Arthur Goldstuck | CEO | World Wide Worx | Editor-in-chief | Gadget.co.za | mail me |
South Africa’s financial institutions are rewriting the rules of banking technology. The cloud has become a new balance sheet of innovation.
For decades, the country’s banking sector has punched above its weight. For example, it provided electronic banking long before many global peers. Now, the cloud is a differentiator, and SA banks use cloud to accelerate a lead that is often overlooked internationally.
AWS Summit insights
During the annual AWS Summit hosted by Amazon Web Services at the Sandton Convention Centre recently, speakers from Absa, Capitec and the Johannesburg Stock Exchange shared case studies from the stage. Breakout sessions featured the likes of Standard Bank, Old Mutual and Sanlam.
It’s about taking a lead. There are some fundamental dynamics in a market like South Africa, which inherently make it very innovative. The real imperative is to help more and more customers secure their financial future. Financial inclusion and that drive applies right across the continent.
– Johnson Idesoh, Group Chief Information and Technology Officer, Absa
Other drivers include the age of the population who are very digitally savvy and then a regulatory framework that actually does encourage competition and therefore innovation.
Cloud as a competitive advantage
With the likes of AWS, Microsoft, Oracle, Google and Huawei establishing hyperscale data centres in South Africa, the world’s most powerful cloud computing platforms can now be roped into this evolution. SA banks use cloud to leverage these platforms for speed, agility and innovation.
Cloud enables us to drive innovation, not just because of the speed at which the hyperscalers innovate, but they have an ecosystem upon which other parties also innovate.
Clearly, from a customer point of view, that’s a huge benefit to a bank like Absa. The second reason is speed and agility. Particularly with AWS, there is value in the partnership, because most large organisations, banks, are considered slow and bureaucratic. In the world we operate in, the speed of response is really important. That speed has translated into new solutions. However, the story extends beyond agility.
You literally can codify things like your security policy on the cloud, which is a really powerful enabler. The one many CIOs talk about first, but I always talk about last, is cost. It can be expensive if you don’t manage it well. But actually on the cloud, because it’s consumption based, when you change your mindset to focus on value and customer value, you can do things at a lower cost.
Fraud prevention and data power
Where Absa focuses on AWS-driven agility, Capitec has used the platform to re-engineer fraud prevention.
There’s absolutely no advantage in taking what you have on premise and dropping it in the cloud. It’s quite an expensive thing to do. Our business imperative to shunt everything into AWS was that we wanted two data centres right next to each other. It gave us more stability.
– Andrew Baker, Chief Information Officer at Capitec
The true benefits emerged in fraud management. We have a big problem with fraud in this country, and that’s a relatively complicated problem to solve. You can’t solve that on premise. You will not have the computational power and the tools and machinery to do in-line interception of a payment.
Now that we’re in AWS, we literally pull payments out the air. If we see something’s wrong with that payment, we’ll pluck it off the network. We couldn’t attempt to do things like that if we were on premise.
The scope is vast. Every single payment that goes through Capitec passes through a beneficiary firewall. Anyone who tries to make a payment to a known scammer, we can make a call on that. Every payment from our 25 million clients for the last year has gone through that, and we have a record of it. We run that on a few CPUs, and that would be impossible on any other infrastructure stack. SA banks use cloud to manage this scale efficiently.
Our clients make over 15,000 card payments every minute. We have billions of transactions in process.
We invested heavily in our data technology and culture, and today we have a massive cloud data platform that is a single source of truth for our data. To give you a sense of our scale, our daily platform processes over 1.5 trillion reports per month, giving us around 27 petabytes of analytical data. We have over 1,000 technical users on our AWS platforms, across engineers, analysts and data scientists and over 6,000 employees across the business using data from dashboards and reports.
– Azhar Said, Chief Data Officer at Capitec
Financial Inclusion and the JSE
That combination of AWS scale and insight feeds directly into financial inclusion. Traditional banks often struggle to serve clients with no financial history. By using alternative data and Artificial Intelligence (AI) on AWS, Capitec can bank those who are invisible to lenders. This means we can extend the small working capital loan to a street vendor who’s never had formal credit before, helping that person grow their business. And that changes lives.
The Johannesburg Stock Exchange, also represented in the keynote session, represents a different dimension of the country’s financial ecosystem.
The JSE is the heartbeat of South Africa’s capital markets. We facilitate trading activity of 27-billion rand per day, and we have peaks well above 30 billion. And our systems have run for the last three years with 99.4% uptime. Ultimately, the operational strength that we deliver and the resilience is what earns us the right to transform the future, and that future is being built now.
– Dr Leila Fourie, CEO of the JSE, told the Summit
The JSE has signed a memorandum of understanding with the tech-heavy NASDAQ exchange, highlighting the high regard for local institutions.
Fourie described the next phase of the partnership:
We are partnering with AWS to advance into a secure cloud environment. We’re moving away from legacy mainframe systems. What we’re looking to do is calculate at scale on demand and open up product capabilities. We are currently also launching the next generation collocation services and very advanced analytics products. Our relationship is with NASDAQ (but) Amazon is the glue that keeps us together. We hope to become the gateway into Africa by aligning our infrastructure and our standards and opening up new pools of liquidity so that the JSE and South African market, as well as the US market, can easily and without friction trade and expand the pools of liquidity.
Clearly, using cloud, the power it enables us, the data on top of that, enables us to get much more into this continuous transformation mindset. Our customers benefit from it, day in, day out. SA banks use cloud to ensure innovation, operational resilience and financial inclusion.