How OakNorth Bank became the first bank in the UK to move to the cloud and why they did it

Contributed Article By Francesca Gandolfo, Chief Operations Officer of OakNorth Bank

Much of the banking headlines over the last few years have been dominated by news of customers being unable to access their accounts online, make transfers or withdraw cash, and one of the sources of these issues has been the legacy IT the banks are burdened with. In addition to wanting to avoid these time-consuming and costly disruptions, there were a number of other reasons why we wanted to move to the cloud:

  • Flexibility: when you buy your own infrastructure, you’re forced to decide what you want upfront and then you’re stuck with it. With the cloud however, you can be a lot more flexible and change settings as you go along. As a new bank, we want the freedom to experiment and continuously evolve our offering in line with customer needs and expectations. Working with a provider like Amazon Web Services (AWS), which has massive purchasing power and invests in the latest and greatest technologies, means we benefit from state of the art technology at a cost our scale wouldn’t otherwise warrant.
  • Scale: working with a large, international provider like AWS has been hugely beneficial as it’s given us a geographical scale and scope of servers that we’d be unable to replicate on our own (e.g. servers in Singapore and later in India for our team in India, and servers in Ireland for our team in the UK).
  • Security: as a bank, security is one of our top priorities and, from our perspective, cloud providers have the scale and commitment to invest in state-of-the-art infosec provisions.
  • Speed of implementation: moving to the cloud has meant that we’re able to make changes to our systems much more quickly than other banks — often in days rather than weeks. This means we’re able to adapt to the needs of our customers, offering solutions where others can’t, and move away from the ‘computer says no’ mentality that plagues the industry.
  • Cost: in September this year, we became the first completely new bank in the UK to break even, achieving profitability less than a year after our launch. Moving to the cloud and being able to keep our IT costs down has been a key part in helping us achieve that.

When we obtained our licence in March 2015, we’d wanted to launch with our core systems already fully hosted in the cloud, but because there was no policy on cloud banking, we were unable to. We chose to launch with traditional hosting and when we began trading in September 2015, picked up conversations with the regulators once again.

Over the next six months, with the help of AWS, we worked with the regulator on policy items such as data protection, access to data, security and business continuity. We started off by moving our ancillary services – such as shared drives — to the cloud and then once we were happy with the transition, moved our core systems over too. In May this year, we became the first (and so far, only) bank to have its core systems fully hosted in the cloud in what the industry called “a landmark move” away from the physical spaghetti infrastructures found at most financial institutions.

Concern over regulatory compliance has historically been one of the top factors against cloud banking, so the fact that there is now guidance to do this means we’re likely to see more banks making the move to the cloud.

Visit OakNorth Banks’s website at www.oaknorth.com.

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