A 30,000 foot view of retail banking from Google Cloud

Zac Maufe, head of global banking solutions for Google Cloud, knows the biggest obstacle preventing US banks from moving to the cloud: inertia. Part of this is because we were the first to move.

“Financial services were the first to adopt them dating back to the ’70s and’ 80s, and at that time they were very innovative, but that left them with a huge technological debt. ”

Today, financial companies are migrating to the cloud.

“We have been waiting for this for some time. “

The pandemic has accelerated the move to the cloud as banks pushed ahead with their digital transformation plans to deliver a much richer user experience, he added. Google sees many banks moving apps to the cloud, preferably using cloud-ready apps.

“Some financial institutions are doing lift and shift movements, and while this is probably faster, you don’t get many of the benefits of digital transformation because moving the legacy to the cloud is missing out. part of innovation. ”

There are mainframe emulators for the cloud, but they don’t perform as well as software developed for the cloud. Banks should see the move to the cloud as an opportunity to upgrade their technology, he suggested.

Applications tend to be followed by a data phase.

“More and more customers are realizing that processing data and on-site analysis is very difficult. Some financial companies have created Big Data Lakes to bypass product silos. However, without a common taxonomy for data, it can quickly become data swamps. The cloud can be a catalyst for these processes.

The emergence of AI and machine learning also works well with cloud computing, he said, citing fraud mitigation chatbots for customer service and automated loan processing, an area where the cloud offers great value by turning unstructured data into structured data.

“Finally, a lot of innovation in retail banking happens in the cloud. Most of the new generation fintechs are cloud-centric. If you’re only into the on-premise game, you’re missing out on the forefront.

Speaking between the December AWS outages, Maufe said a multi-cloud strategy is really important.

“We provide tools to make it easy to do. You want to have the interoperability of your applications to be able to switch them, we have tools to run so that you can run them in multiple clouds. Some people call multi-cloud analytics in one space and apps in another, but if you’re thinking about resiliency, that’s not the best way to go.

Asked about the latency created with two or more datacenters running the same data streams, he said latency is an issue, but there are ways to stream and have data grossly replicated.

Maufe has counted four big things he expects to see in banking for 2022.

“Embedded finance will really take off. We have seen it for a long time. The first time I entered carpooling and payment was integrated, that’s when I became Wow, this is the future of financial services. Financial products are catalysts for anything you want.

“Second, large-scale self-service. The Covid has really accelerated this. Branches – we’ve all learned to live without them when you do everything online from home. Digital natives really got that – how to do it all in the end-to-end app. We will get more apps like mortgages through self-service. I think that will be the new normal.

“The third trend is the democratization of the public cloud. We’ve seen what the cloud has done in retail and the ability to build a business very quickly, with almost infinite scale, and without having to pay up front for the technology. We’re starting to see it in the banking industry with market space as a building block and other capabilities on top of that and the differentiator around data, machine learning, and AI.

“The final trend – the US is finally going to catch up with Europe and APAC in the fintech space. We have seen Block and SoFi, along with other fintechs, start to gain momentum. It will be interesting to see how that will start to change the dynamics of the industry.

He sees more similarities than differences in cloud use across geographies, but differences between industry segments with capital markets and slightly early payments.

As a former chief data officer (and head of corporate strategy, head of digital channels and head of innovation) at Wells Fargo, he believes banks have been slow to use their data to improve business. client experience.

“All of these financial institutions grew up in product silos, so having a horizontal view of your data is a huge advantage. ”

Big banks have amazing data because they get a lot of data when someone applies for a loan.

“Your paycheck data goes to your main checking account, you have transaction data if the customer has a credit card or a debit card with you. It’s surprising how little data you need to get enough in-depth information about someone. It’s only being scratched now. It’s more difficult than being able to recommend a book based on a past purchase – financial services are much more complex than that.

“If you have kids and I don’t, our financial needs will be very different, so you need to dig deeper, which is why financial services have been a relationship business for so long – the advice and guidance has been guided by the human interaction. I think there are really the ingredients to do the same thing virtually.

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