Softly, softly, Kiwibank is quietly rolling out new, mostly cloud-based technologies that promise to transform the business from the customer back to the core.
Among an array of new technologies delivered or planned, the bank has selected London-based Thought Machine, founded by former Google engineers, to provide its new cloud-native core banking platform.
Thought Machine says its Vault software-as-a-service (SaaS) platform delivers the significant portion of functionality required to run a bank, with services from other vendors connecting through application programming interfaces (APIs).
As reported earlier this week, Kiwibank has also selected a new Azure-based payments platform from Miami-based ACI Worldwide, a platform once again built on SaaS principles.
Reseller News asked Kiwibank for a peek under the covers of what is shaping up to be an incredibly low-key but wholesale transformation.
"One of the philosophies we've taken with this stuff is: 'better done than said'," Kiwibank CEO Steve Jurkovich explained.
Kiwibank recognised a need for renewal in the middle of the last decade, but famously faltered. If anything, the pace of systems change has only accelerated since. This time, though, the philosophies are different and every move is deeply considered and tested with customers and team members at the centre in those ruminations.
The bank undertook some paper based assessments and then very quickly went to proof of concept, with Kiwibank engineers standing up minimal viable products to really understand the technologies behind them.
A broad, two-year global search helped the bank get a handle on the technology stacks available, but it also reinforced the fact there was a seismic shift happening.
"What really struck me through looking around the world, was a lot of the technology stacks particularly in banking and financial services were on the cusp between loosely coupled monoliths and moving to cloud native," Jurkovich said.
That required choices about whether to embrace the new stuff or to get the latest version of an existing system.
"The metaphor I’ve used with a lot of people when I've spoken about it internally and with our board is: you know, if we were setting up a mobile network we would go 5G, right?" Jurkovich said. "We wouldn't go 3.5 and then think well maybe we'll go to four and we'll go from there. So that's the choice we were making."
Jurkovich said executives needed to have a pretty high conviction about their transformation choices as well because technology changed so quickly.
"It's really tempting to sit on your hands and think something better will come along, and it usually does, but ultimately you need to get on the field and start playing. That's what we've chosen to do as quickly as we can, really."
Another realisation was that while the core was important, it would be a mistake to obsess about it too much. There were a multitude of other choices to be made as well.
"Out of the whole environment that we want to offer, it's an important part, but it's just a part," Jurkovich said. "Bigger discussions and really interesting discussions have been around multi-cloud, hybrid-cloud, data sovereignty, those sorts of things."
Then there was delivery. Did Kiwibank want to be its own systems integrator or to find partners? And right bang smack in the middle of all that, COVID-19 landed. Trying to bring in people in from offshore became "bloody impossible", Jurkovich said, while at the same time the local market for talent heated up massively.
"We were quite a way down the runway when the pandemic hit and it did cause us to have quite a big rethink about where these centres of excellence are globally and how many people we would be able to get on the ground," Jurkovich said.
One big part of the answer to that challenge was long-term partner Datacom. Just across the road from Kiwibank, the two organisations even shared a major shareholder in the Guardians of NZ Superannuation.
Inevitably, there were also conversations to be had with regulators about the bank's emerging cloud strategy that in turn led to work in the industry on the same subjects. In that context, working with the technology to see how it worked became even more important as was the establishment of some foundation principles such as "secure by design" and "compliant by design".
Kiwibank's false start on transformation had left a legacy of under-investment.
"If you think about a double dip of technology debt and process debt, we probably did suffer from that," Jurkovich said.
It is a journey banks around the world are all facing, including working out how to stay safe and operate while transforming and how to still serve, in Kiwibank's case, a million customers.
The shift to cloud could help to address a lot of those challenges, though. For example, by shifting to subscriptions and by slashing the need to invest in hardware and redundancy up-front.
"Old tech is eaten by new tech," Jurkovich said. "You don't want to upgrade your old stuff. You want to eat it by moving to new stuff."
Kiwibank had already taken a big step towards process agility when it invested in technology from ServiceNow that helped its transform its operating model, a capability of great value during the pandemic and likely to pay additional bonuses supporting the bank's shift to the cloud.
The selection of Thought Machine marked 12-15 months of getting ready for the next stage, the beginning of a different kind of rollout.
"It is a thin slice of what we're going to deliver, but we're also recognising that's the way the world is now," Jurkovich said. "You add, delivering things in drops and thin slices rather than, you know, here's my Uber project and it's a waterfall, and it lasts five years, and I somehow convince you that on the 16th of February 2025 at 9am, I'm going to deliver everything."
A world of threats
Resilience issues last year also brought home just how important it was to invest to stay safe in a global world full of threats.
"It's all very well to talk about them in theory, but I think when you practically look at some of them you recognise that those threats are doubling every 15 or 16 months. There's a lot of company directors and executives that should be asking themselves whether they are doubling their own capability in that same period."
Read more on the next page...