Can insurance companies host core systems on the public cloud?
Tune Protect Malaysia recently received approval from Bank Negara Malaysia to host its insurance core system on the public cloud. Tune Protect will be leveraging TM and Huawei’s public cloud offerings to re-platform its existing general insurance system (GIS). As the first insure in Malaysia to do so, the hosting of the system will be done on Cloud α Edge — the only Malaysian-owned Hyperscaler Public Cloud that promotes data sovereignty.
The core system comes with a set of Systems Applications and Products (SAP) that will be completely hosted on Cloud α Edge which also ensures Tune Protect’s business is constantly at the forefront of digital transformation initiatives.
Cloud α Edge plays an important role as a digital platform enabler through the offerings of a comprehensive set of cloud services in Malaysia and will transform Tune Protect’s existing business capabilities and services into a highly scalable, and agile cloud-native open-source platform to unlock its existing capabilities into an unlimited digital value. This transformation is crucial to support today’s fast-paced and demanding business operations and in ensuring the company consistently stays competitive in the market.
Aside from providing cloud and digital services, Huawei and TM are also rendering advisory and consultation services in terms of compliance and technical requirements that align with the guidance provided by Bank Negara Malaysia.
“We fully understand the importance for FSI customers, including insurers such as Tune Protect, to have highly secured digital infrastructure while they continue accelerating their digital adoption. Given the rising volume of digital transactions and our commitment to excellent customer experience, we must ensure that the infrastructure supporting our partner is resilient, scalable, and protected on all fronts,” commented Imri Mokhtar, Group Chief Executive Officer of TM.
TM is the only local player with its own core data centre and cloud infrastructure with full data residency, locality, and sovereignty. Through the collaboration with Huawei Malaysia, this infrastructure is reinforced through cloud, AI, and the most advanced cyber security practices and technologies, putting it right on track to become the only Malaysian-owned end-to-end cloud and AI infrastructure service provider. This means the data in the cloud is stored right here in Malaysia instead of abroad, providing a solution to the challenge of data sovereignty.
Insurance on the public cloud
There is no denying that cloud services have enabled organizations to deliver better services. However, when it comes to regulated industries like financial services, the usage of the cloud needs to adhere to regulations set.
While the cloud promises cost reduction and increase agility, most FSIs often rely mostly on the private or hybrid cloud to run most of their workloads. In fact, most core systems are hosted on the private cloud and the public cloud is only used to test and run new applications. This is why the hybrid cloud is often the better option.
However, the public cloud is also becoming increasingly popular. Cloud providers have also continued to develop the cloud to ensure they are able to meet all regulations and compliance. For example, an IBM white paper states the core components of its cloud solutions for the insurance industry include offerings for infrastructure, storage, collaboration, development and test, user support, and virtual desktops, which are all protected with IBM security for cloud computing.
According to a report by EY, insurers in Europe have big plans for expanding their adoption of the public cloud, with most insurers aiming to move at least 80% of their business to the cloud in the coming years, building on the workloads they have already migrated.
In a survey on European insurers by EY, most insurers have recognized how the cloud can drive them forward with these important initiatives, which have long been priorities and were significantly accelerated in the wake of the COVID-19 pandemic.
51% of the respondents that believe public cloud gives an advantage over competitors have defined success criteria. However, 59% also feel data security risk is the most serious concern for them moving their business to the public cloud. Compliance risk (44%), regulatory risk (43%), and people, and skillset risk (33%) were other common concerns.
The reality is though, insurance companies want to leverage the cloud. While there are still regulatory, compliance, and security concerns, most cloud providers are now able to provide solutions on the cloud that can meet these requirements.
In the case of Tune Protect, leveraging TM Cloud α Edge was the best option for them as it is fully compliant with Bank Negara Malaysia’s RMiT. It enables FSI players to reap the benefit of scalability and agility to future-proof their business, while simultaneously protecting customer data, at a superior price advantage.
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