Cloud computing in the Kenyan banking industry

Abstract

Cloud Computing refers to the offering of dynamically provisioned computing services comprising of a mix of application platforms and or hardware capacity to users through a network of geographically disbursed systems. The service is typically offered through geographically disbursed and large data centers based on well-defined service level agreements. Given that firms are adopting this technology due to the benefits it provides such as cost savings, reliability and scalability, the objectives of the study were to establish the extent of Cloud Computing adoption in the Kenyan banking industry, its benefits, risks and mitigation strategies for the risks. The study was a census of the 44 commercial banks operating in Kenya. Primary data was collected using a questionnaire administered to ICT managers or their equivalents who could provide the required data, out of the 44 banks only 40 responded. The quantitative data collected was analyzed using means, percentages and frequencies; in addition factor analysis was used to determine the suitability of the mitigation strategies. The results were presented in frequency tables to facilitate comparisons and graphs to identify any underlying trends. The study found out that 57% of the respondents were male, 60% of the respondents were in their middle ages, 62% of the respondents had attained degree level of education while 8% of the respondents had attained post graduate level, 52% of the respondents were ICT managers and 60% of the respondents were from banks whose total assets lied between 10 and 40 billion. 90% of the banks that responded had not adopted Cloud Computing but they recognized the benefits it offers such as minimizing IT costs both upfront costs as well as ongoing maintenance costs. Despite these benefits banks identified risks such as security, vendor lock-in, loss of governance and compliance issues as reasons as to why they were reluctant to adopt Cloud Computing but agreed that auditing vendors of Cloud services and coming up with standard protocols on how the technology can be made safe for use by banks as some of the mitigation strategies that can be used against the risks. The study concludes that banks in Kenya are yet to fully adopt Cloud Computing despite its well documented benefits of cost savings, business continuity, business agility and focus. This is as a result of all the risks that banks face when adopting Cloud Computing. The study concludes that banks need to build their confidence in the technology by proactively taking steps to put in place a framework with all stakeholders that would push for Cloud Computing adoption within the industry.