Blogs > Embrace the public cloud to power a new generation of banking
05 octubre –

Embrace the public cloud to power a new generation of banking

Financial institutions hesitant about cloud adoption could miss out on critical advantages as we approach the future of banking

Alexander Hamilton
6 min

Cloud computing has revolutionised how companies and institutions interact with customers, clients, and the broader ecosystem. The technology has seen widespread adoption in many verticals.

Financial institutions are a top target for cybercriminals and state actors. They are subject to some of the tightest regulatory controls of any global sector. These factors mean banks have yet to grasp the potential of cloud migration.

Up to 80% of banks in the UK have migrated less than 10% of their business to the cloud. A similar number of US institutions claim to be less than halfway through their cloud strategy. Those looking to take advantage of the significant benefits the cloud brings should look to the progress made by their competition.

All but one of the 20 largest US banks have announced public cloud strategies. IBM launched a financial services-focused public cloud and immediately added 10 of the world’s largest banks to its books. Amazon Web Services (AWS), which accounts for 33% of global cloud infrastructure, counts Barclays, Allianz, Capital One, Nasdaq, Nubank (and Pismo) among its customers.

Move beyond the silo

The public cloud is traditionally seen as a method to launch applications and individual services rapidly. Yet the benefits for the middle and back office operations are clear:

  • Better synchronisation of business units through data sharing
  • Enhancing resilience through protection from outages, downtime, and disruption
  • Reduction in exorbitant maintenance costs and hardware expenses
  • Implementation of cloud-specific automation, data streaming, and orchestration
  • The attraction of new tech-savvy talent

Migration to the cloud is the journey, not the destination. It sets the stage as an enabler or more effective and innovative core business. Achieving the goals outlined above requires a redefinition of operating models.

Executives at banks used to on-premises data centres or even private cloud configurations may baulk at the prospect of wholesale cloud adoption. Luckily, technology providers like Pismo enable a composable approach to change.

Financial institutions can run a public cloud-based platform alongside legacy systems without prohibitive costs. They can migrate a few accounts and test the system before committing to a full transfer. 

Pismo has developed a tool kit to help banks move account data to our cloud-native platform, using either our APIs or data files. It means our clients have total visibility and control over transferred data and other details during this process.

Cora and BTG Pactual: Pismo success stories in the cloud

Cora is a Brazilian digital bank that offers free checking accounts, debit and credit cards, and billing management for small and medium enterprises (SMEs). It enables these firms to receive payments free of charge, including instant and regular bank transfers.

Cora uses the Pismo cloud-based platform, hosted on AWS, to integrate its core systems with Visa and card embossers. It approves 80% of the new accounts in less than three hours, a short time compared to other digital banks in Brazil.

Two years after launching in 2020, Cora has exceeded 500,000 account holders.

BTG Pactual, the most significant investment bank in Latin America, launched BTG Pactual Banking, its digital retail bank (initially called BTG+) in Brazil at the beginning of 2021 – after just eight months of development.

The digital bank uses the Pismo platform, hosted on Amazon Web Services (AWS), for back-end processing. It leverages the platform’s features for core banking, card issuing, payment processing, and other financial services. The AWS infrastructure assures the resilience and scalability that the bank needs.

BTG customers can set spending limits per category, such as restaurants, supermarkets, and clothing purchases. Based on customers’ definitions, the app exhibits insights to let them know how to optimise their financial life.

The BTG Pactual team also activated tailored financial advice, an interactive and two-way connection to the investment app and a dynamic insights section that changes daily according to the customer’s behaviour.

Migration to the public cloud

Banks looking to catalyse cloud transformation should look to do so in stages. First, adopt a top-down approach, with buy-in from senior management. The public cloud is an operational opportunity, not a nice-to-have for single applications or services. Identify use cases to start the initial journey. Test the waters with a gradual deployment using partners willing to facilitate it.

Next, develop organisational experience to manage and mitigate challenges on the road ahead. Data issues in cloud migration are often the result of misconfiguration rather than flaws in the technology itself. Alternatively, work with a services provider to ensure any roadblocks are overcome effectively.

Ensure resiliency and security by working with your provider to adopt best practices. AWS’ Well-Architected Framework provides a skeleton on which secure, high-performing, resilient, and efficient infrastructure is built.

Following this, identify areas of the business to be remodelled and revamped using the cloud. Cloud adoption brings significant benefits beyond a simple “lift and shift” of existing processes into a faster environment. Utilise the elasticity, scalability, and modularity of a cloud-based platform like Pismo to create and deploy innovative products and services.

The risk and resiliency question

A financial institution should ensure any partner it works with meets regulatory requirements. Public cloud-based platforms feature enhanced security and resiliency capabilities. AWS, for example, complies with various measures. This includes PCI-DSS, SEC Rule 17-a-4(f), Reg SCI, EU Data Protection Directive, FedRAMP, GDPR, FIPS 140-2, and NIST 800-171, among others.

AWS also offers several security services. These manage access, analyse data for irregular activity with machine learning capabilities, mitigate DDoS attacks, encrypt data, and send alerts whenever changes are made to AWS resources. AWS customers can also access governance-focused, audit-friendly service features to meet regulations and audit standards.

Public cloud providers know that they live and die by the security credentials they display to their customers. Prominent vendors make significant investments to ensure downtime and disruption are minimal. The risk of systems failure is often lower than the banks’ own internal infrastructure.

Want to know more about how the public cloud can power your next-generation transformation? Get in touch with us today.

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