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Banks Fintech Insights Webinar

‘Improving Customer Service through Cloud Migration’ Webinar

Lloyds Banking Group have recently been undertaking a modernisation journey, switching to digital, cloud-based systems. Along this journey, they have used Pegasystems to assist them – 49 applications supporting a variety of customer journeys across areas like fraud, FATCA/CRS, disputes, and credit card inquiries. Pega has been able to aid Lloyds in making this change, despite the challenges that COVID-19 has thrown their way.

Last week, they hosted a webinar, in which some key members of their team discussed in depth the journey that they’ve been undertaking, and how migrating to the cloud created an opportunity to improve their customer and staff outcomes, as well as simplifying its estate and reducing technology debt.

The webinar was hosted by Dom Gregson, Marketing Director at Pegasystems, and featured 3 panelists: Luke Rimmer & Steve Keating from Lloyds Banking Group, and Dave Ray from Pegasystems.

The setup was Dave, Account Director at Pegasystems, posing questions for Luke & Steve to talk through, followed by a short Q & A at the end.

Pega, Lloyds Banking Group & Moving to the Cloud

Steve Keating, Head of CoE and Shaping, began the discussion by illustrating the context, size & scale of Core Platforms at Lloyds Banking Group, “Core platform sits in engineering which is in the CTO element of group transformation we’re a horizontal that’s supports all the 4 technical directorates which is retail Insurance commercial and Enterprise.” He then illustrated how the exact size of their team, between the different labs, can fluctuate according to demand, growing from around 80-90 staff members, up to 500-650. Steve himself heads up the Centre of Excellence (CoE) within Lloyds Banking Group, that forms a part of this structure, along with the shaping function and their lab services.

Luke Rimmer, the Shaping Lead for their Core Platforms, then took the lead to illustrate how exactly the above team uses Pega within Lloyds Group. He explained that they have 49 custom-built applications which are hosted on-prem and 1 out-of-the-box application – their smart disputes application – which is hosted on the Pega Cloud.

In terms of their on-prem applications, they had 35 hosted on one, very large, Enterprise instance. Luke explained they are currently in the process of upgrading these systems from Pega 6.2 to Pega 7.0, but due to the number of different applications, it’s not an easy process. Luke described it as being “very expensive and time-consuming […] the pace of change is slower than we’d like it to be really, we don’t [currently] have the benefits of cloud.”

Therefore, their desire would be to utilise Pega Cloud in an ever-increasing way. Luke explained that, fortunately, this desire to move services to the cloud chimed in with the overall banking group, “the bank’s strategy is to move things away from on-premise and to to a cloud mode of operating we call our FMO, our Future Mode of Operating.” So that group strategy coincided quite nicely with the Core Platform’s desire to transform and modernise their Pega implementation.

Convincing the Bank to make the move to the Cloud

Making the move to cloud-based systems isn’t a small task, especially in a large banking group such as Lloyds. For it to go ahead, all the major decision-makers would have to be satisfied that it was truly worth it. Luke addressed how their team went about making their case. This case was made up of 3 compelling factors – the cost of ownership, the business value, and future technologies – all of which stood to benefit if this migration went ahead.

So firstly, the Cost of Ownership argument. Luke explained that it was just a matter of setting out the As Was costs, and comparing them to the To Be costs, and illustrating the savings to be made. For instance, whilst their may be significant upgrade and maintenance costs, he described that, “there are lots of areas where our costs would come down such as our underlying infrastructure and and our future costs are going to be significantly cheaper as many expensive processes would now be owned by Pega systems.” Luke also pointed out the benefits of all of this happening on in an evergreen state, meaning that “the platform will constantly be upgrading, we wouldn’t have to go through these very slow changes.”

Secondly, in Luke’s opinion, there was “a huge amount of business value to be had.” The example that he used in this instance, was their smart disputes application, and their fraud application. By taking these two separate on-prem services, and moving them to the cloud, they would be able to host them together. The potential result? According to Luke, “there’s going to be about a 30-second saving on the average handling time for each call. I think we have about 500,000 cases a month, so that’s an enormous operational saving to the bank as well as a much better customer experience.”

It already seems like there is a compelling case to make the move to the cloud. But Luke also wanted to illustrate how it helps in terms of future-proofing, and further developments. Noting that their team was all about change & transformation, he identified some future use-cases that would be aided by the cloud migration, “So email bots is a big one for us, the use of Cosmos, Pega Robotics, Cloud-based document processing and mail processing, all those things, are unlocking future technology.”

The Challenges of Full-Scale Cloud Migration

Understandably, when undertaking such a large migration of services, across multiple systems, there will be challenges along the way. The first of these, Steve explained, was that it was the first time that they were using AWS for their cloud systems, “We’ve had to satisfy numerous covenants and technical challenges around data, data transfer & data classification.”

Secondly, they had to overcome the issue of working on a brand new system. As they were used to building and testing automation systems of Pega 6 & 7, having to develop new ones for Pega 7 & Pega Cloud was no simple feat, as Steve explained, “We are building the test automation from scratch so, you know, so all the all of the old work is now redundant.”

Finally, there was the issue of COVID-19, something that presented a major stumbling block to everyone in recent weeks and months. While Steve admitted that they had “lost some timeline” due to the pandemic, he felt that they have come out the other side “by and large looking good.”

Is migrating to the cloud an evolving trend?

With established and well-known banks such as Lloyds making the move to the cloud, are other businesses doing the same, both in the UK and globally? That question was put to Dave Ray in the Q&A at the end of the session.

Dave agreed that this was the case, that many other organisations are also looking at how they can migrate to the cloud. He explained that he had received emails asking for advice on the process from “across the globe really, I’ve had people contact me from Australia and America and across Europe.” He thinks, however,  that many companies may find themselves asking the wrong questions, “the question should not just be about what cloud you should be using, because it also comes down to how skilled you are as an organisation set up to support cloud-services.”

This applies, argued Dave, whether that’s through Pega Cloud, another cloud-service, or making the potentially tricky transformation away from on-prem systems. According to Dave at Pegasystems, therefore, they focus first on what Pega Cloud can actually be used for to modernise the organisation in question, and what business value they can offer. This is relevant, he rationalises, whether it’s “moving applications on to Pega cloud,” or “in other areas, where it has been around remediating risk or lowering infrastructure costs.” In Dave’s opinion, this leads to a really pleasing result, one where he can see “the massive association with business value for the applications we’ve upgraded.”

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