10 May DATA TALK : Using Cloud-Based Solutions in a Bank
In today’s post, Managing Partner at Keboola Singapore, Jana Marle Zizkova, interviews Jiri Manas, Head of Digital IT at Ceska Sporitelna, which is a part of Erste Group, one of the most traditional financial institutions in Europe. They talk about analytics, data big and small, entrepreneurial mindset in enterprise and innovative use of cloud-based solutions in a rather conservative environment of bank and even hackathons.
Tell us about your position and the bank Ceska Sporitelna (Czech Saving Bank).
I work as the Digital IT Manager at Ceska Sporitelna (CS Bank) where I manage anything with an “online & IT” label on it. I also lead the technical innovative solutions team that provides innovative solutions to our customers.
CS Bank is the largest retail bank in the country and is part of the Erste Group, the biggest banking corporation between Russia and Germany.
Cloud in the financial industry is still a very rare phenomenon but you are a big advocate of cloud-based solutions. Why?
Cloud is great for speed of innovation and agility. We’ve started working with business intelligence system integrator, Billigence, to plan the use of cloud as well as leveraging Keboola’s data integration platform for our company.
In the past, when a business wanted to analyze some data, they usually had to wait several weeks, or even months, for the reports to come from their IT department. Cloud-based systems now provide them with answers to their business questions much quicker.
What were the specific business reasons to use cloud-based solutions in your bank?
The starting point was to help our business retain our customers and to monetise the data we have. We wanted to not only sell products, but also build relations with our customers. It’s about helping our enterprise clients to grow their business, increase their revenue and showcase their expertise.
At the same time, we realized we could use the cloud-based reporting for our internal analysis to increase efficiency. For example, branch distribution effectiveness over geographical data. Most of this information is already available in the cloud, all we needed to do was merge it with our internal data.
What was the role of the Keboola Connection (KBC) in the overall architecture?
Keboola Connection is a great technology. It allowed us to quickly and easily deliver the business value via merging data extracted from different sources. It was in two words: easy and fast.
You mention the hot topic of Data Monetisation. What does it mean in the banking environment? How can you monetise the “closely watched” banking data?
In simple terms, it means generating revenue in return for the client. If you want to create a rewarding relationship with your client, you need to help them grow their business. Only then will they continue to stay and invest with you.
If you approach a client and tell them there are some innovative solutions that will help reduce all the transaction payments and increase their efficiency, i.e. they will pay less for your services, they will probably say, “Great, but give me more revenue or bring me more customers instead; that’s what matters!”
As an example, we took transactional data and created a cloud-based dashboard that showed clients insights like how they benchmark against their competitors or against other clients with similar business offerings; as well as whether their branches were in good locations (“hot spots” or high traffic areas). The demand and interest are there, hence it was clear to us that we had to move the data to the cloud.
What about banking regulatory compliance and your internal compliance rules?
The regulation ecosystem in Europe is pretty complicated and it’s getting tighter every year. It’s also closely followed by US market regulation. As a bank, we use several types of services as well as the software as a service (SaaS), which can be seen as the equivalent of outsourcing a service.
The regulators have already acknowledged that their regulations are a bit behind and that SaaS is something to take into consideration, especially when it comes to the big global players such as Google or Amazon.
In each regulated financial organisation, you should have risk management aligned with the classic Basel Criteria for Audit and Governance purposes. With the SaaS outsourcing, you usually have all these levels (Operational, Control and Audit) already under the control of the company that provides the service. Where risk management is concerned, you have to compare how you would do it internally with what your SaaS provider does.
You need to have an insight into these service organisations either through a one-time audit or through security white papers that the organisation provides or by other means. If the service providers are audited by an independent third party, that’s even better. For example, Amazon and Google have SOC reports and ISO certifications from renowned auditing firms, which provide confirmation that all the necessary processes are in place.
These firms are at the same or even higher level in terms of processes compared to some of the banks. I’m not sure how it is in other countries but in the Czech Republic, there’s no bank that currently has an ISO information security certification. I doubt that any bank in the world has that kind of certification standard.
Sounds like security-wise, you would almost be better off with the SaaS provider. From your perspective, can you share the process of creating the security white paper with Keboola?
Keboola was a new kid on the block in the financial industry and that’s why we needed to help each other. The positive points for Keboola was that they use Amazon and the latter has all the necessary certifications and governance well sorted out. The immediate step was to validate the certification with Amazon and audit the processes within Keboola Connection itself. As all the data is stored and resides with Amazon (AWS), the focus then turned to the data in transit. And that is what we did. Keboola is now well versed with financial regulations and how to cope with it.
How did the rest of the organisation react to working with a cloud-based solution? Did you have to do a lot of “internal selling”?
Well, it wasn’t easy. The organisation was not ready for cloud, and is not really even ready today. But if you come armed with the proposition of providing a solution that will help generate revenue for the company, you’ll likely have support from the business/commercial team. Once you secure that support, the compliance and security functions will find it difficult to say, “We can’t do it”.
They will be told by the business to find a way to do so. Similarly for us, we put forward a business proposition with clear results and the business started to push the security team to align their rules and procedures towards the use of the innovative cloud-based solution.
In hindsight, it would have been very handy to have a digital security and compliance officer on our side who wasn’t part of the security team. They could have shown the security and compliance team for example, that we based everything according to the rules and had insights on how to control the risk and the governance within the outsourcing service.
Where are you now with the project?
The POC project is off the ground and we have three business clients who are utilising our data, free of charge as we develop the system/dashboards for them.
One of them is very interested in customised data insights and we are currently developing the dashboards specifically for them. We wanted to officially launch it when we’ve had a few clients already using the application. This creates a win-win situation for everyone: we build a loyal customer base that’s satisfied with us and our services, and the client’s business grows based on the insights we provide.
During the Enterprise Data Hackathon organised by Keboola last year, you allowed the attendees to use the bank’s POS transaction data. How was this even possible?
First, we had to anonymise the dataset so that you couldn’t identify the data without internal knowledge. It was approved by the internal security, compliance and regulatory teams. Then we launched it and surprised the data hackathon teams with the use of these legitimate data sets.
Did the participation in the hackathon help you in any way?
The interesting part of the hackathon for us was seeing how people used the data from a completely different perspective. A great example of a surprising result was having someone build a “Tinder of financial services”. That was fantastic! One could ask things like ‘find me a guy who has this financial consideration or standing, and then we can have a coffee together if they like me’.
Another data monetisation application? 🙂
Yes, but that one would be quite tricky, wouldn’t it?
The hackathon created an environment where people were not limited by any corporate way of thinking, rules or culture. Was that your aim?
Absolutely. The new generation think so differently and the market is very competitive. We do need to get out of the corporate environment to come up with new innovative ideas.
Let’s summarise: was the whole exercise worth it? What were the lessons learnt? And what is ahead for you now?
It was very worth it. Look, the whole banking segment is getting commodified like telecommunications five years ago. There is no differentiation between the banks, unless you have someone you really like at a branch. But what do you do when that person moves to another bank and takes their portfolio with them? On the digital side, there is hardly any differentiation as well – someone might offer a better online banking experience, but we know people usually don’t leave or stay with a bank because of this. In such a commodified segment you must be innovative.
Keboola helped by providing the Keboola Connection (KBC) platform to integrate all the different types of data sources. How was the experience like partnering with Keboola?
What I really value about Keboola is their deep knowledge. The Keboola guys have a great understanding not only of the technology, but also how to use it in the business environment. You don’t usually get this level of expertise. When we needed some new functionality or something completely new, the Keboola team took it as a challenge; almost like “Oh, this is great, why didn’t we think about that?”
They took the idea back and added it as a new functionality in Keboola Connection over one weekend! That and the way how KBC is structured is what I value the most. Keboola Connection is not only a cloud-based data integration platform, it’s also a marketplace for all different data analysis and data science applications, and that is something new and really visionary. The Billigence team also had an integral and crucial role to the whole process as they had the know-how to push these services into corporations.
Thank you, Jiri! And good luck with pioneering the cloud in the financial services sector!
Jiri Manas – Bio
Jiri is a human and disruptive leader. Currently leading technology innovation in Ceska Sporitelna – Erste group bank. He has more than 13 years of experience in technology of large multi-
national banks in Europe and Asia. His expertise varies from IT operation through security to development and business technology innovations. He has established culture of intrapreneurs within IT. He is a multidisciplined person which allows him to think out of the box. His motto – A life lived in a fear is a life half lived – explains his can-do attitude towards most things.
He managed Ceska Sporitelna (Czech Saving Bank, Erste Group), a very conservative bank environment, to adopt cloud collaboration suite Google Apps within one year. He’s a strong believer in bank open APIs, lean development and data-driven organisations.
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