Transforming legacy system by migrating to the cloud

Stephan Schmidt-Tank, Senior Manager, Financial Services Business & Market Development at Amazon Web Services 

  1. Is helping clients with core banking software something that AWS has looked at, or would consider looking at?

We’re seeing a wave of change sweeping the industry directly related to financial institutions’ move to the cloud, and core systems are no exception.  Our customers – both financial institutions and providers of financial solutions – are using AWS services to both transform legacy core systems by migrating them to the cloud, and to innovate in this space by bringing new cloud-native core systems to market.

For example, Monzo, a U.K. based bank that is currently live with limited-edition debit cards, uses the AWS Cloud to host its core banking application to leverage scale and flexibility of cloud computing as well as eliminate the guessing game around capacity, provisioning, and infrastructure management.

Another great example includes our work with Starling Bank, the UK mobile-only challenger bank designed and built completely on the AWS Cloud. The bank uses AWS to deliver and scale infrastructure on demand while ensuring proper governance by managing developer privileges for releases on AWS via automation with Slack. Starling Bank also engaged directly, and early on, with UK and EU banking regulators on its use of AWS to build and operate all of its infrastructure, including its core banking. It was able to demonstrate to these bodies that it could effectively meet its security and compliance obligations.

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Mambu, a banking technology provider that helps banks, microfinance institutions, and other financial innovators deliver essential banking services to individuals and emerging enterprises around the world runs all of its services on AWS. When Mambu was building its product, it was looking to disrupt a market dominated by software from well-established vendors. As a result, it had to consider what financial institutions expect from existing banking software, as well as what new aspects would add value.

“One of our key requirements was high availability,” said Frederik Pfisterer, chief operating officer and cofounder of Mambu. “Our customers expect 99.99% uptime, so that was a must. They also want to see that we can respond to the strict regulatory and security requirements that many of them have.” Pfisterer thinks AWS has been instrumental in the company’s growth and that it will continue to support Mambu’s expansion in the future. “We’ve acquired 150 customers very quickly, and we couldn’t have done that if we didn’t have a single code base that AWS helped us deploy in multiple different ways,” he said. “Using AWS, there are no barriers to scaling our operations tenfold, which we plan to do over the next few years.”

Another example is AWS’s work with Infosys Finacle, which provides solutions to address the core banking, e-banking, mobile banking, CRM, payments, treasury, origination, liquidity management, wealth management, and analytics needs of financial institutions worldwide.

With access to Finacle’s solutions, run on AWS, banks have the ability to choose provisioning depending on their business demands, reducing infrastructure and application management costs, while help them service their customers with real-time services on the AWS Cloud. In addition, a broad range of technology support from AWS helps banks move away from proprietary and constrained legacy environments.

  1. Have any clients asked for assistance with transition to a new core?

Today there are a growing number of financial services organizations using AWS for everything from development and test, to companies running data intensive financial services risk simulations. And in discussions with our customers, we’ve seen cloud adoption has accelerated across the industry to seize long-term competitive advantage. This includes customers migrating existing core banking systems to AWS as well as implementing new ones.

For example, OakNorth Bank delivers innovative services to its customers faster than ever and maintains security and compliance using AWS. A change in guidelines from the UK’s Financial Conduct Authority in late 2015 allowed OakNorth to migrate their on premise Mambu instances to the AWS Cloud, noting that they chose to work with Mambu because of the company’s speed and flexibility.

The company noted that, “Security is easier to handle in the cloud too. AWS gives us the ability to resolve technical constraints around security, such as putting customers on dedicated instances, deploying virtual private networks, controlling access, and encrypting data. It’s more affordable and faster to implement changes in AWS than on-premises, so it lowers the burden of adding higher security.”

Additionally, the Dutch banking regulator, De Nederlandsche Bank (DNB), approved the use of AWS across all platforms of the Dutch financial system enabling the country’s financial organisations to take advantage of the benefits of cloud computing. This approval allowed Ohpen, a company that provides banks with a core banking platform for retail investment and savings accounts, to do so on the cloud. By using AWS, Ohpen can deploy new features in three months or less, compared to the time it took using traditional IT, which was a year or more, and their institutional customers estimate being able save up to 80 percent in IT costs by using the Ohpen platform in the cloud.

  1. What software services does AWS provide for financial services clients beyond secure data storage on its servers?

AWS has been continually expanding its services to support virtually any cloud workload, and it now has more than 100 services that range from compute, storage, networking, database, analytics, application services, deployment, management, developer, mobile, Internet of Things (IoT), Artificial Intelligence (AI), security, hybrid and enterprise applications.

In addition to AWS solution architects, enterprise support and professional service teams specialized on financial services, AWS maintains healthy partner relationships to enable our customers to deploy innovative solutions across the value chain – whether to manage risk, optimize operations, or extract insights from data. We work with Financial Services Partner Competency Program members, who have demonstrated industry expertise, readily implemented solutions that align with AWS architectural best practices, and have staff with AWS-certifications, such as Avoka Transact, Mambu, 2nd Watch, FIS Prophet, and IHS Markit.

The AWS Marketplace also offers customers even more choice. It is a managed and curated software catalog with an ecommerce storefront, that helps customers innovate faster and reduce costs, by making it easy to find, buy, and immediately deploy and manage third party software. Customers can quickly deploy pre-configured software solutions in a number of deployment modes such as AMIs, SaaS, and Desktop software. Customers pay for only what they use, on their AWS bill. AWS Marketplace features over 35 software categories including Security, Networking, BI, Storage, Databases, Operating Systems, and Business Software. Our selection grows monthly and is in excess of 4,200 listings from over 1,280 sellers.

  1. Does AWS provide support to financial services clients who want to use artificial intelligence to make the most of their data (both at the back and front end)?

In financial services, we are seeing increased use of newer technologies like artificial intelligence and machine learning to bring greater efficiency to existing processes and to extract deeper value from data sources in the industry. Traditionally, banks and insurance companies found making effective use of AI and ML models challenging. Today, customers can use AWS AI/ML services to create new insights from data or achieve process efficiencies in much simpler way.

With the introduction of services such as Amazon SageMaker which makes machine learning accessible to everyday developers by eliminating the heavy lifting of building, training, and deploying models. AWS also provides solutions, such as Amazon Rekognition for deep-learning based video and image analysis, Amazon Polly for translating text to speech, Amazon Lex for building conversations, Amazon Transcribe for converting speech to text, Amazon Translate for translating text between languages, and Amazon Comprehend for understanding relationships and finding insights within text.

A number of financial services companies are using AWS machine learning services such as Capital One, who will be using Amazon SageMaker to bolster the skills of its machine learning experts and the graph database, Amazon Neptune, to fight money laundering, along with Dow Jones, Intuit, and Liberty Mutual.

Additionally, the Customer Communication Services (CCS) team at FICO, which helps banks, telecommunications, and utilities around the world connect more effectively with their consumers using analytically-driven, intelligent, automated channels. Using the Amazon Polly Text-to-Speech service, they can now create and edit voice responses in seconds versus days. This innovation has made FICO more agile and responsive to the needs of their customers and they are now able to generate speech recordings for their interactive voice response systems and voice notification products at speed, which is essential for their customer organizations who are working in dynamic and highly regulated markets. And, they can do this across dozens of languages helping them enter new markets and simplifying what would otherwise be a difficult and expensive exercise recording live talent.

AWS is also helping new entrants in the space re-think how they improve customers’ experiences. Leading robo and automated-advisors are building their businesses completely on AWS. Betterment, which uses technology to make investing easier and more efficient, while also helping to increase after-tax returns, has worked with AWS to easily provision infrastructure and offload functions to various services that once required entire teams to manage.

They’ve gone all in with AWS, leveraging services like Amazon Redshift, AWS Lambda, AWS Database Migration Service, Amazon Kinesis, Amazon DynamoDB, and more. Today, they are using over 20 AWS services to develop, test, and deploy features and enhancements on a daily basis.

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