A three-year journey in fundamental technology and business architecture design has resulted in a private Cloud at National Australia Bank that may eventually be used to host all its applications and services.
In August 2008, before Cloud computing became the talk of IT, NAB announced it would undertake a five year Next Generation Platform transformation program to overhaul its core banking systems.
NAB’s IT leaders believed existing systems had served the business well, but they were less confident in their ability to support the bank’s future strategic direction. Less than a year after NGP was announced, Adam Bennett replaced the long-standing Michelle Tredenick as CIO and inherited the bank’s Cloud strategy, which now manifests itself in the form of platform-as-a-service (PaaS).
NAB’s PaaS philosophy centres infrastructure around three strategic themes: Agility, utility and simplicity.
Within the infrastructure context, NAB is moving to a private Cloud operational paradigm, but uses public Cloud services “where it makes sense” to achieve “flexibility through standardisation”.
In documents obtained by CIO, the IT leaders at NAB aren’t holding back when it comes to the full-scale deployment of a private Cloud. Ubank, NAB’s online-only banking service launched in October 2008, is already the flagship ‘tenant’ and running almost exclusively on virtualised infrastructure — from the operating system to Web portal.
UBank is the first ‘user’ of NAB’s new enterprise technology platform, but plans for expansion into the rest of the bank are very ambitious.
In a presentation at Oracle’s OpenWorld conference in San Francisco late last year, NAB’s principal architect for hosting services, Stephen Beer, detailed the technology architecture that is set to revolutionise information management at the multinational financial services provider.
“We’re going through a very significant business transformation program at the moment,” Beer said. “Really, what we’re looking to do is transform a large number of our business platforms. Underlying that, of course, is a technology transformation as well.”
Shared services calls for fresh approach
With its strategy firmly aimed at delivering differentiation from a banking sales perspective at the customer level, NAB is unashamedly looking to standardise its IT infrastructure.
“We build banking products and deploy banking products,” Beer said. “So we’re looking to have very capable products as we deliver them to our business consumers internally as enterprise services as well as very capable products we deliver to our banking customers externally. We’re not looking really at a lot of differentiation in our technology environment.”
NAB classifies its IT transformation journey into three paradigms — the dawn of banking technology in 1968, where having an internal core banking system was a key differentiator; 20 years of significant change in transactional banking up to 1988 when online banking became common; and since 2008, when open systems were used to launch UBank.
“It’s now completely customer-driven relationship-focused environment,” Beer said. “And the bank as an organisation understands that it does need to transform the way in which it delivers outcomes to its customers so it has embarked on this business transformation program.”
Beer said as an organisation, UBank has been “extremely successful” and exceeded all of its targets for a new business startup. Within NAB PaaS architecture, IT is now viewed as a commodity platform for shared services.
“We’re driving a model where we are consolidating, commoditising and sharing underlying infrastructure at the operating system and database level through commoditisation [and] where possible into the platform service layer through shared database servers, shared Web and Java application platforms,” Beer said. “[This is] quite well aligned to the Cloud paradigms of infrastructure-as-a-service and platform-as-a-service.”
NAB’s infrastructure strategy is now being designed for a “private Cloud operational paradigm”.
Some of the inhibitors to that vision, according to Beer, are the things many technology organisations find difficult in such an environment, such as achieving the right charge-back models and being able to charge for use directly to consumers.
“As an organisation we find those things difficult so I do use the term ‘the operational paradigm’ of Cloud,” he said. “We’re not completely successful yet in delivering a full internal Cloud capability because of those types of constraints.”
When the technical and operational hurdles are overcome, NAB is set expand its use of PaaS throughout its enterprise.
[ Read Part 2 of NAB's private Cloud journey at CIO ]
[ Read Part 3 of NAB's private Cloud journey - Unchartered waters a challenge for core banking platform. ]