Cloud infrastructure services can help building societies and other financial institutions accelerate their digital transformation. In this article, I’ll explain how this is possible, and why we’re using Amazon Web Services (AWS) here at ieDigital.
Traditionally, banks have run on private infrastructure. One of the problems with private data centres is that they can’t scale easily. The public cloud allows us to scale the infrastructure very easily, and this ability to flexibly match capacity with demand is primarily why the cloud has taken off.
In digital banking, the variability of demand becomes a real problem. The volume of transactions that run through the infrastructure might vary, but the service you deliver to customers must always be maintained at a high level. During the day, for example, more people are using a digital banking solution than people who use it at 2am. Yet, in a private data centre, you have to buy enough capacity to support your peak demand. This means that at 2am, those boxes are sitting idle in your data centre. The cloud allows you to scale up or scale down in minutes, on the fly. And this flexibility, made possible through virtualisation, is just one of cloud computing’s advantages.
Cloud computing offers virtualisation, and speed!
The technology around virtualisation has significantly advanced in the past five years. The infrastructure has become software. We can now program AWS to build all the infrastructure needed to run our software applications. In the past, we would have written a specification for the hardware required, ordered the physical equipment and a few months later would eventually have applications running on it. With infrastructure as software, we send a script to AWS and it’s built with an application running in 30 minutes. Job done.
The banking software we write at ieDigital now automates the infrastructure build. We treat it the same way as all of the applications we develop: it follows a life cycle, is thoroughly tested, secure and managed in our source code control system. It extends the business application to make the overall technology solution more cost-efficient, performant and scalable. With software controlling the rapid deployment of virtualised infrastructure, we are able to adjust capacity to meet customer demand at speed.
The ability to adapt at speed is essential to an agile approach to systems. It’s a lean approach that reduces waste and enables us to be more responsive to the needs of our customers. Agile software development has been our standard approach for some time. With AWS, we’re able to apply a similar approach to how we deploy the infrastructure the software runs on.
Cloud computing for digital transformation
Building societies often deal with third-party suppliers who run their back-office systems in private data centres. But more and more societies are now offering digital banking services on the web and via mobile applications. As they do this, they can reap the advantages of cloud computing.
The cloud enables software as a service (SaaS). Financial institutions subscribe to an online banking service that’s running on the cloud. This is what we offer at ieDigital. Rather than the traditional fixed capacity approach, we’re bringing flexibility and speed across the solutions we deliver to clients. Our vision is to reduce our clients’ fixed costs and instead provide our clients with the benefits of transaction-based pricing for the digital services they consume.
What the challenger banks are doing
Challenger banks have taken advantage of cloud technology as they launch, which reduces their costs and demonstrates how new entrants can leapfrog old technologies. Monzo has grown from an idea to a fully regulated bank on AWS. The bank has grown to more than two million customers in the UK, and runs millions of transactions per day through its software, all running on AWS.
Anne Boden, Starling Bank’s founder, says the move to AWS would have slashed a huge chunk out of the IT bills she ran up in her previous role as the COO of a traditional bank. “What had taken me £30m … people were doing [in the cloud] for £30k,” she told IDG Connect. This year, Starling won ‘Best British Bank’ at the British Bank Awards.
Today, UK building societies have a similar opportunity. ieDigital’s goal is to help building societies reap the benefits of cloud computing as they move forwards with their own digital transformations. Using cloud computing, ieDigital can help to ensure that speed, agility and reliability is at the heart of their transformation strategy.