature review is done, Future work is improving the questioner, conduct the face to face interviews and online interviews and than analyze the results .After this step we can write benefits and disadvantages of deploying cloud computing in ban system and also deployment model .At the end a guideline with suggestions will come out as a result of this project.