South Africa’s financial institutions are rewriting the rules of banking technology, with the cloud as a new balance sheet of innovation.
For decades, the country’s banking sector has punched above its weight, for example providing electronic banking long before many global peers. Now, the cloud has become a new differentiator, and South African banks are using it to accelerate a lead that is often overlooked internationally.
During the annual AWS Summit hosted by Amazon Web Services at the Sandton Convention Centre this week, speakers from Absa, Capitec and the JSE shared case studies, while breakout sessions featured the likes of Standard Bank, Old Mutual and Sanlam.
“It’s about taking a lead,” Johnson Idesoh, group chief information and technology officer of Absa, told Business Times on the sidelines of the conference.
“There are some fundamental dynamics in a market like South Africa, which inherently make it very innovative. The real imperative is to help more and more customers secure their financial future.”
Factors boosting innovation included “the age of the population, who are very digitally savvy … and then a regulatory framework that actually does encourage competition and therefore innovation”.
With the likes of AWS, Microsoft, Oracle, Google and Huawei establishing hyperscale data centres in South Africa, the world’s most powerful cloud computing platforms can now be roped into this evolution.
“Cloud enables us to drive innovation, not just because of the speed at which the hyperscalers innovate, but they have an ecosystem upon which other parties also innovate,” said Idesoh.
“Clearly, from a customer point of view, that’s a huge benefit to a bank like Absa. The second reason is speed and agility. Particularly with AWS, we value the partnership, because most large organisations, banks, are considered slow and bureaucratic. In the world we operate in, the speed of response is really important.”
That speed has translated into new solutions but, for Idesoh, the story extends beyond agility.
Now that we’re in AWS, we literally pull payments out the air. If we see something’s wrong with that payment, we’ll pluck it off the network
— Andrew Baker, Capitec
“You literally can codify things like your security policy on the cloud, which is a really powerful enabler.”
Where Absa’s focus is on AWS-driven agility, Capitec has used the platform to re-engineer fraud prevention. Andrew Baker, chief information officer of Capitec, told a media round-table that the true benefits emerged in fraud management.
“We have a big problem with fraud in this country, and that’s a relatively complicated problem to solve. You can’t solve that on premise. You will not have the computational power and the tools and machinery to do in-line interception of a payment.
“Now that we’re in AWS, we literally pull payments out the air. If we see something’s wrong with that payment, we’ll pluck it off the network. We couldn’t attempt to do things like that if we were on premise,” Baker said.
“Every single payment that goes through Capitec passes through a beneficiary firewall. Anyone who tries to make a payment to a known scammer, we can make a call on that. Every payment from our 25-million clients for the last year has gone through that and we have a record of it. We run that on a few CPUs, and that would be impossible on any other infrastructure stack.”
The scale of Capitec’s operations was underlined in an AWS Summit keynote by its chief data officer, Azhar Said.
“Our clients make over 15,000 card payments every minute. We have billions of transactions in process.
“We invested heavily in our data technology and culture, and today we have a massive cloud data platform that is a single source of truth for our data,” he said.
“To give you a sense of our scale, our daily platform processes over 1.5-trillion reports per month, giving us around 27-petabytes of analytical data. We have over 1,000 technical users on our AWS platforms, across engineers, analysts and data scientists, and over 6,000 employees across the business using data from dashboards and reports.”
That combination of AWS scale and insight feeds directly into financial inclusion.
“Traditional banks often struggle to serve clients with no financial history. By using alternative data and AI on AWS, Capitec can bank those who are invisible to lenders. This means we can extend the small working capital loan to a street vendor who’s never had formal credit before, helping that person grow their business. And that changes lives.”
The JSE represents a different dimension of the country’s financial ecosystem. Its CEO, Leila Fourie, told attendees: “We facilitate trading activity of R27bn per day, and we have peaks well above R30bn. And our systems have run for the last three years with 99.4% uptime. Ultimately, operational strength ... and resilience are what earn us the right to transform the future, and that future is being built now.”
The JSE has signed a memorandum of understanding with Nasdaq, which points to the high regard in which local institutions are held. Fourie described the next phase of the partnership: “We are partnering with AWS to advance into a secure cloud environment. We’re moving away from legacy mainframe systems. We are currently also launching the next-generation collocation services and very advanced analytics products.”
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