The Fortress

By Daniel Doderlein | 4 November 2016

As I’m leaving the stage and the buzz from the adrenaline is wearing off, it strikes me. Maybe that’s it! Could it be that “the Cloud” is the biggest product naming failure in the history of computer technology?

I was on stage at Google Next, Google’s developer conference where hot topics discussed are their recent $9billion investment in infrastructure, and how their Cloud platform is revolutionising where and how companies do IT.

“The Cloud” should be called “The Fortress”

In my 10 years of drawing on bank boardroom whiteboards in an attempt to explain how ‘The Cloud’ could revolutionise their core business, I have come to realise that a name has great power. Many concepts, products and platforms draw undeserved skepticism and downright disapproval, not because of their technical disabilities or project mismatch, but simply because of their name.

I’m sure bankers are not the only ones who jump to negative (or positive) assumptions about something based on very little (the name, years of proof, the list goes on) stalling change and innovation. Banking as a business is some 4000 years old, and fundamentally the systems put in place many years prior still seem to be working, so why jeopardise that? Advocating or voting for change obviously entails risk and so the cycle of stagnation continues.

We know that banking and the technology behind it has not evolved as fast as many customers would have prefered. The report issued last week by the CMA was reported by many as heralding the ‘Uber age of banking’ and outlined what banks must do in order to fully exploit the benefits of technology.  At the same time, a forest of FinTech oriented businesses continue to pop up at a rate probably best compared to the number of times “blockchain” has been tweeted the last few months by people who really know nothing about it. Clear proof that name and group mentality has a huge part in determining what's hot and what's not to a far greater extent than the actual knowhow of a technology.

I don't know who named it the cloud, but for such a monster infrastructure it sure as hell did not get the name it deserves.

Designing the right infrastructure

A bank, besides the brand, its history, branch offices and advertising, is basically a computer program. The application handles the services the bank offers, like moving money around, and it records what it has been doing on physical media as proof - akin to the old days when both a customer and the bank recorded a transaction in their own separate ledgers.

The obvious benefits of computers compared to humans is that they don't need to sleep, they are cheaper to operate, they don't make as many mistakes and, above all else, they work much faster. But, there is a catch. As companies and institutions grow ever more reliant on them, the complexity increases.

In line with the policy of keeping multiple records from back in the days of paper and pen, companies need a contingency plan for their computer setup. So they put in place software that monitors computer one and if it fails, it switches to computer two. Now, on the record keeping side this can lead to issues with files that are locked by computer one and thus not accessible for computer two - so it becomes necessary to design a more sophisticated record keeping system.

Only limited by the speed of the two computers, it’s necessary to start investing in larger hardware configurations to process more. Institutions must invest in a network, load balancing equipment and software, switching, routers, internet connectivity, firewalls, redundant power supply and larger machines to handle the loads. As disks start to break, and old CPUs are too slow, the company has to buy network storage solutions, hot swap raids and racks of computers to handle the processing loads. As racks die, IT people replace tons of hardware on a regular basis and the IT department grows into one of the company’s largest units. The comprising staff need parking and benefits, not to mention that each time there is a need for new features for a simple application, they are knee deep in a data migration project where some tower of power is being replaced by new and expensive machines being brought in by their new best friend - the IT vendor with invites to the best summer parties. The company is now officially tied down to pricy, complicated legacy IT infrastructure. Between buying new hardware and software, hiring experts, and being late on all remotely IT related projects, the company is paying through the nose and stuck in a desert of no innovation… and then they get a letter from the regulator asking about disaster recovery plans... phewwww. :facepalm:

I wish this was an exaggeration, but this is how most retail banks are currently operating. Some are addressing this problem head on. They’re rewriting their applications from the ground up, according to new requirements, to be run on new environments. But, most are not. This is where the cloud becomes relevant.

All that pain described above? Imagine that gone. No more constant replacing of CPUs, staff and hard drives and full automation of the data centre (with a hard drive crushing robot to ensure client data on a faulty disk doesn’t end up in the wrong hands). The data centre is part of a world-leading, strictly secure, industry-leading network of a global data centres network. The company doesn't have to worry about server configurations, load balancing, scale or disaster recovery, it's all built in.

This capability, and more, absolutely exists, and could be levelling the playing field for banks vs. newer innovators. Banks and financial institutions could spend their time developing great products rather than running IT infrastructure. At the end of the day; it’s not the business running the IT - it’s the most highly qualified and skilled people in the globe doing it.

When people refer to the ‘Cloud’ - this is what they’re talking about. Which is why it’s a pity it wasn’t originally named: The Fortress. It’s the safest and most efficient place on Earth for any financial institution to run their core business. I challenge anyone to describe an equivalent more secure system.

However, because it was named the ‘cloud’, most don’t know about the actual technical and security characteristics of this fortress system. It perhaps didn’t help either that the leading vendor is best known for their search and advertising business, it is yet to be fully discovered or approved by the pack.

The future is powered by ‘The Cloud’ but at the end of the day - the cloud is just computers. Except the way they are managed is so much more advanced than what is in the power of any individual company. The sooner institutions take advantage of this, the faster they can completely rid themselves of legacy systems and start to innovate, grow and move forward.

By Daniel Doderlein, CEO, Auka.

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