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DIGITAL BANKS AND THE POWER OF THE CLOUD TRACKER® AUGUST 2020 How Holvi is Australian online-only Xinja Why the pandemic is pushing leveraging Kubernetes Bank turns to Kubernetes banks to go cloud-native for seamless service to enhance its mobile Page 8 banking features Page 19 FEATURE STORY Page 13 DEEP DIVE NEWS AND TRENDS TABLE OF CONTENTS 03 WHAT’S INSIDE Recent cloud and digital banking developments, such as why banks need to examine their container orchestration and Kubernetes investments as well as why the Royal Bank of Canada is employing AI and private cloud technology to accelerate its software innovation 08 FEATURE STORY An interview with Andrew Smith, director of technical operations for Finnish banking service Holvi, on why Kubernetes’ speed and scalability are essential to helping FIs swiftly deploy services for customers NEWS AND TRENDS 13 The latest cloud banking headlines, including why Australian business banking FinTech Tyro is using the cloud to upgrade its infrastructure and why Singapore’s Asia Digital Bank Corporation is leveraging the cloud to better contend for one of the region’s digital banking licenses DEEP DIVE 19 ACKNOWLEDGMENT An in-depth look at how the ongoing The Digital Banks And The Power Of The pandemic is pushing banks onto cloud-native ® Cloud Tracker was done in collaboration digital infrastructure and how systems like with NuoDB, and PYMNTS is grateful for the company’s support and insight. PYMNTS.com Kubernetes will prove essential for this move retains full editorial control over the following findings, methodology and data analysis. 23 ABOUT Information on PYMNTS.com and NuoDB WHAT’S INSIDE pproximately half a year has passed since the COVID-19 pandemic was declared and banks have largely determined how to continue their oper- ations as the industry faces significant challenges. Financial institutions (FIs) around the globe used digital banking to interact with customers as Abrick-and-mortar branches closed or faced significant restrictions and many have continued to invest in these channels. Consumers keep flocking to them, too, with mobile banking application traffic growing by 85 percent in April. Many FIs are still struggling to adjust to Cloud-based solutions are therefore these shifts in ways that keep their cus- becoming more attractive to the banking tomers fully satisfied, however. United industry, especially given the potential of States consumers are reporting long call tools such as Kubernetes. Kubernetes is an center and customer service wait times, for open-source orchestration solution origi- example, leading to increased frustration. nally designed by technology giant Google Fraud and cybersecurity threat instances in 2014. It aims to offer more flexibility for are also rising as bad actors capitalize on firms deploying their services via cloud- pandemic-related confusion. The U.S. based containers, which are essentially Financial Crimes Enforcement Network bundled applications stored on the cloud. (FinCen) recently issued an advisory Kubernetes offers banks and companies detailing the types of cybercrime that are frameworks they can use to more trans- growing more prevalent. Thwarting illicit parently — and more quickly — consoli- activity and placating the proliferation of date various applications running on their digital banking customers are necessities separate containers. FIs looking for flexi- for banks, but accomplishing these tasks bility and scalability in their robust online can be especially challenging for FIs run- banking operations would thus be wise to ning most of their processes — and spend- examine the technology and its potential. ing the bulk of their technology budgets — on legacy core banking infrastructure. © 2020 PYMNTS.com All Rights Reserved August 2020 | 3 What’s Inside AROUND THE CLOUD BANKING WORLD Institutions had begun using containers to better organize their data and quickly provide new offerings to customers even before the pandemic. One 2019 study found that 25 percent of surveyed entities invested $250,000 or more in cloud-native container technologies, including Kuber- netes. These and similar tools could help banks add agility and transparency to their digital operations — critical moves toward serving the rising number of digital- oriented customers. The Royal Bank of Canada (RBC) is experi- menting with emerging cloud technologies to add flexibility to its digital banking offer- ings. It announced that it is working with a third-party cloud provider to develop a private cloud environment that will utilize artificial intelligence (AI) to deliver more robust data analytics. The offering will allow RBC to test and simulate changes to the software powering its consumer- facing solutions, reducing the time it typ- ically takes to complete these tasks and enabling innovative upgrades and products to reach the market faster. © 2020 PYMNTS.com All Rights Reserved August 2020 | 4 EXECUTIVEDigital Banks And The Power Of The Cloud Tracker® INSIGHT Challenger banks are also accelerating How does the use of Kubernetes their cloud use, with Australian digital-only benefit banks’ clients and customers, financial institution Volt Bank partnering and why should banks be utilizing the with cloud technology provider IBM for technology, especially in the wake of the ongoing pandemic? more security, for example. The former will employ the latter’s cloud-supported fraud “To survive and provide the best service protection solutions, allowing it to more to their customers, banks need to become easily distinguish between legitimate cus- more agile. Agility is critical to enable banks to quickly meet the ever-changing demands tomers and fraudsters attempting to use of their clients and customers. Kubernetes its online-only banking platform. Leverag- is a container management and orchestra- ing the cloud will give Volt Bank access to tion platform that enables banks to build and deploy new applications faster, allow- more data for its assessments, which could ing banks to quickly and easily address the also enable it to build out more personal- needs of their clients and customers. ized features for legitimate customers. Kubernetes also improves [the] user expe- rience by ensuring applications are always For more on these stories and other cloud available and responsive to customer banking headlines, check out the Tracker’s demand. Kubernetes automatically restarts News and Trends section (p. 13). failed processes and dynamically scales pro- cesses to be able to keep up with demand. No longer do banks have to [expect] custom- HOLVI ON THE ers complaining about slow performance. PUSH TO KUBERNETES- Kubernetes manages the environment auto- matically so that customers get the best SUPPORTED BANKING experience. Digital banking volumes are up and con- For banks, Kubernetes allows them to sumers are becoming more sensitive to reduce costs while providing an on-ramp online frictions. Many are building digital to the cloud. Both are critical in the face of the ongoing pandemic. Since containers relationships with their banks, meaning FIs are smaller than virtual machines, banks must quickly work to eliminate pain points can increase server utilization and reduce such as lagging responses to customer que- costs with Kubernetes. Finally, Kubernetes provides a seamless experience either on- ries or long wait times at call centers. Tools premises or in any cloud. Kubernetes allows such as Kubernetes could offer solutions, banks to easily migrate to the cloud.” however, enabling the speed and flexibil- ity that many FIs now require to address ARIFF KASSAM, chief technology officer atNuoDB © 2020 PYMNTS.com All Rights Reserved August 2020 | 5 What’s Inside their customers’ banking expectations. In ing these systems’ weaknesses. Many FIs this month’s Feature Story (p. 8), Andrew are enhancing their existing operations in Smith, director of technical operations for response to the recent rise in digital bank- Finnish banking service Holvi, explains how ing, but this stopgap strategy is unlikely Kubernetes and container solutions can to hold up in the long term, especially as help FIs manage increased server volumes greater online engagement becomes per- and deploy necessary updates with ease. manent. One solution to help FIs suc- cessfully navigate this jump could be to DEEP DIVE: HOW THE PANDEMIC move to cloud-native systems that were IS CAUSING FIs TO CONSIDER designed wholly for digital banking. This CLOUD-NATIVE BANKING month’s Deep Dive (p. 19) examines why Banks were confronting the limitations of investment in cloud-based solutions is their legacy banking infrastructures even becoming more essential for banks and before the COVID-19 pandemic began, how platforms such as Kubernetes could but the health crisis is further highlight- play larger roles in these shifts and in the banking industry’s future. © 2020 PYMNTS.com All Rights Reserved August 2020 | 6 Digital Banks And The Power Of The Cloud Tracker® 40% 95% 80% Portion of Generation Z or Share of IT professionals Approximate portion of FIs’ digitally savvy customers who believe adopting annual technology budgets who would be willing Kubernetes has benefited spent on maintaining legacy to switch banks in the their companies core banking infrastructure next year 87% 33% Portion of IT professionals Share of enterprises that are who believe pandemic- presently using multicloud related shifts will drive management tools further cloud migration © 2020 PYMNTS.com All Rights Reserved August 2020 | 7 HOW HOLVI