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HomeBankPodcast: Cloud migration ‘a must’ for FIs

Podcast: Cloud migration ‘a must’ for FIs

Financial institutions are prioritizing cloud migration as cost reduction and innovation continue to be top of mind. 

“We definitely see cloud migration as a must,”  Rodrigo Silvaregional director for the Americas at Temenos, tells Bank Automation News on this episode of “The Buzz” podcast. 

According to the tech provider’s annual economics report, set for release on April 15, banks are leaning into the cloud as they expect the following in the coming years: 

Temenos is a cloud and core banking software provider based in Switzerland. It’s loan origination solution was selected by $31.8 billion Commerce Bank in February to improve the customer experience for bank clients. Other temenos clients include $521 million Varo Bank, $156 billion Regions Bank and $142 billion Alex Bank. Its economics study, which includes a survey of 300 banking executives, is completed annually, according to the company. 

Listen as Temenos’ Silva discusses the future of the cloud in banking, what clients are requesting and how to approach cloud migration. 

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 10:16:53
Hello and welcome to The Buzz, a bank automation news podcast. My name is Winnie McDonald and I’m the editor of bank automation News. Today is April 11 2024. Joining me is Rodrigo Silva. He is the head of North America tech provider terminos. He’s here to discuss cloud migration, including how to select a vendor how to approach moving to the cloud, and some data on what banks are thinking about the future of banking when it comes to the cloud. Welcome to the buzzer. I’d be go.

Rodrigo Silva 10:17:18
Sounds good. Whitney, thank you. It’s great to be here. My name is Rodrigo Silva. I am the Regional Director for 10 minerals for the Americas. I joined Temenos, just about a year and a half ago, and recently got an extended role to lead our region for for the organization. My background, I come from the industry. I was for about 21 years at at Fiserv in multiple different roles primarily around sales and commercial with leading teams around the globe. My last role there was with the posit solutions, which is a large organization primarily focused in the US. And as an organization, Temenos is today the largest provider of core banking applications around the world. We serve as around 3000 clients in about 150 countries. We have a market leading technology platform that caters to different segments of the market for different industries, large, small fine institutions. And, and North America is a very strategic, or region for us, where we’re investing in, in our product, in in technology in our cloud services, on resources, we have a large number of existing clients in this region. And I’m very excited about the opportunity to be here talking to you and be leading organization in this territory.

Whitney McDonald 10:18:49
Great. Well, thank you again for being here. And for sharing a little bit about your background. I’m excited here today we’ll be talking about cloud migration. And of course, with your background and in the role that you’re in today. I’m sure that it’ll be a great conversation. So with that, why don’t we just start here with where we stand today with cloud migration? What are you hearing from bank clients? Is there still this big push for cloud migration? What are what are you kind of following and hearing from your clients? Yeah,

Rodrigo Silva 10:19:18
absolutely. So so with the there’s more confidence than never right? The public clouds has has now a stronger presence in, in everywhere in banking, tons of investment by the hyperscalers. Bank see cost reductions and innovation being key for for the banking world. Nowadays, adopting cloud is a must. We we see future, the future of banking is in the cloud. Our latest economics economist impact study showed that about 51% of bankers believe banks will not own any data center in five years, because they will be moving most of the applications to the public cloud. That is that is more so in North America than anywhere else. We saw out of the respondents that that 36% of banks are prioritizing, moving their domestic core banking to the cloud, compared to 26. Banks. globally. We also saw that the 79% of North America respondents said that multi cloud strategy could become a regulatory prerequisite in the next five years, compared to about 60%. In Europe. So we definitely see cloud migration as as a must. Our clients are, are contacting us clients that are today on on prem solutions, running on their own data centers are looking at moving to the cloud, either their own cloud providers or moving to our SAS operation where we manage the hyperscalers on behalf of our clients a

Whitney McDonald 10:21:09
couple of things to break down there, of course, great stats, so thank you so much for putting some numbers to it, but maybe like a break down a little bit what those conversations look like when a client approaches Temenos and says, You know what, I do want to migrate to the cloud. What’s that step one? Of course, it’s it’s expensive, and it can be a big undertaking. So what are those conversations initially look like?

Rodrigo Silva 10:21:33
It’s all about the benefits, right that our clients will see with the cloud. And first and foremost, what we need to understand is the banking environment as we know has changed. Right? We have demanding customers that are looking for services 24/7 Um, we have the rise of new competitors, right, you’re talking about fintechs, you’re talking about new banks, you’re talking about bass providers, you have regulatory pressures in the market, we have very tough still very tough market conditions with interest rates being high. So all of that put pressures on the banks to become more innovative to change the ways they’re doing things. Also, you’re looking at new performance metrics and performance drivers, right innovation, customer centricity, operational efficiencies, risk, compliance, artificial intelligence, AI, is all over the place. So so there’s a lot of pressures in the banks to do things differently in rethink the way they’re operating today. And cloud brings exactly that with Cloud, they’re going to see cost efficiencies, they’re going to see and be able to provide enhanced customer experience. They’re gonna have scalability advantages, adaptability advantages, you have, you have a lot of automation, within within the cloud world deployment speed, the hyperscalers have invested a lot in security, business agility. So again, the cloud is where the banks will be able to compete and thrive in the digital world. You look at the wave of payment providers and Neo banks out there, and they’re built from scratch on the latest cloud technology. And in the incumbent, that are using still those legacy systems that spaghetti systems as we joke, are, are really not suited to to the demands of this digital era. So so it’s quite frankly, a race against obsolescence. The move to cloud will give the banks the agility, they need to go to market with new products and, and cater to their clients needs, and really future proof their technology stack.

Whitney McDonald 10:23:48
Yeah, you just talked through a few benefits. Of course, the competitive side, you mentioned that fintechs are building on Cloud, they’re not really having to do that lift. So from from the benefit of talking through the benefits, and the need to stay competitive, is definitely key here. So maybe we can talk about what those considerations are. There’s obviously the pros that we just talked through. But it’s not just as easy as okay, we’re going to move to the cloud now. So how do you really consider cost? How do you consider what it’s going to entail a time commitment? What does that sound like when you’re when you’re discussing that with your clients?

Rodrigo Silva 10:24:24
Yeah, you’re absolutely right. Right. It’s it’s a complete shift to a new set of different practices. You’re talking about automated testing, design, a more of a customer centricity model, that the need for accelerated production environments, shorter delivery cycles, higher quality, so So the fine institutions, the banks, they need to be prepared for it, make sure that they have the right resources in place to take on the world of cloud, they also need to make sure that they are working with with vendors with partners, they have a broad and deep set of cloud native banking capabilities. Same same requires that we just talked about for the banks you have internally with their own resources, you should expect that from your vendors and from your partners, right. So having having proven cloud delivery proven is scalability, proven migration credentials experience doing so. So when I look internally at 10, windows, right, we have experience of working with 700 SAS clients today, they have already migrated or started in our SAS environment. So massive scalability, right, we are an organization that has been doing this for for many years now. We have both on premise clients and SAS clients, and in a lot of our on prem clients is X have actually implemented the our applications on their own cloud providers, right, that being AWS, or your or, or what have you, because we are an application that day. That is that is cloud agnostic. So again, deep experience, understanding of the regulatory environment, understanding of the security environment, making sure that you’re compliant, and having many years in our case, 30 years working with with bank IP is critical for, for our clients to to be successful. And they should be considering all of that when they’re making their move to the cloud.

Whitney McDonald 10:26:28
A lot of the conversations that we have is about that vetting process and making sure that the vendors that you do select have those same, whether it’s security or even just values and kind of what you’re trying to accomplish all line up. So yeah, that definitely resonates. I know that you also just mentioned tendonosis cloud agnostic So maybe we can talk a little bit more about where terminos fits in. So if you have a client that as mu is moving toward the cloud, what does that look like for terminos? How do you guys help along that journey? Yeah,

Rodrigo Silva 10:27:01
absolutely. So we’ve been on that journey for for many years, and evolving our cloud. Offering for many years, we were one of the pioneers to move core banking and our clients to the cloud. And what is what is interesting and important about 10 minnows is that we were not only talking about a retail application or corporate application, we are, we are one single platform that works in all around the world for different different types of clients, those being small for institutions, large finished tuitions, credit unions, neobanks, Challenger banks. And we not only, not only we work with multiple types of institutions, but we also work with different segments of the market. So one single platform that caters to retail, small business, corporate private wealth, we have an end to end channel solution that does both the digital piece online banking, but also originations onboarding, we have solutions for fraud monitoring AML. So payments hubs. So we, in all those solutions are cloud native, and in in cloud agnostic, meaning that we can help our clients in that journey into the cloud, not only with their core, but also with those also supporting solutions that revolve around the core. And the composability of our applications is very important, because when a client is testing the waters with the cloud, they may not be willing to move the entire platform at once. So with the way the architecture works, you can move bits and pieces as as you you feel comfortable with. So maybe you have a strategy, you’re going to start with the posits only as MVP one and in the future start moving then your lending and your credit products into the cloud. So you can decide what makes most sense. So you can you can test you can feel comfortable, you can see everything that is working. And then you can start moving according to your your needs and your your risk appetite. So at the end of the day, you have a partner in 10 Windows that allows you to move not only your core banking at your speed and your desire, but also move all the other platforms that support the core and surround the core into into a core environment.

Whitney McDonald 10:29:30
Which makes it less daunting, right? You don’t have to do it all at once you can kind of do it piece by piece and see how it works and then determine okay, what’s the next piece that we should move over? You don’t have to do it all in one fell swoop.

Rodrigo Silva 10:29:45
That is absolutely correct. So you can take your time. And depending on your business strategy and your risk appetite, and how comfortable you are with the move, you can decide which pieces to move first. And again, that is those are the type of conversations that we love to have with clients. I’m very fortunate that in my role, I have a chance to speak with many banking executives and talk to them and with them about, you know, what are their appetite to move to cloud? And we showed some stats earlier on it, everyone’s talking about it. And the question is, how quickly can we move? And what should we move first? And who are we going to be working with and we’re glad to see that there’s a lot of trust in what we have been able to show the market. And, and we’re seeing a lot of interest in, in this move.

Whitney McDonald 10:30:32
So we’ve been seeing or following along this cloud migration journey. For quite some time. We talked through some benefits, we’ve seen the lift and shift. But what do you think is next within this cloud banking model? How is this cloud migration evolution changing? What are you watching for? What’s next in your perspective?

Rodrigo Silva 10:30:56
Yeah, so what we’re seeing is the market is changing. And so is the way the banks consume technology, right? They’re moving to SAS, we end with a SaaS offering, you are basically allocating all those quality, the responsibilities around managing the infrastructure, managing the security, the the monitoring the day to day operations, the close of business, the updates the upgrades, putting that in the hands of a of a vendor, right, an organization like like dominoes on a cloud environment. So we’re seeing them move more and more that is very, it’s a model that has been in place, especially in North America for many years. But we’re seeing that more and more around the world as well. That took a little longer to adapt and to adopt that data. Call it the the SAS model or just putting With all that responsibility in the hands of a vendor, now, what we’re seeing as the next wave is, is really is Cloud Analytics, right the amount of call it what the banks can do with all the data that can be available in the cloud, because cloud allows you to allows the scalability to really move tremendous amount of data in and in with the speed and scalability that you need to, to be able to manage that. And with with Cloud Analytics, banks will be able to to have real time insight into customer behaviors, market trends. And that is super important as they are launching their new products and their next best offer and how they’re managing other aspects of their business such as risk profiling, Fraud Management, so on and so forth. So So with a highly scalable, says model, together with a robust localization and local operations, right, the banks can feel comfortable on moving into into the cloud environment and, and again, with a vendor that has been doing that for a while.

Whitney McDonald 10:33:04
You’ve been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at Bank automation For more automation news,

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