Battling onslaught from fintech firms, high-street banks want the Reserve Bank of India (RBI) to lay down the rules that allow them to store and analyse data on Cloud which, they believe, is at the heart of digital transformation.

In a report submitted recently, they have asked the regulator to set out a “clear and not unduly burdensome process” for banks and financial institutions to follow when outsourcing and adopting the selection, on boarding and management of cloud services, two persons familiar with the development told ET. A cloud service, simply put, offers data storage and computing power without the user’s — here, a bank’s —direct management.

The proposal assumes significance in the wake of data security and other regulations on one hand, and the urgency felt by traditional banks to innovate with fintech firms challenging the conventional operating models and commercial structures.

“…traditional banks have been grappling with low margins, declining efficiency ratios, a low-interest-rate environment, flattened revenue growth, and growing nonperforming loans. During the current pandemic, these have become even more acute. With the advent of the digital economy, the banking business is undergoing a constant transformation… It has become imperative for banks to undertake a digital transformation, adopt data as the currency for growth and reimagine their operating model. Technology has proven to be the most important enabler and it is powering significant banking industry transformation and the cloud is at its centre,” says the report prepared by a 11-member committee (of senior bankers) constituted by Indian Banks’ Association.

“The outsourcing guidelines of RBI are largely silent on hiring Cloud services. On Cloud adoption, institutions depend on MeiTY (the Ministry of electronics and information technology) and TRAI. But given the sensitivity about customer data, banks are looking for guidance from RBI. What kind of data can be on Cloud, what should be the protocol,” said a senior banker.

In the present environment, Cloud, according to banking circles, is not merely a virtualised infrastructure provided by tech biggies like Microsoft and Google as well as Indian firms for data storage.