IIMs developing SaaS framework for capital markets, banking sector

Researchers from the Indian Institutes of Management (IIM) in Lucknow, Amritsar, and Kashipur have collaborated to address the challenges faced by India’s regulated industries in adopting Software-as-a-Service (SaaS) technologies. Their newly developed framework provides actionable insights for the banking and capital markets sectors to integrate SaaS while managing associated risks effectively.

SaaS, a cloud-based service delivering software applications over the Internet, is widely adopted globally but has seen slower uptake in India, especially in highly regulated industries such as banking and financial services. Concerns over data security, regulatory compliance, and privacy have hindered its widespread acceptance.

The research, led by Professor Arunabha Mukhopadhyay of IIM Lucknow, delves into the root causes of this hesitation and offers a risk-based IT governance framework tailored for organizations in regulated sectors. Published in the Journal of Organisational Computing and Electronic Commerce, the study provides actionable insights for decision-makers.

“While SaaS applications like Google Drive and Microsoft 365 are popular globally, concerns around data security and compliance with stringent regulations have slowed adoption in industries with strict oversight,” Mukhopadhyay explained. “Our framework helps organizations evaluate these risks and make informed decisions about adopting SaaS.”

The research team, which included Swati Jain from IIM Amritsar and Shubhendu Dutta from IIM Kashipur, focused on how leadership in regulated industries approaches risk management when considering SaaS. They identified factors such as risk tolerance, internal security protocols, and regulatory requirements as critical to decision-making.

Through a case study of a capital market firm, the researchers demonstrated how organizations weigh the risks and benefits of SaaS adoption. The framework they developed provides practical steps for mitigating risks, including enhancing security measures and aligning internal processes with regulatory demands.

“Our findings highlight the importance of a strategic approach to managing risks associated with SaaS. This framework not only benefits organizations in navigating these complexities but also helps SaaS providers better tailor their solutions to meet industry-specific needs,” Mukhopadhyay added.

This study offers a roadmap for fostering greater confidence in adopting SaaS technologies, paving the way for modernization and efficiency in India’s regulated sectors.