Amazon: How Financial Services Firms Use The Cloud For A Power Boost

Among the enduring promises of computer technology is that it would give the “little guys” — all those Davids struggling to compete in a world full of corporate Goliaths — a new source of strength. Sourcing, marketing, selling and payments: Harnessing the power of digital could make any new or relatively small company a global star.

So it is perhaps with a bit of irony that the eCommerce behemoth known as Amazon, via its Web Services division (AWS), has positioned itself as offering a way for local and regional financial services providers to craft new products, enter new markets and meet the regulatory requirements necessary for worldwide competition.

In a sense, the cloud — web-hosted services — is a new type of slingshot. That’s the impression taken from a recent discussion between Philip Moyer, director of financial services for AWS, and Karen Webster. They explored the advantages that financial services firms can tap into by moving some of their operations to the cloud.

Among the main motivations is the expansive nature of modern financial services, said Moyer, who leads a team that is about two years old. “Today, if you want to launch a financial services product, very, very few (of them) are regional anymore,” he said. Web and mobile channels enable businesses to reach across all kinds of borders, basically amounting to leaving money on the table if firms do not try to win revenue from as many markets as possible.

That can be easier said than done, of course.

Different countries, regions and markets impose different rules on financial services, and regulators and lawmakers are becoming more focused on protecting the privacy rights and data security needs of consumers. That’s why AWS, to boost its attractiveness among financial services providers, has gathered human and technological expertise around such areas as PIC, HIPPA, ISO 9000 and other vital standards, Moyer said.

“We can be more global and more secure than they can on their own,” he said, adding that the technology used by AWS for such tasks as encryption has advanced significantly in recent years.

But financial services rely on more than the latest software, algorithms and machine learning capabilities. Compliance is key. Financial services firms must keep records that prove they are meeting the requirements set by governments and their proxies. Moyer said that AWS provides such reporting capabilities to financial services firms: “We deal with regulators around the world.”

The reasons vary for financial services companies to move operations to the cloud, he noted. Some firms are following the herd, lured by the prospect of moving data center operations outside the house, a move that can reduce salary and maintenance expenses.

“For some, it’s agility or cost savings,” Moyer said.

For instance, an AWS client used the cloud and its related services to build a business serving consumers who need personal loans of no more than $35,000. Other companies — Moyer mentioned FICO — seek to “change the game” when they move to cloud services.

FICO can, for instance, take advantage of the machine learning features of AWS, or its text-to-speech tool, which helps FICO distribute better fraud alerts. “A lot of people know them for credit scores, but (FICO has) more than 9,000 clients, and it is helping them make decisions around credit,” he said.

Financial services firms using cloud services are “also doing interesting things around the customer journey,” Moyer said. He used the example of a call center product that combines speech-to-text and sentiment analysis to arrive at a clear view of why customers might be angry — for instance, could the process to get to an agent be too cumbersome, or do certain phrases annoy those who call in?

As well, financial services firms using the cloud can gain an advantage when it comes to creating new products. Instead of farming out that work and going through a time-consuming bidding process, the firm’s technical staff can develop new applications and launch them sooner, Moyer said.

All that shows why the cloud is making things get more promising for all the Davids out there — those small companies that really have little choice about going global in today’s financial services industry. “I suddenly have the same type of computing power available to me as a small or regional bank, as the big boys do,” he said. “It does change the game.”