How is the Cloud Shaping Next-Generation Banking?

How is the Cloud Shaping Next-Generation Banking?

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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

2021-04-27 20:41

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