Ian Massingham, Technical Evangelist, Amazon Web Services
For a long time the financial services industry has been taking advantage of the flexibility, scalability and cost savings of cloud computing – a trend which is likely to continue. Cloud solutions are used for a range of technology workloads, from mobile banking to websites to high frequency trading and High Performance Computing tasks.
Many organisations choose to take a pragmatic approach to moving their technology to the cloud. They typically start with green field projects or with ‘low hanging fruit’ applications that will benefit most from the flexibility and scalability cloud technology has to offer. For some financial services organisations, these applications are customer facing and can help provide better service to customers. Here are some scenarios where cloud computing makes a difference:
- High Performance Computing workloads
Retail bank Bankinter, the sixth largest bank in Spain, has adopted the Amazon Web Services cloud to achieve a competitive advantage, by running credit risk simulations to evaluate the financial health of their clients. By incorporating cloud into their IT environment, Bankinter has managed to take their average time for running simulations from 23 hours to 20 minutes. Bankinter also estimates that it has spent only one hundredth the amount it would have had to invest in hardware to achieve the same level of performance.
- Cost savings
The Commonwealth Bank of Australia (CBA) has transformed its IT from running a dozen on-premises applications to a much more flexible approach with the cloud. This has had dramatic results: The bank halved storage costs as well as most app testing and development costs. Using the cloud initially for small workloads, the bank has saved tens of millions of Australian dollars already. When the roll out is completed, cost savings are expected to be hundreds of millions of dollars.
Through using cloud computing technologies, the CBA is also gaining agility by rapidly reducing the time it takes to provision technology. With their previous infrastructure, it took up to eight weeks to stand up a new server, costing several thousand dollars. It now takes just eight minutes and 25 cents to do the same in the cloud. This rapid reduction in procurement time is helping the bank to roll out new initiatives more quickly, and to more rapidly adapt to customer demand.
- Customer service
Pan-European bank Unicredit has approximately 40 million customers and 9,500 branches in 22 countries, making it the largest Central and Eastern European banking network. Unicredit is using cloud solutions for geospatial web and mobile applications. The result is the UniCredit Locator application which helps customers find the nearest offices, branches, and ATMs. This helps improve the customer experience for Unicredit as it is connecting customers to the bank while they are mobile. Using the Cloud to enable rapid development of standalone applications, such as this, is a common first step for organisations that want to experience the benefits of cloud
- Mobile banking
South African technology company Entersekt works with Africa’s largest banks to help them take advantage of the cloud. Entersekt’s mobile applications help improve the security of the retail banking experience and allows users to authenticate individual transactions, such as online card purchases, online wire transfers and money withdrawals at an ATM, by simply choosing to “Accept” the transaction when prompted on their mobile phones. Entersekt’s system sends fully encrypted data from banks including Nedbank and Capitec Bank to the cloud which has the scale to handle massive amounts of mobile phones connecting to its infrastructure. This helps the banks to cope with vast numbers of users connecting to their system all at once – during high transaction periods, such as the end of the month, when people are being paid, or the end of the year, around the holiday and shopping seasons. In the quieter periods the infrastructure is able to scale back down again. This means that financial institutions only pay for the technology they need, when they need it, and do not over-provision hardware to cope with seasonal peaks. By using this cloud based system banks have been able to give their customers a more secure and better retail banking experience, while reducing online phishing fraud to an absolute 0%.
Another banking institution using the cloud for their technology infrastructure is Dutch retail bank Robeco Direct. The bank currently manages over €8 billion in assets and recently moved their entire retail banking platform to the cloud. Robeco had ambitions to streamline their technology platforms, increase agility of their technology while, at the same time, lowering costs. To achieve this Robeco Direct has chosen Ohpen’s ‘bank in the cloud’ software which runs on top of Amazon Web Services (AWS). Choosing the cloud based technology gives Robeco Direct’s customers a technology platform that has better performance than they have had in the past. This initiative has also had the approval of the Dutch Central Bank that the Ohpen hosted solution on AWS complies with all outsourcing legislation.
Whilst cloud computing has obvious benefits, financial institutions need to ensure that their priorities for security and compliance are in line with those of their cloud infrastructure provider. For example, for financial institutions, it is paramount they retain ownership and control of their content. Financial institutions should look for a cloud provider that will not reorganise their data, and will offer their clients the ability to choose the geographic regions in which they locate their technology infrastructure, without moving it. This can be crucial to comply with data protection laws. Another measurement of the suitability of a cloud provider is the level of security they provide. Security should be every reputable cloud provider’s top priority and the savvy cloud customer will demand that their cloud providers provide proof that they have achieved certifications and accreditations, proving the security of their offering.
The most widely respected and applicable of these certifications is ISO-27001. Developed by the International Standards Organization, the controls defined within ISO 27001 are accepted by companies around the world. Cloud infrastructure providers should also undergo Service Organization Controls 1, 2 and 3 (SOC 1, 2, 3) audits to ensure they are complying with their own internal policies. Customers may also like to see certifications and accreditations for their particular industry – one such example being PCI DSS Level 1, applicable to the credit card payments industry.
The cloud is a secure and flexible technology on which to conduct and grow financial services businesses. We expect many more use cases to appear on Amazon Web Services in the near future as the cloud becomes a key tool for innovation and a part of mainstream computing for financial organisations.