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By Simon Hull, Head of Financial Services at BJSS
In my recent whitepaper, “Banking in the cloud - how to get it right” I looked at why the cloud is an underpinning enabler of enterprise transformation and five key focus areas to ensure full value is achieved. These areas are:
When you look across the banking industry, there are many differences in strategy, levels of adoption and maturity when it comes to the cloud. Many banks have made great strides on the journey and are achieving great success by focussing on these five key areas.
In this article, we look at five success stories across the UK and US and outline how a focus on the five key areas outlined above has been critical to their success.
1. ABN Amro
ABN Amro has been around for 300 years and is the third largest bank in the Netherlands. They offer a range of banking products and services across personal, private, commercial, and corporate & institutional banking. Their strategy is “a personal bank in the digital age”. This is underpinned by an aim to better understand and get closer to the clients to tailor products and services to their needs and be there for them during key life milestones such as buying a home or starting a family.
To execute this strategy, ABN has embraced the cloud and partnered with Microsoft to develop a cloud strategy and Centre of Excellence that has allowed them to break down silos and enable data sharing and advanced analytics across the organisation. This has been done using a data mesh architecture that enables clear ownership of “data as a product” within business domains whilst also efficiently sharing data across business areas that have different uses for the same data.
The Azure suite of tools, such as Databricks and Synapse Analytics, enabled seamless data integration, data processing at scale and the ability to create analytics workflows to generate insights. The solution has empowered teams to use and combine data in new ways, query data, and act on insights to drive enhanced customer experience and business decisions.
A cloud-first approach has also come with improvements to delivery processes to increase the speed of change through DevOps automation while also ensuring regulatory considerations around security and compliance, particularly storing sensitive data in the cloud, were fully understood and met. This has enabled the bank to move safely forward at pace, with empowered teams delivering innovative products and services to customers more quickly.
HSBC is one of the world's biggest banks serving over 40 million customers in over 65 countries. They recently increased IT spending by $900M in 2021 to $6 billion, with a CEO-driven focus on continued digital transformation driven by a cloud strategy. HSBC claims that 27% of its workloads are now on the cloud, showing significant progress to date.
In July 2020, HSBC signed a long-term deal with AWS to “drive innovation, automate key processes, and enhance operational efficiency across a range of personal financial services''. This partnership started in HSBC's Wealth & Personal Banking business, where it has focussed on leveraging the cloud to support its business objectives of scale, resiliency, security, and innovation.
The “bank in your pocket” business strategy is to build out services and offerings over digital channels and keep pace with customers increasing expectations, servicing them where and when they want. A key part of this has been organisational change and achieving speed of decision making through empowerment. The cloud has enabled this along with the technology’s data capabilities. This approach has been scaled by building enterprise-wide accelerators such as common infrastructure patterns and policy as code.
Cloud adoption has proceeded hand in hand with an Agile and DevOps transformation and process modernisation to remove impediments to change. A partnership and rollout of the CloudBees CI/CD platform provides standardisation, automation and improved productivity across their 23,000 developers, giving them more autonomy and the ability to push new customer features to production safely and frequently. This area is significant and complex for a bank like HSBC. While they have a cloud-driven vision, they have a hybrid environment with change often cutting across existing on-premise and new cloud-based platforms.
3. Atom Bank
Atom Bank was founded in 2014 and is the UK’s first app-based retail and business bank, with technology at the heart of its strategy to deliver exceptional customer experience and business agility to create new products and services at speed.
When Atom initially launched, it hosted its banking app in a third-party data centre, as the cloud was not ready due to regulatory concerns. More recently, however, Atom has partnered with Google, and it began a migration from on-premise managed infrastructure to Google Cloud in 2019. The bank has embraced an innovation mindset and the power of data capabilities as a source of competitive advantage.
The ability to capture and analyse customer behaviour data in real-time enabled the generation of actionable insights to feed into product and service development. This approach has been working, with customer satisfaction ratings steadily increasing to 4.7 on TrustPilot and app store ratings moving from 3 to over 4.
A culture of innovation and experimentation enabled Atom to take these insights and innovate to launch new products quickly and cheaply on the cloud, without the up-front costs and time delay of acquiring hardware. Atom CTO, Rana Bhattacharya, explained last year how the cloud has enabled this, with development teams able to develop rapidly and test and validate new features with a subset of clients before rolling out changes to all.
4. BNY Mellon
BNY Mellon is the world's largest custodian bank and security services company, with a strong focus on technology innovation as a differentiator.
Data strategy and actionable analytics were called out as a top technology priority last year. As part of this strategy, BNY has partnered with Microsoft and used Azure as the foundation of its cloud-native data management platform. Data is viewed as a strategic asset, and the ability to mine data for value in flexible ways that empower decision making is critical for competitive advantage, both for BNY and for the solutions it provides to its clients.
BNY aimed to put the power to experiment and general insights from data into the hands of business users, rather than just data scientists, truly enabling data democratisation. They saw many challenges to doing this, such as growing data complexity, the impediments of legacy platforms and the lack of tools for unstructured data analysis.
This was achieved by developing Data Vault, an Azure-based data management solution that BNY could use and offer to its clients. Data Vault can handle many datasets at scale and seamlessly integrate with ecosystems. It provides a data fabric to break down silos and enable sharing across an organisation, and it provides users with advanced analytics capabilities and a low-code environment. Critically, the platform is also designed to flexibly change as market, client, and regulatory landscapes evolve.
The capabilities of Data Vault have truly enabled business innovation. An example of the use of the platform is in providing ESG data and analytics to investment managers, allowing them to navigate the varying quality of available ESG data to make more informed investment decisions.
5. Capital One
Capital One was founded in 1994 and offers banking services and credit to people and businesses in the US, Canada and the UK through a range of products, including credit cards, accounts and lending. Capital One has been credited with revolutionising the credit card industry through the use of data and technology and is widely seen as an innovative technology-driven bank.
In 2015, Capital One decided to run everything in the public cloud. This set a clear path for all new applications and a plan to systematically re-architect existing applications. The key driver for this was to create the ability to continually transform and optimise the customer experience through innovation and personalisation. Capital One created an enterprise-wide long-term vision for the cloud that was aligned to its business strategy and linked to value. This enabled everyone to get behind the strategy.
To achieve this, Capital One partnered with AWS and set about solving difficult problems such as security and compliance, and in particular, ensuring the safety of sensitive customer data. A cloud risk framework was developed along with enabling technology and tools, for example, to automate the detection of compliance and policy violations, allowing the teams to innovate safely within well-defined guardrails. DevOps processes were also introduced to allow for a faster speed of change.
Capital One has seen the move to public cloud as a “game changer” for innovation, enabling it to focus on delivering customer value rather than managing infrastructure, to move from delivering new features in days rather than weeks or months through instant infrastructure provisioning, and by taking advantage of the enhanced data and analytics capabilities provided by AWS and the Snowflake Data Cloud.
As an example, Capital One has taken advantage of the ability to bring together vast quantities of data across channels and external sources to accelerate its use of Machine Learning, enabling it to build and continually train models. This has helped Capital One to launch new customer services such as Eno, the company’s intelligent virtual assistant.
The five banks covered in this article are by no means the only banks getting cloud right, but they are all great success stories about how to achieve the full value of cloud. They all started with a clear strategy for the cloud and aligned this to business strategy and value delivery. They understood the scale of organisational and people change and made this a core element of the programme. A focus on how enhanced data and analytics could deliver improved customer value enabled them to democratise and empower their people. And finally, they all identified the need to streamline governance and change processes and develop enterprise-wide accelerators to achieve rapid delivery and scale.