Even in the cloud, banking is tied to legacy tech
While IBM's recent purchase of Red Hat shows the importance of cloud computing to banks and beyond, it's clear that — for financial institutions, at least — the cloud is not yet powerful enough to grapple with all the issues that legacy systems were built to handle.
Serverless "might seem limitless, but it still has its limits,” Jason Katzer, the director of software engineering at Capital One, told attendees at Serverless NYC, a one-day conference in New York this past week.
Even an executive from Google, which provides serverless capabilities in Google Cloud Functions, cautioned the audience about the hype.
“It doesn’t solve general computing needs, which is why there isn’t more adoption,” said Kelsey Hightower, staff developer advocate for Google Cloud Platform. “If you keep overpromising, people will retreat from the platform.”
That is not stopping banks from exploring the technology, however. Capital One has said it plans to move completely to the cloud sometime next year. BBVA is also a big proponent of the cloud for development and the ability to quickly upgrade digital products.
"For a bank like BBVA, which is already a long way down the digital transformation path — and we have close to 50% of our customers now engaging with us on digital platforms — serverless or cloud-based services are an essential part of our technology stack,” Iñaki Bernal, BBVA’s global head of architecture and IT innovation, told American Banker in an email.
The appeal of the technology is that banks don't need to rely on their own infrastructure to quickly alter offerings, such as a mobile banking app. It also allows anyone worldwide to make needed changes.
"For building and delivery of new products and services, this access to cloud also enables a truly global approach to delivery,” Bernal said. “Take our mobile app for example. We can have elements of it built in any of our design centers around the world, with country managers then able to call in those elements they need for their market when they need them and all of it delivered in a way that is fast, efficient, on-demand and scalable."
Serverless computing — where companies rely on cloud providers for their servers, rather than a traditional, on-site network — is also viewed as more cost effective than relying on traditional infrastructure because Amazon, Google and Microsoft only charge a fee each time the platform is used. There are no ongoing maintenance costs.
Companies such as Iguazio show what’s possible for banks with serverless (the name is a bit of a misnomer since a server is still required by cloud computing firms, as opposed to banks or other firms). The New York company is working with financial institutions such as Capital One to deliver them real-time, artificial intelligence-enabled data to help banks make quicker decisions for their customers based on such information.
Iguazio collects data, adds context to it and sends it to a bank through its continuous data platform, which contains serverless functions. Banks can use this data and apply it to applications that take advantage of a customer’s geolocation or transaction history. For example, real-time geolocation data could help a bank push relevant notifications to a customer’s smartphone to alert them about nearby retail deals.
“The value of data is higher when it’s fresh,” Yaron Haviv, Iguazio's founder and chief technology officer, told American Banker at the conference.
Haviv said banks have been slow to embrace the cloud because the industry has been reluctant to swap out core banking systems. BBVA and Capital One are outliers at the moment, but as the technology improves, banks may be forced to adopt it to keep pace.
“I don’t think the banks are there yet,” Haviv said. “They want to get there, but they’re still chained to traditional methods.”