How Banks Can Thrive By Moving to Cloud

November 22, 2018 Lawrence Crowther

By the end of 2019, worldwide spending on digital transformation will reach US$1.7 trillion. That’s a 42% increase from 2017, according to IDC Futurescape: Worldwide Digital Transformation 2018 Predictions. But you can’t just throw money at a problem and expect it to fix itself. To unlock the full potential of digital transformation, it is essential that organizations understand the key pillars in transitioning from a traditional enterprise to a modern software company. These include: the adoption of agile methodologies, deployment of a next generation cloud-native platform, and creating and responding to fast-feedback loops.

First, we’ll start with a quick explanation of why banks would want to adopt cloud technologies. Then we’ll talk about what one bank has gained from a wholehearted embrace of digital transformation.

The Cloud Opportunity for Banks

There are different approaches organizations can take when pivoting to cloud.

One of which is cloud-enabled applications: these are applications that were originally developed for deployment in a traditional data center but have moved to cloud. Some of the characteristics of the applications have been tweaked of customized for the cloud.

Cloud-native, on the other hand, is an approach to building and running applications that leverage the advantages of the cloud computing delivery model. It is about how applications are created and deployed, rather than where. Developing and operating applications in a cloud-native way will allow banks to bring new ideas to market faster and respond sooner to customer demands whether the applications are running in the public cloud or on-premise in a hybrid cloud model.

Either way, a well-developed cloud strategy requires a platform for creating and deploying cloud-native applications and services that automates and integrates these concepts:

 

  1. DevOps: Collaboration between software developers and IT operations with the goal of constantly delivering high-quality software that solves customer challenges. For a bank, this means bugs can be fixed faster, ensuring uptime for their customers.

  2. Microservices: An architectural approach to developing an application as a collection of small services. Does your bank still have to send out warnings that their system will be offline for upgrades? If using a microservices architecture, services and apps can be updated independently, and don’t require taking down the whole system.

  3. Containers: Using operating system (OS)-level virtualization, a single OS instance is dynamically divided among one or more isolated containers. This offers both efficiency and speed compared with standard virtual machines (VMs). This would allow banks to respond to customer demands quicker by scaling up and equally shutting down capacity when not required, saving millions.  

 

Going Digital in the Banking Industry

According to Pivotal’s recent Benchmark report, where we polled over 1,600 respondents from across the globe (including Australia, Singapore, and Japan) and numerous industries, we discovered that only 34% of banking apps are built to run in the cloud. This means the road to cloud is just beginning for this particular industry. However some banks are starting to lead the way.

Southeast Asia’s internet economy is projected to hit US$200 billion by 2025. As the third largest market globally in terms of internet users, tapping on the digital natives is definitely the way to go for organizations in the region.

DBS Bank, one of Asia’s most awarded banks, and the largest in Southeast Asia, has recognized the customers’ shifting preference to digital channels. The bank first embarked on its digital transformation journey in 2014, relooking at how they can deliver a holistic digital experience and helping customers to “live more, bank less.”

Siew Choo Soh, who leads the Consumer Banking and Big Data/AI Technology for DBS Bank, spoke about what it takes to follow up on this brand promise during her main stage presentation at this year’s SpringOne Platform: “In order to [live more, bank less], we believe that we have to fundamentally re-architect our infrastructure, as well as application to one of cloud-native.” This shift to the cloud economy was one the company saw lots of opportunity in.

To improve agility within the organization, DBS started looking at how they could transition from monolith into microservices and redesigned the way they worked—from waterfall to an agile work process, which they learned from a series of engagements with Pivotal Labs. The bank has also chosen Pivotal in its digital transformation journey in 2016. This meant the use of Pivotal Cloud Foundry (PCF) as a platform-as-a-service (PaaS), which enabled DBS to build platforms from scratch and replace many of the monolith apps that were reaching end-of-life. Since then, the bank has achieved outstanding results:

 

  • Up to 6 times improvement in time-to-market for major product releases

  • Up to 10 times improvement in lead time and up to 6 times reduction in effort

  • Enabled self-provisioning of infrastructure for developers

  • An impressive achievement of zero downtime in the past two years

 

Slide from Siew Choo Soh’s talk, which can be watched here.

But their journey did not stop there. In 2017, DBS embraced open source and launched the world’s biggest banking API portal—built on PCF! To date, DBS has more than 200 live APIs and more than 60 live partners to support businesses and their customers’ needs. Additionally, they announced a unique hiring process—a two-day hackathon—to build a strong ecosystem of tech talents. In its second year, the hackathon resulted in the bank hiring over 100 developers after the first day of the event.

This has all led to some high accolades: Earlier this year, DBS became the first Asian bank to be named “Best Bank in the World” by Global Finance magazine. Furthermore, it was also named “World’s Best Digital Bank” by Euromoney in 2018. It’s a great testament to its efforts in digital innovation by the team at DBS and Pivotal is honored to be part of that journey.

 

In a Nutshell

If you need to reinvent your organization for cloud adoption, remember these lessons from the DBS Bank’s strategy:

  1. Agile is key. To improve productivity, quality and ultimately, end-user experience, agile should be a key organizational goal for any business—regardless of its size. That said, organizations adopting agile must be culturally ready for the change.

  2. Find your talent. While it’s vital to foster your own pool of talent, conducting external hires at scale will propel organizational growth. Creating opportunities for candidates to work at the organization will allow bilateral exchanges between both individuals and employers to get a better sense of whether they are the “right fit.”

  3. Embrace DevOps, Microservices, and Containers. This combination is going to help you ship software faster in a safer and more robust way. To users this will mean applications are more consistently available and dependable, and their feedback will be heard and addressed quickly.

These lessons can help any bank or large company adopt a cloud strategy. If you need more digital inspiration: watch these stories of digital transformation from SpringOne Platform 2018.

About the Author

Lawrence Crowther

Lawrence Crowther is the Head of Platform Architecture for Asia Pacific and Japan at Pivotal.

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