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DUTCH REGULATOR, DE NEDERLANDSCHE BANK, MAKES CLOUD MIGRATION A SEAMLESS REALITY

Patrick Lastennet, Director Financial Services Business Development,Interxion

By Patrick Lastennet, Director Financial Services Business Development and Bill Fenick, Strategy Director Financial Services, Interxion

Bill Fenick, Strategy Director Financial Services, Interxion

Bill Fenick, Strategy Director Financial Services, Interxion

Since the financial crisis, banks have been under even more scrutiny and are consequently facing greater regulatory and competitive pressures. Institutions are now at a crossroads when it comes to IT effectiveness. With ‘cloud’ at the top of many IT decision makers’ agenda, it’s no surprise that banking institutions are also moving this up the debate chain. While the cloud could drastically change the business infrastructure for these institutions, it’s no secret that the EU imposes strict rules on data privacy, from data processing to data location and transfer. With this in mind, one might think that financial regulators in Europe would take a conservative approach to the implementation of cloud computing in the industry. Fortunately for the industry and those looking to get IT back on track, this is actually not true across the board.

While financial regulators in some jurisdictions are strictly policing financial institutions over their outsourcing choices, others are adopting a far more pragmatic attitude to the cloud. The financial services sector may have more worries over data privacy than other industries, but these stem largely from fears of reputational damage from breaches in customer data security rather than pressure from any regulator.

Particularly vocal about how it has cleared financial institutions in its jurisdiction to utilise a number of cloud vendors is The Dutch regulator De Nederlandsche Bank (DNB). In 2013 DNB approved the use of Amazon Web Services in the Netherlands for the financial services industry. Similarly, measures have been made with providers like Salesforce, IBM, KPN and Microsoft Azure.

Tackling the cloud: a progressive approach

DNB’s outlook and progressive approach to the use of cloud in the financial services industry should be looked at as a model for other institutions. The financial institution has actively taken the lead to further accelerate the inevitable transition to the cloud, allowing other Netherland’s based institutions to reap considerable benefits.

Patrick Lastennet, Director Financial Services Business Development,Interxion

Patrick Lastennet, Director Financial Services Business Development,Interxion

Across the banking sector there is a widely held perception that the industry and its regulators are very conservative to approaching cloud computing. In the Netherlands it’s the banks themselves who have been lobbying the DNB for access to cloud services.

Critics claim that it will always be riskier for a bank to use the cloud than to maintain a data centre in-house, but this is simply not true. Many external data centres necessitate, by sheer scale, the very highest levels of security and are far more resilient than the in-house data centres found at many banks.

Cloud + banks = endless possibilities

When migrating to the cloud, banks can relish in benefits such as significant cost savings and enhanced efficiency. The use of Office 365 and virtual desktops, allows banks to reduce costs. The maintenance of IT (e.g. email, websites and desktops) is not cost-specific to financial services but all enterprise businesses. The issue for banks – sheer size and complexity makes for even costlier IT.

Enter the cloud. A more exciting possibility for financial services-specific applications such as credit risk analysis and high-performance computing. For many, the adoption of public cloud is the only solution available that can effectively manage over-the-counter derivatives, and collaterals across exchange traded derivatives, which can lead to cost savings of up to tens of millions of Euros per year. Unfortunately, we have yet to see many large banks do this effectively. For large banks, there is still a culture of keeping infrastructure in-house, though this has evolved from running proprietary applications and software on bespoke hardware in proprietary datacenters, to running third party software on virtualized infrastructure within a dedicated area in a third party data centre.

Cloud adoption can also allow small to medium-sized banks the opportunity to thrive by granting them access to scalable computing resources without the need for significant capex outlays. What does this mean? By allowing retail arms to be more efficient and effective, they will be able to feed direct value back into the economy. A win win for everyone.

Tackling the cloud: the approach

Based on internal infrastructure, business approach and capabilities, small to medium-sized banks are typically more open to embracing the public cloud. On the flip side, larger banks tend to be more proprietary and look to build their own private cloud environment in an in-house or third-party data centre.

Over the last few years, many banks have subsequently adopted a hybrid approach to the cloud, allowing for greater control of sensitive data while still enjoying some of the benefits of cloud computing. Under this model, the public cloud is most often office automation elements such as email, whereas core banking applications themselves are housed within dedicated private clouds built in third-party data centres.

Choosing a data centre: the influence on migration

Choice of data centres will be critical for banks looking to build a private cloud in a hosted environment as the hybrid cloud approach becomes more and more popular. A top priority and concern is security – financial institutions naturally have the very highest security standards which any outsourced service must be able to match. Additional factors include:

  • Density of power: A virtualised environment requires lots of processors running in parallel, rendering power consumption very high. The cost savings that can be leveraged from the cloud has much to do with the power density of a bank’s chosen data centre.
  • Connectivity and range of locations: A provider with a choice of data centre locations close to financial centres can help banks overcome data sovereignty concerns, enabling them to have infrastructure located in various geographies. Additionally, administration savings can be seen by combining data centres in different jurisdictions under a single service level agreement.
  • Carrier neutrality: It is preferable for data centres to not be owned by carriers or systems integrators who themselves have a vested interest in cloud services. Neutrality can ensure that banks operate with unbundled services choosing whichever connectivity and hardware environment is appropriate for their own, individual private cloud.

Moving forward: a new cloud-driven environment

As financial institutions look to navigate an increasingly competitive and regulated environment, it is encouraging to see regulators such as DNB taking responsible steps towards promoting cloud migration in the banking ecosystem. For banks looking to build private clouds, choice in a data centre provider is key to ensuring a successful migration to the cloud.

Banking

How new trends are creating the perfect recipe for rapid digital transformation throughout the world’s oldest institutions

How new trends are creating the perfect recipe for rapid digital transformation throughout the world's oldest institutions 1

By Wayne Johnson, CEO, Encompass

Digital banking has drastically changed the landscape of financial transactions over the last few years. Technologies used to be limited when it came to banking, however, now they cover every step of banking or investment services, from behind the scenes due diligence checks to customer facing channels. Embracing this change through emerging technologies is the future for the financial industry.

In recent years, financial technology (FinTech) has developed to facilitate online payments, instant banking, trading, lending, and more.

This new era of digital transformation has been driven by technologies such as artificial intelligence (AI), APIs, blockchain, process automation, and internet of things (IoT) technologies, which have provided vital upgrades to the outdated legacy IT systems institutions historically relied on. The aforementioned technologies streamline and enhance processes, consequently generating a much more reliable and pleasant customer experience. These technological advancements have transformed modern banking operations, changing how the banking industry operates today.

Every new advancement in technology in the finance sector, like expanding a financial service offering to business customers, brings with it new risks and compliance obligations, but the latest trends are creating the perfect recipe for rapid digital transformation throughout the world’s oldest institutions.

The acceptance of new-age technologies

Technology is already driving massive changes in the banking landscape as we know it, and it will be an influential contributor to shaping the industry of the future.

Focus on improving customer experience

One of the areas that banks are increasingly trying to improve through digital banking is customer

experience. Customer expectations for online services are constantly being influenced by the experience provided by big tech companies like Google, Amazon, Apple, and Facebook. With their influence, everyone is looking for a similar experience from their own providers. While digitally savvy Millennials are mainly responsible for the rise in expectations across the board, the wide-spread use of digital technologies in most industries has meant that it is more important than ever for banks to be on top of their delivery at all times.

Wayne Johnson

Wayne Johnson

Interactive banking channels

There has been a huge decline in branch visits in recent years, with some re-evaluating their very role, and an increasing shift from just providing transactional services to allowing for a practical banking experience. This was initially done by moving banks to key locations in town centres, investing in video chat services and offering self-service points – all of which has only been possible through the use of digital technologies. Financial institutions have realised that customers, with their busy and demanding lifestyles, like to have a choice and rely on a full range of channels, online access and 24/7 availability.

The rise of open banking

The increased popularity of open banking and rise in API usage is set to drastically change the industry with the flexibility offered by APIs allowing financial institutions and FinTech’s to put innovation at the heart of their service, resulting in improved customer service and enhanced convenience.

The importance of organisational structure transformation

In order to achieve true digital transformation, financial services institutions need to change their organisation functions from the inside out. To reap the greatest rewards, they must promote a “digital first” strategy internally. Only then will they see a positive change and truly release the benefits of digital transformation and the solutions available today.

The  market is constantly evolving , and adapting, and whilst the survival of traditional institutions is not under immediate threat, key players are going to have to modernise their processes and ways of working to keep up with developing requirements and customer needs.

Financial institutions are now starting to recognise the importance of digitalisation, which many other businesses realised was a priority years ago. This is demonstrated by the emerging trends mentioned, which indicate a rapid altering of the operating environment, from increased customer expectations and improved processes, back-end technology and newer operating models to organisational priorities shifting with the times. Digital transformation can no longer be ignored, and financial services organisations will have to embrace it if they want to remain competitive

 

This is a Sponsored Feature.

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Banking

Standard Chartered Bank partners with Microsoft to become a cloud-first bank

Standard Chartered Bank partners with Microsoft to become a cloud-first bank 2

Standard Chartered Bank and Microsoft Corp. on Tuesday announced a three-year strategic partnership to accelerate the bank’s digital transformation through a cloud-first strategy. This partnership marks a significant milestone for Standard Chartered in making its vision for virtual banking, next-generation payments, open banking and banking-as-a-service a reality. Leveraging Azure as a preferred cloud platform, the companies will also co-innovate in open banking and real-time payments to help the bank unlock new banking experiences for clients.

Standard Chartered Bank partners with Microsoft to become a cloud-first bank 3

Embarking on a cloud-first strategy

As part of its digital transformation, Standard Chartered will adopt a multicloud approach, where significant applications, including its core banking and trading systems and new digital ventures such as virtual banking and banking as-a-service, will be cloud-based by 2025, subject to regulatory approvals. The bank will also adopt a cloud-first principle for all new software developments and major enhancements.

As technology reshapes the banking industry, Standard Chartered recognizes that a cloud-first strategy is critical to the bank’s ambition to make banking simpler, faster and more convenient. By being digital-first, the bank will be able to meet the demand for seamless banking virtually anytime, anywhere, and make banking more accessible to people across its network.

Michael Gorriz, Group Chief Information Officer of Standard Chartered, said, “Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients. Cloud providers have invested massively in the reliability and automation of infrastructure and platforms. Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners. To realize our digital ambitions, Standard Chartered has chosen Microsoft as a strategic partner and this partnership marks a major milestone for the bank in adopting a cloud-first approach.”

Bhupendra Warathe, Chief Technology Officer, Cloud Transformation at Standard Chartered, added that “The pandemic has shone a spotlight on the need for businesses and banks to be resilient from a risk mitigation, cost and security perspective. With the increasing trend of an always-on digital economy, commercial and consumer clients are looking for applications and services that empower them to do online banking from anywhere, flexibly and efficiently. The speed and scale of continuous innovation offered by Azure allows us to innovate with the latest AI services to meet evolving client needs. We can pilot new apps in one market and scale them rapidly across others. This is especially important for a bank with a footprint as broad and diverse as ours.”

Standard Chartered will adopt Microsoft Azure as a preferred cloud platform to meet the bank’s need for resilient data centers and cloud services and addressing customers’ security, privacy and compliance requirements across the bank’s global footprint.

The first set of capabilities to move to Microsoft Azure will be Standard Chartered’s trade finance systems, allowing for seamless cross-border trade for the bank’s corporate and institutional clients.

The partnership will also advance the bank’s digital workplace transformation with Microsoft 365 and Microsoft Teams providing modern productivity and collaboration tools to Standard Chartered’s 84,000 employees across its 60 markets.

Co-innovating the future of banking

Standard Chartered will also use Microsoft Azure artificial intelligence (AI) and data analytics capabilities to enhance and automate banking processes as well as deliver hyper personalization of its client products and experiences. Co-innovation in open banking application programming interface (API) and Internet-of-Things-based, real-time payments will also help the bank unlock new banking experiences for clients.

Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft said, “Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand. We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”

Addressing the social needs of communities in the emerging markets

Standard Chartered strives to understand the evolving needs of its communities and be an enabler for change. As a part of the strategic partnership, the bank and Microsoft will explore sustainable finance and business initiatives to expand sustainability across the industry.

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Banking

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card 4

By James Herbert, CEO & founder, Hastee

Let’s begin by looking at how our brains are wired. Think about the hunter-gatherer mindset: when we expend effort, we expect an immediate reward.

It’s therefore no surprise that over time, different areas in society have adapted to our nature as humans. Almost everything we want, we can get on-demand. Whether it’s instantly streaming movies on Netflix, online shopping from Amazon, or fast-food delivery from the likes of Just Eat. And, because of such technological innovations our expectations have accelerated when it comes to the pace of delivery. This isn’t individual to us as consumers in our day-to-day lives, it’s also reflected in the workplace. We ultimately want work to work for us.

Part of this of course comes down to accessing wages. Workers should be able to access a portion of their earned wages whenever they need it, in advance of the monthly pay cycle – whether to help during challenging times or in day-to-day life. We solved this solutionBut, to take this up a level, ready for the future, we introduced the world’s first Earnings on Demand contactless debit card, powered by Visa – giving users access to their accrued earnings in real-time, with the card’s balance dynamically increasing every day they work.

So what is the card, and how will it change how we access earnings in the future?

The basis is very much the concept of Earnings on Demand. At university I set up a company called Brightsparks to connect students with work opportunities so they could earn money. Yet I noticed a common trend. With students often having to wait for the monthly pay cycle to get their earnings, many were having to turn down work simply because they couldn’t afford the travel day-by-day. It became very apparent that not having £20 today could stop them earning £200 tomorrow.

It struck me that payday itself doesn’t have to be a rigid construct that people have to wait for. But this isn’t specific to students. Liquidity is a widespread issue faced by people in all industries and of all ages, and according to our most recent Workplace Wellbeing Study, 82 per cent of people turn to high-cost methods of financing to tide them over when needed.

The Hastee Card effectively makes wages directly accessible: it simply lets people spend a portion of  what they’ve already earned.

Some people might wonder why they’d want to step away from the standard monthly pay cycle. But consider this: the monthly payroll (via a cheque) only came about in the 1960s as an Act of Parliament. Before this, most people were paid weekly in cash. The first major firm that shifted to monthly payments did it for cost-cutting. It worked for the employer more than the employee. In fact, that firm’s employees had rejected their employer’s change of payment type when it was first trialled a decade before (look up ‘Pye Radio’). So the way that workers and organisations interact around pay is not set in stone – it changes as technology and society shifts.

The way we perceive and use money keeps evolving. Apple Pay, Monzo, and PayPal have completely changed the way payments can happen, yet payroll still remains largely unchanged. It’s only a matter of time before disruption becomes more widespread.

Looking at it from the employer side, it has its benefits too. Before the climate changed, businesses were accommodating enhanced workplace benefits such as no-desk policies, flexible or remote working. In all cases by businesses offering more, they tend to see a more engaged, happier and less financially stressed workforce – leading to increased productivity.

Earnings on Demand is ultimately a perk that presents an ethical alternative to high-cost credit options such as payday loans, credit cards and overdrafts. And existing solutions offer zero impact on payroll processes, zero impact on the cashflow of the business and are designed for quick, simple integration.

The Hastee Card is an evolution of this all – preparing for the future. It builds upon and enhances the user experience by reducing friction and offering immediate spending power as well as a path to greater benefits such as cashback and rewards in the not-to-distant future.

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