Using cloud technology to create better digital banking experiences

Defining "the next normal" of a digital business may prove to be as elusive as the proverbial pot of gold at the end of the rainbow. The digital world around is rapidly changing and is straining the systems and processes of banks that created over the last two decades.  

Customers may be increasingly impatient and demanding. As they shift between digital and physical products, services, and channels, banks will need to rapidly pivot to keep them happy. This requires spending as much or more time on shoring up transactional systems as it does on digital applications. For instance, a payment service needs to be connected to customer and account information along with financial crime prevention services and, of course, payment networks. The user interface is important, but it is only one component of the larger customer experience. 

Most banks already have a broad and solid base of systems to service customers. But that base has been acquired and integrated over many years and is showing its age. Consider contact centers. According to a 2020 IDC survey¹, 40% of contact center agents toggle between six or more applications in a typical day. Even when these applications are integrated with each other, they often remain separated from customer-facing digital channels. 

In many instances, the information and capabilities are disjointed across channels and often difficult to change. This helps explain why 69% of enterprises struggle to create a consistent customer experience, and 38% struggle with connecting experiences across channels.

How CYBG PLC and Shinhan Bank improved digital banking with Red Hat 

The UK-based banking group CYBG PLC (now Virgin Money) is a case in point. The parent group of Clydesdales Bank, Yorkshire Bank, and the digital banking service B, CYBG PLC managed 159 branches, around 6,500 employees, and millions of personal and business clients. For several years, CYBG handled the different mobile banking services and internet banking of the three brands and needed to create a common digital platform to enable the sharing of digital services across Virgin Money.

To address the challenge, CYBG PLC started by creating microservices on a traditional platform that enhanced some agility for B, its mobile digital brand. To bring everything together, they needed a cloud platform that enabled  different teams to continue building, developing, and deploying digital services while ensuring the pieces could be adjusted as needed. By implementing solutions like Red Hat OpenShift Container Platform, CYBG also laid the groundwork for incorporating process automation, which makes it easier to adjust processing decisions and ultimately the overall banking experience.

On the other side of the globe, the oldest Korean bank faced a similar challenge. Shinhan Bank operates more than 900 branches domestically and another 160 internationally (in 20 different countries). Shinhan needed to accelerate the pace of digital services and features development to keep pace with rising customer expectations while meeting its compliance obligations.

With Red Hat, Shihan modernized its digital banking services based on a microservices-based architecture. The underlying cloud platform includes built-in encryption, security, and automation to meet its compliance obligations. It allows developers and administrators to create new digital services  independently with their preferred tools while being assured that the services they create will work together. Since implementation, it has reduced time-to-market of digital services by 50% (and operational costs by 60%). 

Takeaways for making the change

Like every industry, banking is characterized by nuances across markets based on the customers they serve. The CYBG and Shinhan examples, however, supply lessons that are applicable across markets. Three stand out:

• Define your purpose. Begin with a clear mission. In banking, the emergence of competition from technology companies has made innovating digital products and services critical to attracting and keeping customers. Both CYBG and Shinhan Bank knew they needed to accelerate development of digital services to stay relevant, and they created their platforms around that goal. Shinhan Bank, for example, has recently started scaling the facial recognition payment system it piloted in 2019. Both have a clear objective of being digital banking leaders in their respective markets and made the investments to realize it.

• Don't disparage technology heterogeneity — embrace it! Advancements in cloud platforms have made it possible to run a catalog of application and data services without leading to additional operational complexity and cost. It means teams are free to work with the best technology for the job without the operational constraints of the past. The growing standardization found within the Kubernetes community and the broader Cloud Native Computing Foundation (CNCF) is spurring innovation in artificial intelligence, distributed ledger, data streaming and other technologies. Whether it is Apache Kafka and Apache Camel or Active MQ and Apache NiFi, teams can choose the tools that make the most sense as they adopt event-driven, microservice-based architectures for their digital services.

• Embrace the cloud. This point is closely related to the one above. While it may sound a bit old fashioned, it has proven effective. Microservices and modularization more generally amplify digital flexibility, while cloud — both public and private — provides scalability. Both are essential for keeping pace with changing customer demands. 

Of course, the front end is also important. The user experience must be connected across physical and digital touchpoints. But without a modern cloud platform, exceptional customer experience may remain elusive. Read the full CYBG PLC (PDF) and Shinhan Bank (PDF) case studies to see how a common cloud platform can help you better meet customer demands in your environment.