10 minute read
The only way is up
For most banks, it’s a case of how, not if, they will adopt Cloud technology. We asked senior execs from NatWest’s Mettle, open banking-driven startup Mojo Mortgages and Cloud services provider Hyve what difference it can make
The battle for business facing banks has never been more intense than it is now.
Speed of innovation is a key driver in a sector where digital challengers have dramatically ripped up the traditional landscape for so long dominated by incumbent, heavyweight institutions. And, if tech now defines success, then the Cloud and how chief technology officers deploy it, is probably the single most influential contributor – potentially levelling the playing field between legacy operators and agile newcomers and redrawing the CTO’s job spec in the process.
First, though, legacy banks must be sure they’re picking the right fight; deciding when to square up to challengers has
“Mettle is built for members of the growing passion economy and we’re seeing more and more of those” says Freeman.
Sitting, as it does, inside NatWest’s innovation arm gives the spinoff bank the best of both worlds.
“We attempt to operate like a startup, with our ways of working and our structure, but we leverage the very best elements of being part of the NatWest experience,” says Freeman.
“Particularly at Mettle, the customer is at the centre of everything we do, and we serve their needs through technology, whether that’s apps, websites or the services they support. In order to deliver those experiences, I have to work very closely with the chief product officer, the chief operations officer and the chief marketing officer at Mettle, and I think our teams actually, culturally, are much more entwined.
“Product and engineering are matrixed – they work together – and they both own the customer experience, the features we’re building, all of the strengthening and hardening, the security, privacy, resilience and scalability considerations, as well. Those things together are extremely important.”
Chris Thacker, until recently CTO at
become a crucial factor in a winning or losing strategy. UK banking giant NatWest Group has recently experienced both sides of that particular coin.
In May 2020, the group, then known as the Royal Bank of Scotland Group, closed its digital retail bank Bó only six months after a high-profile launch in which it directly pitted itself against successful neobanks such as Monzo, Starling and Revolut... and came up short.
By contrast, NatWest’s speedboat SME digital business bank Mettle has proved a hit since its low-key debut in 2019.
It’s grown to 250-plus employees, some of whom were incorporated from Bó following its demise, and it’s now grown up enough to appoint its first culture and people boss, to promote initiatives such as hybrid working.
Wayne Freeman, Mettle’s CTO, says its success was made possible by the fact the startup got its target market right from the get-go. And that market was the ‘passion economy’ – the small business entrepreneurs, freelancers and sole traders, fuelled by dreams of independence, and many seeking an alternative to the tired economic models and ways of working the pandemic has shot holes in.
Above the Clouds:
So many things would have been impossible without this tech
digital mortgage broker Mojo Mortgages, which has set out to disrupt, change and update the industry, is also unequivocal about the importance of technology and, by extension, the people in charge of it.
“We’ve definitely left the world where technology was seen as a cost; it’s now viewed as an enabler, a business’ competitive advantage,” Thacker says.
“So, whether CTOs are the most important executives in the C-suite is probably a debate that could go on forever, but their importance is growing, I imagine, every year.”
Both Mettle and Mojo were built on Cloud architecture, which, Freeman and Thacker agree, is a prerequisite for financial startups to provide the speed and agility they need.
“I wonder if something like Mojo would even exist if it wasn’t for Cloud systems,” says Thacker. “I refer to them as force multipliers. They allow it to have very small teams focussing on problems, and those teams can spin up an environment in seconds, which means that they can deploy to production in one day, which is hugely powerful.”
The Cloud allowed NatWest to spin out Mettle, even while the parent bank’s system remains largely bound to physical servers.
The group’s decision to treat its offspring as an independent entity, albeit under a watchful eye and with access to larger group resources, could be a template for other legacy institutions to follow, believes Freeman.
“Trying to transform huge organisations’ financial platform systems, many of which may have been live for 40-plus years, is obviously no trivial task,” he says.
Chris Thacker, Mojo Mortgages
“And I think we’ve also realised that taking those platforms and, potentially, lifting and shifting into the Cloud, doesn’t maximise the value, doesn’t deliver the operational benefit you’d want, and certainly doesn’t even come close to helping with any costs. But, also, all of the regulation, all of the compliance, all of the security and privacy aspects that come with it need a rethink, and it’s very difficult to do that at absolutely massive scale.
“At Mettle, I feel very privileged that we’ve had the opportunity to start in a relatively greenfield way, learn from all of the experience of the bank, while actually being able to build a banking platform and product, Cloud-natively, from the ground up, which has definitely been a huge benefit to us.”
US banking giant J.P. Morgan adopted a similar strategy in launching its digital retail bank Chase in the UK in late 2021, as did Standard Chartered with its Hong Kong speedboat bank Mox in 2020.
According to a new survey commissioned by core banking provider Temenos and conducted by The Economist Intelligence Unit among IT execs in the banking sector, business agility, elasticity and scalability are among their top drivers for moving to the Cloud. The results, published in a report called Capturing The Cloud, found that while banks have generally been slower to adopt the technology than other sectors, both software-as-a -service (SaaS) and Cloud infrastructure have raced up their technology shopping list since the pandemic. Eighty-two per cent said they now have a clear strategy for Cloud adoption, while barriers to them embracing it fully included security, privacy and compliance and governance issues.
Paulo Machado, who leads a team of Cloud specialists at global technology provider Hyve, based in the UK, says scalability is a clear advantage that comes with Cloud adoption, especially in an organisation’s early growth phase.
Hyve works with banks’ IT teams to migrate on-premise systems to the Cloud using out-of-the-box solutions. It also supplies technology for other major customers, including the UK’s National Health Service, Capita, LG, Tesco and British Airways, covering mission-critical private Cloud, enterprise Cloud and colocation projects, as well as a variety of security services.
Machado says: “The growth of a fintech may obviously purely rely on scalability, in terms of onboarding new customers, while traditional financial institutions would be a lot more stable.
“A startup also needs to be a bit more dynamic. Being able to react in terms of what’s actually happening in the market, and doing so quickly, is obviously fundamental to the business. So, in that respect, being able to scale out, whether it be horizontally on a business’ servers, or vertically, is of paramount importance to the business. And it’s key within the current marketplace.”
THE QUESTION OF SECURITY
Despite the concerns apparent in the Temenos report, Wayne Freeman argues that a properly-designed Cloud system can single interaction is authenticated and authorised. We believe this gives us considerably more security strength and depth.”
Machado broadly agrees with Freeman but also points to an ongoing debate about whether private or public Cloud solutions provide the best security.
“Whether to go public or private is something lots of CTOs raise with us,” he says. “There are obviously a lot of benefits with private Cloud. There’s the physical security around a private environment – they know exactly where it is, within a secure, manned datacentre. But, in the public Cloud, there are layers of authentication that they need to access their environment. Whether that’s multifactor authentication or utilising various VPNs, there are a whole range of
A startup needs to be dynamic. Being able to react to what’s happening in the market, and do so quickly, is fundamental to the business
Paulo Machado, Hyve
be made safer than one run on-premise, while acknowledging that, in theory, ‘hosting your applications or your platforms in the public Cloud means it could be accessible by any computer on the planet’.
“So, how you architect appropriately, what tools you use, what partners you use, and how secure your interactions are with these partners – all of those things are really important. But there is a huge paradigm shift; if architected properly, we’ve now seen that, actually, it can be safer than on-premise systems.
“I think we’ve moved, or we’re moving, from a world where the security focus is on building very high walls around something, where once you get over that high wall you have access to the crown jewels. Now, many organisations follow a zero-trust security model, as we do, where every security suite measures that can be applied to keep data safe.”
On-premise or remote hosting, he points out that the weakest link in both scenarios is staff who are vulnerable to the psychology, more than the technology, used by cybercriminals to breach systems,.
“So, it’s all about improving awareness within the business itself, and that obviously stems from the top down,” he says.
Cybersecurity is an ever-present threat, but Cloud systems were put to a major incident test by the COVID-19 pandemic, during which lockdowns forced millions of people to work remotely. So, how did it fare under those extraordinary pressures?
Both Machado and Thacker agree that the anytime, any place access provided by the Cloud was vital in keeping their businesses going, while Freeman says: “As CTO of Mettle, I was obviously concerned about how we would even work. But because of our use of Cloud technologies and SaaS platforms, not just to host and serve our customers, but actually for all of our productivity tools, it was pretty clear that it wouldn’t be, practically, much of a problem. In fact, we transitioned over the course of a few days, and just carried on. Obviously, people missed the interaction, but there was no interruption to any of our service to our customers, and, actually, there was a measurable increase in our productivity for a few weeks, probably while people were focussed on not thinking about the pandemic. But, a few years ago, I think it would’ve been devastating.”
Global, once-in-a-lifetime events aside,
Wayne Freeman, CTO, Mettle (NatWest Group)
there is another, more permanent change to the financial landscape that, according to Freeman and Thacker, wouldn’t have got as far, nor gone as fast, without the Cloud – and that’s open banking.
“Decentralised, scalable systems are probably the only feasible way for banks and other financial institutions to be able to realise the benefit presented by open banking,” says Freeman.
“There’s obviously a need to have a home for the vast amount of data it creates, and data within all of the institutions, moving in lots of different directions.
“ The whole piece is about flexibility and speed of change. We build and ship features every day now into Cloud environments. I don’t think that was possible before.”
Thacker is in no doubt of the Cloud’s impact: “If Cloud wasn’t around, and people were still relying on datacentres, would the uptake of open banking have been as quick among businesses?
“My gut feeling is it wouldn’t have.”
