Deloitte has partnered with AWS to take on a persistent challenge in banking — moving to digital-first systems that extend from customer interface to back office cores.
The task of replacing a banking core has been variously, if unimaginatively, compared to changing the engines on a jet airliner while it is flying or swapping out the tires on a Formula One car while it is racing. Legacy cores tend to be fairly inflexible, and may have years, or decades, of custom code written by people who are no longer with the bank, or even, perhaps, still alive.
Deloitte has announced a multi-year collaboration with AWS to develop solutions that help institutions expedite the launch of digital banking services and modernize their legacy core banking stacks. It combines Deloitte’s ConvergePROSPERITY BankingSuite solution and multiple AWS services. Using the combined solutions,
Western Union launched a state-of-the-art digital banking platform in Germany, Romania and Poland in under a year.
Deloitte has taken a modular approach working with several banking technology providers and linking systems with APIs and micro services for greater choice and flexibility.
“Some approaches focus on a digital wrapper, some on cloud transformation,” said Tim O’Connor, ConvergePROSPERITY banking offering leader and principal at Deloitte Consulting LLP. He has seen a marked shift in the core banking industry.
“Three years ago with the emergence of next gen platforms and a plethora of new providers in the marketplace, we started to see the pieces come together,” he said. “We do a tremendous job of sorting through the viable players and giving clients options with the different players in the marketplace.”
“Launching bespoke digital banking services has long been expensive and time-consuming,” said Gys Hyman, general manager of ConvergePROSPERITY and principal, Deloitte Consulting LLP. “This new solution combines the power of Deloitte’s deep sector and technology experience together with the security and scale of AWS, and breadth and depth of AWS services to build an enterprise-class banking platform that can help our clients create a tech-forward and customer-centric digital banking future today.”
The Deloitte practice builds on open banking practices developed in Europe that rely on standardization around data and APIs.
Using the micro services approach provides a lot of interoperability across many different providers, O’Connor added.
“That gives flexibility and avoids individual vendor lock-in and allows us to use modular based architecture. Vendors see a lot of power in a partnership with Deloitte and the opportunities we present to them.”
Deloitte has worked with AWS to develop integrations.
“We built a framework and have pre-configured it to a high degree so clients can get the value of next gen technology.”
The consultancy developed this as a market strategy to reach smaller sub-$100 billion banks, although they have also worked with a $1 billion bank and Tier One banks.
“Next gen platforms are fundamentally different — their overall architecture represents a best rethink of products and data architecture, facilitated through micros services. Because they are headless, they fit into a true eco-system approach from wire to debit card and credit card. It’s not a bank in a box. We enable that model of a thinner core that is headless but elegant and innovative.”
BankingSuite provides a digital-first back office by giving internal employees a single view of the customer and innovative financial products — such as crypto buying for consumers and invoicing for small-to-medium businesses — integrated within the banking app. It uses AWS apps such as Amazon Connect for contact center and Amazon Connect Cases for call center case management, Amazon Pinpoint for customer engagement management, and Amazon Cognito for end-user security.
The combined offering can speed implementation of new customer-centric features such as cross-product offers, rewards, and highly contextual omni-channel experiences for banks and non-banks.
Tom Mazzaferro, chief data and innovation officer at Western Union, said the modular design of the Deloitte banking suite in the AWS cloud enhanced Western Union’s ability to expand its set of products to countries incrementally.
Tier One banks in the U.S. have made significant investment in full stack modernization, he added. Other banks are fairly to very far behind, although some smaller financial institutions, including some challenger banks, also have invested in next generation technology, sometimes through Banking as a Service (Baas). Both the available technology and evolving regulation make it easier to launch a new bank now than it was 10 or 15 years ago.
“Looking back at the European challenger banks there is a trajectory for a much more successful lower capital requirement. The technology has become significantly more efficient and vendor models are different. The cost efficiency for launch has improved also, and cloud is a big piece of that.”
Some vendors are charging financial services customers based using a consumption model, which takes away huge upfront costs before a bank is operational. In addition, the full suit that a bank needs to bring together is significantly more mature than 10 years ago.
“Those elements add up nicely for people launching today.”