Cloud in Retail Banking and Capital Markets: Financial Services Leaders Forum NYC Recap (Part Two)

The Financial Services Leaders Forum (FSL Forum) from Google presented a detailed and comprehensive look at how Google Cloud and its attendant services are acting to drive transformation in the industry. Financial services was long seen as a laggard in embracing the power of the cloud, but that has changed dramatically in the past year or two. The day-long lineup of speakers and presentations at FSL Forum stands as testament to that fact.

google cloud financial services

The FSL Forum was split into morning and afternoon sessions, with the afternoon splitting into two tracks that covered both retail banking and capital markets. Part One of this blog series covers the morning session and is available here.

The Power of Cloud in Retail Banking

It’s no surprise that retail has been a key focus for transformation in financial services. Our current app-driven culture is well suited to lead disruption as customers expect and demand more speed, flexibility, and service from their interactions with their financial providers. In this environment, cloud is a critical tool for delivering the transformation needed to meet the needs and expectations of the modern consumer of financial services. This point was brought home clearly in two presentations during the afternoon sessions that focused on retail banking: Anthos for Retail Banking and Fueling ATBs Business Transformation with G Suite.

Anthos for Retail Banking

The Anthos For Retail Banking session kicked off with comments from Joe Albanese of Google Cloud and featured Gabe Jaynes from KeyBank. Albanese described how Anthos is more than “Kubernetes everywhere” and instead is a way to achieve the full realization of the “build once, run anywhere” ethos. Anthos is still in its early days, but its release is a logical and welcomed addition to the path that KeyBank and others are already traveling down.

Transformation Powered by G Suite

The ability for cloud to transform a financial services business was hammered home by the example presented by Wellington Holbrook from ATB Financial, a top Canadian financial institution headquartered in Edmonton, Alberta. The journey began when the firm realized that their current way of doing business was stopping them from realizing the core vision and principles that they had encapsulated in a 92-word mission statement. While Holbrook said that he dislikes the word “transformation,” the changes that he described fit the description of what transformation truly means.

ATB made a wholesale switch to Google for productivity and collaboration tools in 2017 and has reaped the rewards. For example, internal polling found that the number of employees who said that they had the tools needed to succeed has risen significantly since the move to G Suite. On a more practical level, ATB has been able to impactfully reduce its strategic planning cycle, a change that is not only faster but also promotes greater collaboration and insight. The switch to G Suite has also shortened their new employee training because cloud-native millennials who before needed to be trained to use Office can now hit the ground running with G Suite. This allowed them to future-proof the bank for their workers and achieve digital orchestration as their 6,000 workers can speak with one voice.

Jaynes described KeyBank as the “biggest bank you’ve never heard of,” and detailed the path that they have taken to the cloud. As is often the case, a significant corporate event was a key driver that helped propel progress: in their case, a much-needed re-platforming in 2016 was accelerated and expanded because an impending acquisition led them to the conclusion that they didn’t want to go through the same transformation twice. Instead, they combined the efforts and wound up taking a more significant leap forward. Anthos has complimented this effort because it allows them to optimize their efforts in an environment where on-premise persists and cloud is delivered from multiple vendors. In the end, Jaynes said that “multi-cloud is our inevitable future,” making Anthos a much-needed vehicle to make the most of this reality.

A View from Capital Markets

Parallel to the Retail Banking track, a separate course of discussion took a wider view and examined the full breadth of capital markets in a series of panels and presentations that covered Cloud as an Innovation Platform in Capital Markets and Predicting Treasury Settlement Failures with ML.

Cloud as an Innovation Platform

The Innovation Platform was moderated by Ulku Rowe of Google Cloud and included Adam Honore from CME Group, Manoj Narang of Mana Partners, and Sameer Gupta of Point 72. 

For the CME Group, data is now a half billion dollar global business that generates more than a billion messages per day and serves customers far afield from traditional traders and speculators. According to Honore, cloud is making it possible to handle more data with greater availability in such a way that the automation of services will likely disrupt some of their customers. For example, Google BigQuery is enabling firms to derive their own data sets as an alternative to traditional providers. 

Narang presented a different perspective that reflected his experience as both a hedge fund manager and market infrastructure provider. In his view, latency is the old arms race in capital markets, and compute power is the current and future battleground. There is no way to compete in compute without cloud. Narang also noted that many firms are moving away from DIY and that they want to be in the business of “buying an outcome.” Harnessing the power of parallel computation all the way to alpha is an outcome worth paying for. 

Gupta took a different tack and discussed how technology is changing the paradigm of skills and training in financial services. Tools are changing so rapidly that our skills are flipped on their head and, as a result, we have to follow ion how we develop new skills. In some ways, real-time Coursera learning coupled with experience-based, hands-on training is changing the approach to building talent and may supplant university education. Cloud makes that possible.

Rowe, for her part, summarized the consensus of the panel that the integration of cloud is more than a cost or effectiveness decision, it’s a business decision that needs to start at the top. Also, she summarized that it’s a common misconception that you need Silicon Valley talent, as and that transformation happens within.

Predicting Treasury Settlement Failures with ML

There is a great deal of talk about machine learning (ML) these days, but the promise often doesn’t match the results. That proved to not be the case as Victor O’Laughlen and Sarthak Pattanaik of BNY Mellon described how they have used Google Cloud Platform to help them predict settlement failures in the market for U.S. Treasury securities. BNY Mellon is the sole provider of treasury settlement services in the U.S., making them a critical player in the financial health of the world. 

The focus of their efforts was on predictive work to prevent clearing and settlement failures with the objective of improving their forecasting of $70+ billion in daily settlement failures. The results were compelling, at 80% predictive and 40% recall, which is an appropriate profile for review since given the large quantities of capital involved. Critical to their success was organizational buy-in from above and the bank’s support for prudent use of new GCP technologies, firmly putting risk and security first.  

Two Opposing Vectors to Hate…

Ed Morris, head of sales for financial services at Google, said it well whenas he concluded the afternoon Retail Banking session: “There are two things that employees don’t like – the way things are and change.” Change may not be easy but it’s not possible to thrive – or perhaps survive – unless you embrace change. Financial services have been slow to embrace the change embodied in the cloud but that is clearly evolving. G Suite, Google Cloud Platform, and solutions like Anthos provide companies with the tools that they need in order to maximize this shift.

Financial services organizations seeking to accelerate performance rely on Maven Wave for innovation-driven digital transformation. Maven Wave delivers strategy-led, results-driven business solutions powered by cloud computing. To learn more, contact us now.

About the Author

Chuck Mackie
Chuck Mackie is a consultant with Maven Wave focusing on creating cutting-edge content and thought leadership articles in the areas of financial services, healthcare, and technology. He joined Maven Wave in 2010 and prior work experiences include stints at IntercontinentalExchange (ICE), Trading Technologies, and the CME Group. He has a Masters degree in marketing from Kellogg/Northwestern and a BA in Economics and Humanities from Coe College.
October 11th, 2019

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