Dr Michael Gorriz, group CIO of Standard Chartered, describes how the multinational bank has enthusiastically — but judiciously — embraced the cloud as the new foundation for both digital innovation and traditional core banking systems.When Dr Michael Gorriz joined financial services company Standard Chartered in July 2015 as group CIO, his mission was to raise the bank’s digital capabilities to the point where its vast multinational retail and wholesale businesses could run services in an integrated and seamless fashion, 24x7. Such digital ambitions were never going to come cheap, and in subsequent years the company saw annual investment in technology double to $1.6 billion as it sought to build the new foundation to underpin that. It included an architecture based of APIs that would enable external services to be securely connected to the bank’s core systems while also delivering integration across key internal systems, microservices and customer channels. But making that happen exposed the need for an underlying technology infrastructure that was much more flexible and adaptive — something that was not evident in the bank’s existing on-premise set up. Especially when faced with the constant pressure of always-on global demand.
|Standard Chartered’s group CIO, Michael Gorriz|
“We have a varying compute need, dependent on the presence [online] of different countries and regions at different times of day and the pattern of their activities,” says Gorriz. The London-headquartered but Asia, Middle-East and Africa-focused group actively trades and logs deposits in 45 markets. “We have a balance sheet in each of these markets but, because we are everywhere in terms of footprint, there’s no ideal place for hosting [the systems to support all of these].”That reality led to a dramatic conclusion in 2019, and one that is still unique among traditional financial services companies: that, going forward, the cloud should be the primary home for its IT. And with that, Gorriz set his team the task of developing and implementing a cloud-first strategy.Into the cloudHe emphasizes that the company was not a complete stranger to cloud. For example, it was already using the service model to host risk calculations in several of its markets. However, the cloud-first approach would mean a significant rethink in almost every part of its operations. “Cloud-first [to us now] means that whenever we start a new system, we have cloud in mind, building systems for modern compute paradigms and architectures that are container-based and service-based,” he says. That didn’t just apply to the design of new systems. Standard Chartered’s technology team are also retargeting systems due for a major upgrade at cloud-compatible or cloud-native alternatives. Examples of the policy in action have included Mox, the standalone digital retail bank launched in Hong Kong in September 2020, which is exclusively run in the cloud. The move also extended to nexus, a cloud-native ‘banking-as-a-service’ solution, first announced in Indonesia in March 2020, that enables digital platforms and ecosystems such as e-commerce, social media or ride-hailing companies to offer loans, credit cards and savings accounts co-created with the bank to their customers under their own brand.
The company’s digital channels across its corporate, wholesale and retail arms have all also been updated to the cloud — meaning that they are fully containerized using software capabilities supported by cloud service providers.
|Standard Chartered, Marina Bay Financial Centre, Singapore (Image: Erwin-Soo (Creative Commons))|
The next step in the cloud strategy, says Gorriz, was a focus on fast payment capabilities, increasingly expected in regions such as Hong Kong and Singapore (where Gorriz is based). Such payments require the bank to be able to process transactions in near real-time, rather than in batch, by directly connecting customers into central systems.
However, there was a consequence of that move, he says. Supporting the connection of fast transactions to Standard Chartered’s core banking system gave rise to another bold proposal, as Gorriz outlines: “To convert the core banking system [for cloud] as well.”
By the end of January 2021, the company had shifted core systems to the cloud in two major markets — Vietnam and the Philippines. And since then it has set a goal of migrating at least one core banking system to the cloud each month, with around 40 in the pipeline.
In adopting cloud on such a large scale, however, Standard Chartered has not wanted to put all of its eggs in one basket.
In August 2020, the bank announced a three-year strategic partnership with Microsoft “to accelerate the bank’s digital transformation through a cloud-first strategy.” Standard Chartered said it was adopting Microsoft Azure as a preferred cloud platform to meet its need for resilient data centers and cloud services such as its trade finance systems — a move that would allow for seamless cross-border trading for corporate and institutional clients.
That deal was quickly followed by a five-year agreement with Amazon Web Services (AWS) which involves Standard Chartered running strategic banking systems and customer-facing applications on AWS. In addition, it plans to use AWS services including database, containers, compute, networking, storage and security.
Gorriz explains that, as well as those two vendors, the bank has no issue in working with a third or fourth cloud provider in due course. A multi-cloud strategy enables a more resilient infrastructure and less reliance on any one partner, he says.
|Standard Chartered, Singapore|
But the approach doesn’t necessarily relate to the need to minimize dependency on any single supplier, says Gorriz — a topic often raised by regulators. “The IT organization has been dependent on suppliers all of its life — whether vanilla, shrink-wrapped software or specialist technology. There is a different dimension here: we go into partnerships where [each vendor will] have a different cut of the responsibilities going forward,” he says.
“For example, on the channel side and for financial markets where we do risk calculations, we have AWS; when it comes to data management, our data lake implementation and analytics we picked Azure because of Microsoft’s strengths with end-user computing,” he says.
Standard Chartered’s confidence in cloud is not always mirrored at financial market regulators. With that in mind, the bank brought together all of its risk partners at the start of its cloud-first journey to work through its plan and try to alleviated concerns, Gorriz explains.
“We engaged our regulators early on and we have taken them along the journey with us. We have [been given] approval from our main supervisor, the UK’s Prudential Regulation Authority, to migrate to the cloud subject to local regulations and within our risk processes. And they are happy with our governance framework going forward,” he says.
Standard Chartered now has 19 countries that have approved its use of cloud for critical workloads, and several others that have said the bank can migrate less critical systems such as HR to the cloud.
By the end of 2020, it had 26 major systems in the cloud — a number that is expected to double in each of the next two years. And although Gorriz hasn’t set a target for overall cloud usage, he envisages that by 2025 more than half of Standard Chartered’s workloads will be delivered as a service from the cloud.