Friday, 7 December 2012

Commonwealth Bank of Australia run by Amazon?

 

No this isn't the latest bold move on the part of Amazon, acquiring one of Australia's so-called 'Four Pillars', but rather the extensive use of Amazon's cloud services by Commonwealth Bank.

Michael Harte, CIO of Commonwealth Bank of Australia (CBA) has spent the last four years and around AUD$1bn (£650m, $1bn USD) moving to a cloud-based operating model transforming the infrastructure and the way applications are delivered at the bank. This has included a considerable investment in the use of cloud services particularly those provided by Amazon Web Services (AWS). By so doing he has managed to reduce the percentage of the IT budget spent on infrastructure from 75% to 26%.

An example of where this cost reduction comes from is that whilst it used to take eight weeks to stand up a new server and several thousand dollars it now takes, according to Harte, eight minutes and 25 cents to do the same in the cloud. There is also a hugely significant reduction in the amount of energy that the bank directly consumes. No wonder large amounts of cost can be taken out.

Amongst financial services organisations there is a lot of debate about the use of cloud and whether it is safe or appropriate to use. There are some CIOs, such as Barclays European CIO, Anthony Watson, who are skeptical of the hype around the cloud and see it as fundamentally nothing more than large server farms, and there are others who are still in the early stages of deciding what to do about it. CBA and NAB (National Australia Bank) with their approach to virtualising the IT function (see http://www.itsafinancialworld.net/2012/10/do-banks-need-to-be-it-experts.html ) appear to be leading the way in implementing these technologies and  making the fundamental shifts to the IT operating model. However the use of Amazon Web Services by banks is not limited to those in the Southern Hemisphere, both Bank Inter in Spain and Italian bank Unicredito are using Amazon to host applications.

Customers may become concerned about the security of their personal data when they hear of  their banks moving onto the cloud, but Harte and other progressive CIOs are very clear about the fact that customer data will never be put into a public cloud. What this does mean is that the design of how applications and data are put into the cloud is absolutely critical, particularly as increasingly organisations implement cloud-based application such as the CRM solution, salesforce.com. Finding ways of exploiting the richness of functionality and the reduced costs of cloud solutions while leaving customer data firmly secured in the financial institutions private data centre is critical if the confidence and trust of the customer is not to be lost. This is particularly key for banks where the customer trust is at an all time low.

CBA has taken a measured approach to moving towards the cloud operating model starting with using it for development and testing, where no customer data is involved. Before Christmas 2012 CBA will migrate commbank.com.au, the internet banking platform onto Amazon's cloud and then it will be fair to say, with tongue lightly pressed into the cheek that Commonwealth Bank is being run by Amazon.

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