Culture shift imperative in cloud adoption: HSBC CIO
By Edwin Yapp March 30, 2017
- Change in culture, business mindset a must to drive cloud-first mentality
- Machine learning, deep analytics to understand customers is HSBC’s priority
THE journey towards cloud computing begins with a committed shift in business and cultural paradigms before technology comes into play, declares a senior executive of one of the largest banks in the world.
HSBC Bank Plc chief information officer Darryl West (pic, above) said based on his own experience of moving the bank towards the cloud, the first step was to get everyone on board and to shift them into a “cloud-first” mindset.
“We thought about this carefully [and we concluded] that as a bank we may have significant technology [as an organisation] but the question really is: Are we going to compete with cloud players?
“Are we going to do what they do as well as they can do it? Our conclusion was that it was better for our business to adopt cloud, so we adopted a cloud-first policy.”
West was speaking at Google Cloud Next 17, the search giant’s second edition of its annual cloud conference for customers, partners, analysts and the media. The British-based bank began working with Google Inc’s Google Cloud Platform (GCP) about six months ago.
West noted that in an organisation in a bank like HSBC, there needs to be a major overhaul of how challenges are approached. Banks, he added, must think about things differently today such as adopting a dev-ops and agile mentality and making the jump the cloud and being bold and courageous in how it approaches innovation.
A veteran IT executive, West left his previous role as CIO of Lloyds Banking Group to take over a similar role at Barclays in November 2013. He was group CIO and deputy chief operations and technology officer for a little over a year when he left Barclays to join HSBC in February 2015.
Sharing the stage with Google’s president of enterprise sales, Tariq Shaukat (pic, right), West said customers today are adopting digital channels more aggressively, and HSBC is collecting more data than ever about how its customers interact with it.
“There are massive insights. What we need to do as a bank is to work with partners, draw insights, and create better customer experience,” he said, adding that this is why it’s important to have a cloud-first policy.
What HSBC gets from the cloud
West related how as a bank, it had many legacy issues and its journey towards the cloud was very similar to what many other large enterprises go through. He noted that as a bank, HSBC had ‘good ol’ fashion databases and banking core software that had been running for 40 years.
“These systems do a great job but they just don’t have the database structures for new technology such as advanced data analytics and machine learning,” he revealed.
Machine learning is a subset of artificial intelligence, where software is taught to recognise patterns through the observation of massive data sets automatically, often without being explicitly programmed by humans.
Its goal is to automatically allow computers to take a certain action or draw certain conclusions from a large set of data, and where the decisions made are automatically refined and evolved given more data analysed.
West said that historically, the bank would have to extract its data onto a data warehouse platform to do analytics and while that worked well for many years, it had over the years become too expensive and complicated.
“It’s been a tough road for us [dealing with legacy] but we took the plunge about three years ago, adopting tech such as Hadoop, building out our data centres, and hiring talent who understood all of this.”
West also said that its journey with Google Cloud began about six months ago on data crunching, analytics and machine learning because so much of these applications need tremendous computing power.
Some of the areas it needed such power were in anti-money laundering initiatives, where it needed to process millions of transactions to weed out what look like nefarious activities.
“These apps needs not only huge computing capability but also machine learning capabilities to identify patterns in large data sets,” he argued.
Other services that needed the cloud were in areas to do with the simulation of its finance and risk evaluation services, as well as in the trading business in order to better understand its trading positions and risks associated with them.
Enablers in place
In moving to the cloud, West acknowledged that it didn’t happen overnight and there needed to be some enablers to be in place for it to work.
Firstly, as a bank, West said that information security was paramount as the banking business was a heavily regulated business. As agile as the bank wanted to be in order to meet customers’ needs, it had to comply with data protection, privacy and information sovereignty laws, he stressed.
“We operate in 70 countries and we had to work with Google on this closely. Information security is the biggest enabler in this journey. We had to drive a cultural shift, adopt an agile methodology, a dev-ops mindset, recruit talent and get people how to understand and make it work.”
The second enabler was to ensure the integration process between legacy and newer systems was as seamless as it could be.
“We had to make sure we could integrate the cloud with our legacy technology and to ensure its complexity worked with GCP,” he said. “We also had to get people to understand how to do it and build the integration layers to do it.
“Finally, data preparation and managing data sprawl, as well as to ensure we invested in the right data architecture. We had to know where our copies were and where our ‘crown jewels’ of information were. And we need to interface this with our cloud partner [Google]. These were the enablers fundamental in achieving our goals at HSBC.”
When asked by Google’s Shaukat what the future was like for HSBC now that it had taken the plunge with GCP, West said it was very hard to predict the future but is sure that data will only grow, and it’ll need to be not only managed by processed intelligently.
“We are being pushed to go faster and our customers are driving us into a new world, to be faster to market and be more agile,” he explained. “The use of of data analytics, particularly machine learning, is only going to get more prevalent.
On what advice West would give other banks thinking about this journey to the cloud, he said: “The first thing is to make the jump and become a cloud-first company and get everyone on board – this includes technology and business teams.
Then, pick a partner that has the same type of culture with you as you’ll need to work together closely and have the same ways of working,” he said.
“We spent a great amount time evaluating all the big cloud providers [including Amazon Web Services and Microsoft] and found that with Google, it had the right subject matter experts and a suite of products that was easy to use, and had performance we wanted,” he claimed.
That said, West noted that HSBC’s partnership with Google was still in pilot mode and IT was still early days in their relationship. West however conceeded that HSBC still had certain workloads with AWS.
“Have a good look, meet all the people in the market, decide on the chemistry and culture, and commit yourself to it.”
Edwin Yapp reports from Google Next 2017 in San Francisco, at the invitation of Google Inc. All editorials are independent. He is contributing editor to Digital News Asia and Asean analyst at Tech Research Asia, an advisory firm that translates technology into business outcomes for executives in Asia Pacific.
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