Gary Delooze, CIO of the UK’s Nationwide, gives an honest and detailed insight into the building society’s migration to the Cloud – part of a £4.1billion IT investment that more than lived up to its promise during the pandemic.
Nationwide Building Society is in the process of re-platforming its digital banking and mortgage services to a multi-Cloud environment. It’s part of an ambitious journey that Britain’s biggest building society, the UK’s second-largest mortgage lender, set out on in 2008, to ensure it was primed for the next generation of digital innovation.
As it progressed, it topped up the spend. In 2018, the organisation announced that it would be investing £4.1billion over the next five years to radically simplify its IT system, speed up development processes and improve the quality of the products and services it brings to market.
Today, its Cloud Centre of Excellence teams are focussed on building Cloud landing zones using DevOps tool chains, and partnering with the likes of Amazon Web Services (AWS) and Microsoft to bring an agile, multi-Cloud capability to the organisation. Projects include working with Microsoft to build new websites and member services into Azure tenants; building new digital journeys and APIs, using microservices hosted in AWS containers; and creating multi-Cloud, containerised environments using RedHat OpenShift. In the words of the man leading those teams, it means they ‘get to work on some phenomenal projects that tackle properly thorny problems’.
Moving to Cloud is a road that many of Nationwide’s contemporaries are on, as they seek to prevent their market share from more nimble competitors.
CIO Gary Delooze explains: “One of our bigger challenges for the last few years has been how we can achieve the same level of agility as you would expect to see in a challenger bank, or in a typical technology organisation.
“What Cloud gives us – with the automation and tooling that we’ve put in place – is the ability to create infrastructure as code, to deploy this very quickly and to therefore be able to stand up new solutions, capabilities and services for our members – we’re talking minutes, not months. But where it’s really exploded for us is software-as-a-service. That variety of building blocks, services, platforms and environments that we can stand up really quickly has grown exponentially in the past few years, and has accelerated the journey to value massively. And, done right, we can deliver it all in a way that is far more resilient than typical, on-premise technology.”
Exploiting the vast possibilities that new technology and Cloud adoption create for the benefit of Nationwide’s 15 million members doesn’t come without its challenges, however.
“Financial services organisations are set up to manage risk, so the big challenge for us in adopting any new technology, whether it’s Cloud, artificial intelligence (AI), or anything else, is are we able to put sufficient controls in place? Are we able to manage the risks so we can protect our members and customers, and deliver the kind of services that they want us to?
“When it comes to Cloud, I think the most important part of the adoption journey for us has been about getting a good understanding of the risks, developing a good understanding of the controls required to manage those risks, and being able to demonstrate, over time, that we’re able to put those controls in place so that we can safely and securely deliver the technology.
“You could argue that it takes financial services organisations longer to do that; the regulations that we are managed by require us to take that approach. But, for
me, it’s about protecting our members with the right controls in place while also unlocking the value that the technology brings. Getting that balance right takes a bit of time,” says Delooze.
Not everyone has got it right, of course.
“If I look back at some of the big surprises that organisations have had around Cloud, they typically come from an immaturity in the control frameworks and in their operating models,” he says. “For example, as we’ve gone through this journey we have learned how to better manage consumption and how to manage capacity and bandwidth. We now manage the economics of Cloud in a way that is very, very different from the economics of our on-premise technology.”
That means, in Delooze’s words, spinning new environments up quickly, tearing them down quickly and moving on to the next.
“If you leave those environments stood up overnight when you’re not using them, you’re still paying for them,” he points out.
“So, it’s really important to have those capabilities to monitor, to manage, to maintain, and to consume the technology in the right way.”
Investing in Cloud technology means Nationwide has room to grow and accommodate change as the number of customers who use its digital banking and payment channels continues to spiral up.
The COVID-19 pandemic has put the organisation under immense pressure to deliver seamless services via digital channels, while coping with drastic operational changes and a huge shift in customer expectations.
One of the biggest challenges was switching up to 13,000 employees to remote working overnight as well as re-routing calls from contact centres to remote workers and branches, so they could continue to support members affected by the crisis.
But when mortgage payment holidays were announced by the Government at the height of the pandemic, a team nevertheless built, tested and rolled out a dedicated online journey in just five days.
“The regulators wanted us to be able to give our customers payment holidays to make sure that they were being helped through the crisis and, for us, that led to unprecedented demand on our branches and contact centres.
“So, we wanted to stand up new digital services and give our members the opportunity to request a payment holiday online. And we couldn’t have done this without Cloud technology that we had already developed,” says Delooze.
“We reused our Cloud platforms, reused the microservices we’d built in the Cloud-native architectures that we’d deployed for some of our other digital services and, within about three or four days, had a payment journey working. And, in just over a week, we got the first version of those payment holiday requests online.
“If I think back a couple of years, doing that through our traditional, waterfall IT development cycle, we would probably not have made it to the end of the requirement specification phase in the time it took us to go live,” he says.
Cost and security
Using Cloud-based solutions or providers can open all kinds of possibilities for banks, especially for legacy financial institutions trying to shake off outdated infrastructure. Some are experimenting with this approach but others are stalling due to lingering concerns over cost, integration and security.
“We take this incredibly seriously, and we put a lot of investment into securing our datacentres and infrastructure,” says Delooze. “However, we can’t get close to the level of investment that the likes of Microsoft, Amazon and Google are now putting into their own public Cloud infrastructures.
“Given the complexity of the estate that we run, though, given the 50 years’ worth of IT that’s been built up, layer by layer, and the challenges we have in managing that complexity and maintaining service on a day-to-day basis, the risks we face in migrating from that environment to the Cloud are significant.
“The legacy-free environments that the public Cloud providers run are super-scaled, but are often orders of magnitude simpler. However, the security technologies they wrap around these are phenomenal. I would love to say that we are as good at this as the hyper-scalers and, in many respects, we are. But I do believe they are gaining the edge on us, just because they have the depth of pockets in terms of an ability to invest in this space that we don’t have, and that’s one of the reasons why will be increasingly adopting their technology and using their services.”