AWS Advances Financial Services In The Cloud: News From Re:Invent 2022

Last week, 50,000 people convened in Las Vegas, and another 300,000 gathered virtually around the world for AWS re:Invent, one of the most anticipated tech events of the year. Chief Analyst Patrick Moorhead and Principal Analyst Anshel Sag attended live in Vegas. Other Moor Insights & Strategy analysts and I attended events virtually as AWS made several announcements throughout the week.

The cloud computing giant revealed a slew of new releases, upgrades, and initiatives, with plenty of them coming in the financial services industry. Overall, recurring themes at re:Invent 2022 were the introduction of intelligent applications, specialized industry solutions, and a modern data cloud—all of which suit financial services very well as they bring more speed and scalability that increases performance and service levels for consumers.

Time and again, AWS is showing its focus on leveraging cloud computing to help banks and other financial institutions move faster and serve end users better. Let’s examine some of these moves in more detail.

AWS and Trust Bank of Singapore Onboard 300K Customers in Two Months

Amazon Web Services Singapore Private Limited announced a partnership for AWS to power Trust Bank, Singapore’s first built-in-the-cloud digitally native bank. As a sign of its effectiveness, in two months of the collaboration Trust onboarded more than 300,000 retail customers. The companies tout the collaboration as giving Trust the agility to evolve rapidly based on consumer feedback and the scalability to support its fast-growing customer base.

Trust is backed by a partnership between Standard Chartered Bank and FairPrice Group and is the first of a new wave of digitally native banks in Singapore. To serve the evolving needs of digital-first consumers, Trust is deploying Amazon Elastic Compute Cloud (Amazon EC2) for scalable compute capacity without hardware constraints and Amazon Relational Database Service (Amazon RDS), a managed service for setting up, operating, and scaling a relational database in the cloud. Using real-time data, including consumer feedback and transaction history, Trust can upgrade its customer experience with improvements to its app, including customizing payment options and credit limits. The solution allows the bank to iterate quickly to provide a seamless and engaging user experience.

Thanks to AWS, Trust now offers consumer-facing conveniences such as onboarding times of less than four minutes for a savings or checking account, a first-to-market numberless credit card, and the ability to consolidate debit and credit cards by simply choosing one or the other in the app. The AWS Asia Pacific (Singapore) Region provides support for Trust platform customers across multiple Availability Zones with ultra-low latency for a seamless experience. AWS also helps the bank meet all compliance requirements for data residency.

The benefits of a built-in-the-cloud bank go beyond eliminating the time and expense invested in a digital transformation with little to no learning curve for bank associates or its customers. While many financial institutions (FIs) migrate to the cloud from legacy hardware and software, building cloud-based banking architecture from scratch allows for multi-channel onboarding, transactions, payment processing, and more. Operating in the cloud with real-time data will enable FIs to react quickly to ever-changing consumer demands and preferences and promptly respond to competitive threats. Cloud infrastructure can also help FIs’ compliance position around audits, data encryption, event logging, and more.

AWS and Timo Bank Bring Financial Services to the Unbanked In Vietnam

AWS also announced a partnership with Vietnam’s Timo Bank, one of the country’s leading digital banks, to build a core banking platform on AWS in a six-month timeframe. Timo plans to scale the cloud-native banking business and acquire five million new customers within three years.

Using AWS’ compute, data analytics, and machine learning capabilities, Timo is bringing accessible digital banking services such as online payments and savings accounts to its customers in Vietnam via their mobile devices. The bank focuses on economic empowerment for the 69% of the country who are unbanked. Even though it has one of the fastest-growing economies in the world, Vietnam ranks near the top of the list of the most unbanked nations. Many of the country’s residents live too far from a bank, don’t have sufficient documentation to open accounts, or simply don’t trust the system. Ample access to inexpensive mobile devices, however, has changed banks’ ability to reach the underserved population.

We can compare the Timo initiative with a non-AWS example. Techcombank, a Hanoi-based bank with more than 360 branches across Vietnam, also recognized the need to reach the unbanked, allowing people to transact through mobile devices. The bank underwent a digital transformation with IBM to create a mobile-optimized platform that can scale, provide excellent performance, and adapt to fluctuating workloads. As with any financial institution, Techcombank also needed cost-efficiency and enhanced security features. The bank chose IBM LinuxONE, and from 2015 to 2017, Techcombank experienced a more than 100% year-over-year increase in both transaction volume and the value of its e-banking services. Additionally, its customer base is increasing by 30 percent year-on-year following its shift to serving Vietnam’s unbanked.

Timo is working towards a similar outcome but started with digital-first and then built around that mission. “Timo has developed a unique banking proposition on AWS, including services that solve customer pain points working backward from the mission to develop economic empowerment. We are excited to support Timo as the company grows,” said Pete Murray, ASEAN Head of Financial Services at AWS.

AWS Partner Mambu helped build Timo’s core financial applications in the cloud, including banking, payments, and a mobile app. The company uses Amazon EC2, an AWS cloud for scalable computing capacity, and Amazon Elastic Kubernetes Services (Amazon EKS), a managed container service to quickly scale workloads on demand.

With the company expecting a tenfold increase in transactions by 2025, scalability will be critical. Timo also built a data lake using Amazon Simple Storage Service (Amazon S3) for scalable storage infrastructure and AWS Glue to extract, transform, and load (ETL) data. The data lake stores Timo’s data on customer demographics and financial behavior securely and compliantly at scale. Using Amazon’s SageMaker data wrangler, Timo provides customers with personalized financial services using data stored in the lake. The service is fully managed and delivers on-demand machine learning models that can be trained quickly without expertise or time lag between input data points.

Nasdaq Cloud Migration Update

At the re:Invent 2021 keynote, Nasdaq CEO Adina Friedman revealed that Nasdaq will be transitioning its North American markets to AWS step by step, beginning with its U.S. options market, MRX. Nasdaq and AWS announced a multi-year collaboration that promised to change the foundation of stock exchange operator starting in 2022.

At this year’s opening keynote, AWS CEO Adam Selipsky said the two entities have delivered on that promise. “They [Nasdaq] moved a number of symbols already, with the rest on track to move before the end of this year. And customers are already seeing enhanced performance,.” Selipsky said of the transition.

According to an announcement at re:Invent last year, Nasdaq and AWS co-developed an edge computing solution exclusively designed for market infrastructure, using AWS Outposts hybrid solutions to extend its infrastructure, services, and tools to any location, data center, or on-premise facility. The AWS Outposts enable ultra-low latency edge computing for latency- and security-sensitive workloads, facilitating billions of dollars in daily transactions.

As it looks from the original announcement, the partnership should also help Nasdaq’s many infrastructure clients in the financial sector utilize AWS’s cloud capabilities to safeguard against criminal activity, analyze data more efficiently, and reduce costs associated with maintaining legacy systems. While Nasdaq said it will eventually be 100% cloud-enabled, it did not give a concrete timeline for moving additional markets to the cloud other than “within the next decade.” As with any financial institution, the need for elasticity and resilience in volatility will always come up against concern for data breaches and regulatory matters, so although it is a needed move, it may not be entirely swift. My guess is at least four years, and that might be optimistic.

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Moor Insights & Strategy founder, CEO, and Chief Analyst Patrick Moorhead is an investor in dMY Technology Group Inc. VI, Dreamium Labs, Groq, Luminar Technologies, MemryX, and Movand

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