How is the Cloud Shaping Next-Generation Banking?
Welcome to RedCompass After Hours where the best and brightest of the financial services industry let their hair down and button their collars and share their passion for payments I'm Mike Truter Director of Digital Ecosystems and Innovation at RedCompass and in each episode I'm joined by my friend and colleague Julie Guetta. Let's kick things off. Today we're overjoyed to welcome our guest for today's episode, co-founder and CEO of volante Vijay Oddiraju. Since co-founding Volante Technologies in 2001, Vijay has grown the organization globally and today they provide mission-critical payment and financial messaging automation solutions for customers globally. In 1995, Vijay also founded standards-based middleware solution provider GlueBeans following a very successful career with Oracle. As this is an After Hours chat, I hope everyone has brought
along a drink. I have a gin and tonic to keep my vocal cords lubricated. Julie, what's your tipple? Unfortunately, boring tea today. Well, that's okay! Vijay, are you going to go more exciting? What's waiting you this evening? I'm having chai latte. Chai latte is very good. Maybe I could ask you, Vijay, just share a little bit about what led you to have such a strong focus on financial messaging. Yeah, as you mentioned uh
coming from Oracle databases middleware was our core competency um and BlueBeans were looking at uh yeah, JavaBeans in those days uh I took that EJB uh which was uh at the infancy stage and took it to the next level saying we'll create uh application integration through JavaBeans. In those days there were no asynchronous EJBs uh I mean so we created a concept called asynchronous EJBs and started creating there and finally, that company merged with another one, and then after we saw the term there we just came out, and then we were looking at in the same spacing 'what are the issues that financial industry is facing' uh implementing uh either biz talk or IBM, Websphere or TIPCO, Rendezvous or any one of those middlewares. What are they spending time on and what are the challenges and is there room for us to create another middleware, actually, that was the whole idea. Then we found out that there is no room for another middleware. Definitely not. But there is room for us to make these middlewares more efficient so we became an agreement for the middleware, actually. So by creating this product which is essentially uh making all this middleware a bit more efficient and all the financial institutions to bring application integration uh to a next level, basically, where they were spending - assuming that if a project takes 100 days - most of the 100 days is spent on labor-intensive activities where people have to code and unfortunately or fortunately. Fortunately for the vendors, I guess, and unfortunately for the financial institutions,
there was more than one middleware in each department. One has this talk, the other one is siding... by somebody else is working on uh websphere and the work which they do on this uh Microsoft products will not be used on IBM so there's no there's zero portability across them so and huge amounts of armies of people who are working on making things happen and time to market any new product was like taking forever uh so what we felt is uh we then we started analyzing what the problem was and then it came down to labor intensive activities so we said okay we need to do a lot more automation to be brought into this and we brought that automation into this and portability across all the... so because it is a business logic which
create out of which the code is generated we can create business logic once and can run on any other platform, it doesn't really matter so uh it's a scalability also brought into picture on across all the platforms um so pretty much brought the open systems concept to the middleware layer and that's how we reduced the time to market ,portability reduced, especially uh yeah and then the revenue started increasing for the customers and yeah, automation is a genesis and today if you look at lots of people or lots of companies are getting funded with huge valuations on no code, low code, and all those things that we have done 19, 20 years back so that is... And why did we chose the financial industry? We felt if we can prove it in the financial industry we can go somewhere else as well with the credibility which we build but we are so busy here we don't have time. If you've got the secret formula everyone wants to use you. Right. That's a good problem to have. Right. Okay let's get down to business then um just to remind everyone the format for today is really simple: to add a bit of spice in spontaneity Julie and I don't yet know the topic that Vijay is going to choose so we're going to ask him to look at a big list and then without any script or preparation we see where the conversation takes us. In this conversation there's only one rule:
like the scottish knife the sgian-dubh, we need to keep things short, sharp, and to the point. And now the moment we've all been waiting for.. uh Vijay's choice of topic. Let me throw that up on a screen for you. There we go, okay so Vijay, which topic are you going to choose tonight? I guess move to cloud. Move to cloud , yep okay, move to cloud. Where should we begin? Julie where
do you think um do you think cloud has a role to play in financial services in the future? I'm smiling because of course it has, right? Cloud is a foundation for the financial services of the future and you know I think it was very interesting to hear like Satya Nadella at the Singapore Fintech Festival uh mentioning that computers are everywhere and the base for everything because I do believe this is the case. Yeah, Vijay, from your perspective um you know, from what you're doing, how do you see the kind of route to cloud happening for especially the kind of the big banks, right? I guess they're leading the way um showing the others how, you know, what's the word... walking through the snow, you know, um making the path clear for others. Right, yeah it's very uh interesting that a few years back when talked about cloud, a lot of banks were a little hesitant because of the risks involved and all that but in the last two, two, and a half years, we have seen a huge shift, especially from the tier one banks and some of our customers are... I would say all of our tier one banks are in the cloud on our payments product now and...
now the smaller and medium-sized banks are also trying to follow the same thing um and my prediction is after from now I... i'm not going to be precise i guess... but five years from now i don't see data centers for the banks existing... Yeah. They'll all be on the cloud whether it's private or public or... it doesn't really matter but they'll
all the technologies will be moving or all the business applications will be moved to the cloud and um uh yeah, payments definitely is uh on the top of the list. So one of the interesting points there, I mean, you say five years... five years just has a special meaning for us because we speak so much about ISO 20022 that just happens to be five years time so you've got this massive shift in messaging and middleware changes and a move... and move to cloud do you think the two are kind of
becoming linked? Do you think they'll happen at the same time? Or is it going to be one and then the other to mitigate risk? I think they're all in parallel uh the thing is uh 15 sorry 20022. I am an old-timer, I guess. I'm saying 15022. But 20022 has to happen uh irrespective of whatever happens. Whether... it's it doesn't really matter which deployment architecture you use uh cloud is just deployment architecture uh but uh if you say 20022 is uh has to happen and I think uh with SWIFT's deadlines and all that um all the bigger banks have already started work and we have a lot of work going on I think probably you might have seen some press releases with our clients so uh that's independent of what's happening so cloud is going in parallel with those things so it's not like one or the other or one after the other it's all going in parallel uh and uh banks are taking advantage of the time they have uh in their hands now and the cloud... if you don't mind i know you want sharp and quick answers but cloud is beautiful, I feel like, in the sense especially with the COVID situations where you don't have to go to the data centers and access to those and you... wherever you are you can access the cloud, lots of admin work can be done,
monitoring can be done, everything can be done uh from whichever corner of the world you are, and then yeah depending on your questions I can expand on that and I feel like if you don't do the cloud basically... I don't want to be arrogant but evolve or die, sorry but yeah that's how uh passionate I'm about cloud migration in the sense everybody will be evolving towards that cloud. If you don't make those changes fast enough or if you don't... that whole digital transformation has a different meaning when you're going through the cloud and the service customers adding value to their customers, banks would achieve a whole lot and adding new products it becomes a lot simpler because Evergreen software... they don't have to wait for huge planning cycle for nine months upgrades and things like that you know? It all instantaneously can be done. So you think it and you can do it, right? So you don't have to wait for anything... that makes a lot of sense.
Julie, I wondered, I mean one of the things Julie and i talk about a lot um is the kind of 24x7 operating cycle that that's going to come ...especially when we look at you know I mean our concern is normally core banking and how does core banking cope with that you know the fact that there's no downtime RTGS platforms that are already kind of moving to 24x7 operation if we look at India. You know that's going to be everywhere soon and it's difficult to imagine a world where... you know, I think, again, in five years' time the question is, you know, going to be how do you operate without being 24x7? It's going to be a strange concept, right? Right, absolutely right, and uh um yeah the thing is I'm surprised it is not already, actually... you know? Why is it not there when the technology is already there to support all that?
It's just the mindset changing and saying okay "I need this for my customers" you know I think banks have to really evolve to that stage saying I need to provide 24x7 uh yes there are lots of other issues code banking systems have to be graduated to that level and payment systems have to be up and running 24x7. Lots of resiliency has to be brought in... even on the cloud uh you have to have active active active systems uh where um they can be geographically redistributed uh so that the risk goes down for the banks and they're up and running all the time so how these architectures are built... uh so huge opportunity for the technologies to improve uh there... they, again, our uh our product is already ready uh for resiliency and support which we do, uh but it's... a whole lot
of things will be changing from uh where we were to where we are going to be in the next few years on the cloud. I think for me Covid has played like has accelerated the move effectively because first of all like, you know, all of a sudden people are not in the premises of the bank so why would you have your data at at at the bank when your people are not in the bank, right? So I think like... you know, the discussion around cloud that I have definitely accelerated with COVID and I think for me like um I do agree with you when you say people who don't migrate to the cloud are gonna die.
I agree strongly and one reason for that is like... if you think of like, you know, the expectation from the customer all in all right ...and the service that they can get now through fintech, through big tech as well and it's not the same like, you know, the level of personalization that was expected in the past. It's not also like the same pace of innovation demanded
by the customer and I don't think that you can actually meet the customer demand in terms again of personalization, using the data, or innovative services without migrating to the cloud. It's just too costly only and not safe enough. Right, absolutely in agreement...So um Vijay I'm guessing you're really being that glue that sticks everything together, right, so you're the bit that enables pieces of a bank to move into the cloud environment while others remain inside their data centers, right? How difficult is that journey for banks to kind of pick up a piece and move it into the cloud and you know... how do you make it easy for them to do that? To take out the risk? Right, so um seeing that the tier one banks what they are doing is um they are migrating most of the applications uh to the cloud um and some of them are doing uh um vanilla applicationsm only payments just on the cloud uh but the smaller players are smaller banks and medium-sized banks are um looking at others who can provide this as a service, basically, and we are uh for example uh payments as a services we have an offering uh and we are we are providing that and where we uh partner with other uh application providers including AML checks and accounts and all that so we have partner ecosystem which we have created with with whom we can work with uh but at the same time we can also work with whatever the bank prefers to have but payments as a service uh meaning through the cloud so that they don't have to have their data centers and they don't have to have people to manage that and they have access to this 24x7 uh high resiliency and high performance high throughputs and all that so um the first medium and small size companies, what you're asking, is not a major issue because they're going to the service provider like us, like a payments as a service provider, and then the major uh banks all the tier one banks, are slowly migrating a lot of applications onto the cloud so once they're on the cloud, integration is a lot more easier um because they're all the same um otherwise we again as you know we are known for our data integration capabilities our application integration capabilities we do go through uh different locations and all that but that will add a little more complexity uh to the latencies and things like that so as long as you're okay with those latency issues then there's no problem but if you if you say i don't want any latency then hey please bring that application closer to where we are hosting or where you're hosting other ones so that proximity will become more important. Okay, yeah, so I'm just thinking about that that latency point and we know you know faster payment schemes have relatively tight SLAs and uh, in fact, one of the topics that that again we discuss a lot is the real-time sanction screening, you know because fitting that inside of, you know, an end-to-end process that's measured in seconds um is really challenging as well you know this uh maybe a thing that we're speaking about is not the domestic fast payments but what we're seeing with things like p27 - cross-border faster payments um or between Thailand and Singapore is another example but um you know how do you solve those latency problems and I'm assuming the cloud is part of that that mixture for the solution because you have the computing capacity, right? Right, okay again if you look at all the vendors out there on the cloud providers, they're making lots of uh advanced uh architectures from their infrastructure side which is uh helping us out to mitigate that risk of latency and all that... meaning low latency and all that so...
um that the latency issues can be addressed at the lower level uh as well uh from the cloud infrastructure and because of the cloud providers have data centers almost in every country uh it becomes a lot easier to pick and choose where you want to start the transaction... again, if you look at all these things are combined... I don't want to throw buzzwords here because I don't like using all the latest terminology into this uh anytime I don't want to do that but a lot of uh like where do you pick the transaction uh which node you want to send it to all that is artificial intelligence will be able to address it, uh so you'll pick the least so... in operations research, I guess basically
"what is the least amount of time I need to spend on a wire" and that's all it is and then go to that point and do it so I think as we are evolving I think lots of things will happen where the latency should not be a concern uh as we move forward uh but again all these guys uh right from um Azure to AWS to Oracle and Google... they're doing a fabulous job about enhancing their capabilities in the cloud and architectures and how dynamically they're changing... amazing actually, so uh and they're making it easy. Every day you can see every weekend you
can see how much of uh progression they are making to make it easy for vendors like us and even banks how they want to deploy things so I think uh I'm an eternal optimist and uh that's what I'm an entrepreneur and um but things are looking very promising and exciting, actually. I think one thing that is interesting is like... I heard IBM recently talking about the cloud and the open-source concept that they are putting together around the cloud and I think one thing that was said by IBM which was like for me very interesting was the fact that today we are only like at stage one of the cloud effectively and that, you know, it's basically a lot of banks migrating their complexity to the cloud but not necessarily, if we like, you know, thinking fully from uh end to end workflow. Being cloud native... really cloud native
and so for IBM they were like "yeah it's only stage one" then when you see already, you know, like all the possibility from stage one I think it's very promising for stage two and step three right about the type of service, the type of personalization, again, like you can give to the customer and the cost the reduction of cost as well right so therefore like you know the kind of what you can price and the margin you can recognize as a bank because the cost is lower. I'm going to throw a kind of different perspective because I agree cost is important and you can deliver for far less but you typically need scale then to make it work, right, so is there not a chance that you know it'll become too easy and flood the market with too much choice? Then not everyone can survive when you can't charge and you can't get scale, right? that's a good problem to have I guess but uh I just I'll uh answer that also but uh going to Julie's uh observation on the IBM side I think that cloud nature is a very important to point, which you brought up because when we are talking to lots of banks they say their vendors are coming saying "okay we are also cloud-enabled".... there's a difference between cloud-enabled and cloud-native, okay? Cloud-enabled... is you take the same monolithic application which you have and just put it on the cloud. You're not taking advantage of the cloud architectures, okay... but if you build cloud native architecture, you can take advantage of all the cloud features, and as we were talking about the active... the resilience and all that we talked about earlier uh failovers and all that it becomes a lot more easier if you build a cloud native architecture, containerization, and all that it becomes a lot easier and then what we have done are we have built ground up using microservices architecture uh which runs on the cloud um and it's built for cloud native... basically we look at all the uh
elements of the cloud and they say "okay let's build this product for the cloud" so if we um so... the different difference again... i don't want to do too much too much marketing of our product here but basically what i'm saying is banks have to be very cognizant about these fact: cloud enablement versus cloud native and pick the vendors who are cloud native rather than just enablement and uh they're not going to get any benefit of the cloud. I think I agree with you and... for me when you're short of cloud enablement. it's a bit like to say
"I have a different electricity provider, I'm changing from one to one because of, you know, either cost or security and so on" but then I'm not really getting all the benefits like, you know if I really can think of... like how you know this new electricity provider fully works um and I think for me like um one point that says that you mentioned as well around like um short of being like cloud native and cloud enabled... at the end, it's not a technology issue anymore... you know you mentioned earlier like culture and mindset being quite key -Ii think you know this is for me this is the next hurdle that we kind of need to go over because the technology is the right mindset to use the technologies here but not necessarily within all the organization effectively. Right, one thing I want to come back to you Mike about uh the cost and the scalability issues but one additional point I want to make here is... it's business opportunities for the banks, okay, new business opportunities uh today in the absence of cloud if you say there's no cloud then how do you start a new service or a new uh product in a different country uh which you may have the best presence in but still... how
easy it will be for you versus if you have cloud how easily can you take the new product okay uh to the market so uh that whole product productization and globalization of those products becomes a lot more simple with cloud deployments um and you don't have to have a data center in a country, okay? Unless regulators want that data to be there in their country, you don't need to, and even if you have it as a cloud providers will provide that it becomes a lot more easier because sitting in the remote part of another country somewhere on the opposite side of the globe, you can still do all those things uh very quickly you can roll out products and the beauty of that is and I'm very passionate about this is... there are um 300 million adults who don't have banking accounts in the world okay and the majority of them come from countries like China, India... in India I think 170 million or so, okay... if we can get all those unbanked individuals' banking domain, okay... um they will have a
different world all together, we are talking about cashless societies and when uh even in bigger countries developed countries also um in developing countries and underdeveloped countries uh if there are any entertainments and if there are any things which government wants to do. For every dollar the government wants to spend for the needy um a small percentage of that goes to the beneficiary uh there's so much of [inaudible] everywhere and by having these banks uh or if you can get all these unbanked adults to bank easily... immediately what happens is that inclusiveness will come and they get the benefits right from the government to the beneficiary without any [inaudible] and it goes to the person who the government wants it to go to without any problem and once you have that facility uh and all the transactions going through the bank accounts uh and that money flow uh not having to deal with cash.... carrying cash and all that is gone, no checks, nothing, it's just all electronic and you uh again in countries like India, you have seen Paytm and others everybody has a mobile payment device now... or in their mobile phones,
I feel like I'm like... I'm not up to speed on them, you know? Do I want to download that or not is the question for me, always... but Google Pays and Paytms and lots of other vendors are there and they're making it so easy for people to do banking and the reason why I'm giving you a big story about all this is cloud enables banks to create new products which they have not even envisioned before to remotest parts of the world and make lots of money. Yeah. And bringing the unbanked into productive uh society also means GDP grows for those countries and it brings prosperity and pulls people out of poverty which is huge. Absolutely, absolutely, that inclusiveness is so important because I think uh even in developed countries if you look at San Francisco or what uh uh Salesforce Mark Benioff is doing for the uh people on the road or streets, you know, and especially with COVID, New York, and Boston, I see like.... so much of poverty out there,
you know uh it's so sad actually... and I feel... what are we doing, you know? Are we humans? You know just get into that saying "okay what can we do" and I think ultimately a technology for the benefit of society. If you look at it... I think the cloud will be a game changer. Absolutely, I think that's such a great point to end on as well, we have this um uh saying you know as part of our RedFlag Accelerator and human trafficking work, you know, that data saves lives. Maybe we should update that to include "cloud saves lives" as well right and uh and it's an important message for us to kind of bear in mind um that cloud is enabling the unbanked to be banked and making all of the world's society productive members of our global economy. Absolutely. Thank you so much for taking the time to join us for this After Hours chat. Your depth and breadth of experience in improving payment messaging
and people's lives as well for years and years has made this a fascinating discussion for us both. The opportunity to chat with people knowledgeable and passionate about payments is what motivates Julie and me to get out of bed each morning and for our audience did you find this uh discussion motivating as well? If you enjoyed the discussion then please do show your support by giving us a thumbs up hitting subscribe and click on the bell to get notified when future new content arrives. And don't be shy about giving us feedback either we really appreciate your comments and suggestions for new topics and guests. But that's all for this week catch you on the flip side that's who I am, sorry! Because I have put the heart and soul into this and then... I just talk about it from my emotions, you know, saying "okay this is it", you know, so sorry.
We want your passion, we want your passion. You are passionate so no need to apologize