As banks move steadily into the digital realm, their customers expect trusted, convenient and reliable services across different channels. This puts growing pressure on the data centres that hold the information, upon which all services depend. Jim Banks speaks to David Young, director of change and innovation at Metro Bank, about the importance of data centres to its rapidly expanding UK presence.
There is a lot of talk in the financial services community about the move towards digital banking, but the fact is we already live in the age of the digital bank. No provider of financial services can hope to succeed without effective means of storing and analysing vast amounts of digital data, so although there is much more that the industry can do, it has already made many steps on its digital journey.
Digitisation promises many things that customers are coming to take for granted, such as consistent services across all channels, and personalised products and services. Efforts to deliver what customers want put great pressure on data centres, which must operate efficiently and robustly at all times. Banks need to trust their IT infrastructure to deliver consistently, and there are great risks to the business if a data centre fails.
The UK's Metro Bank is an interesting example of the importance of data centres to a fast-growing business. It is experiencing rapid growth - doubling its size year on year in terms of customer numbers and deposits. This poses many IT challenges, not least managing the growing amount of customer data and ensuring that the systems that underpin the bank's offering across different channels are well managed and consistently available.
"Our growth means we must continue to invest in IT to offer the right customer proposition," says David Young, director of change and innovation at Metro Bank. "This falls into two areas - building the bank and running the bank.
"The first of those is my area, and it is all about offering customers choice. It means innovating across all channels - the stores, the contact centre, online and mobile. We have implemented a new telephony system in the contact centre and a new internet platform. As we grow, the focus is on scale as well as choice,"
"We have recently moved the bank from the data centre provider we used for the first five years and now we use Rackspace, which is an internationally renowned institution that can help us to scale up and grow. We need to continue building our infrastructure across all parts of the bank so that we don't have to worry about whether we can take on more customers."
The inexorable move of financial services into the digital arena affects all banks, whether or not their model emphasises a bricks-and-mortar presence on the street, as is the case with Metro Bank.
"Digitisation is a big focus, and we have invested heavily in it, but we are different. We see it as complementary to branches, unlike other banks.
"Our investment in digitisation is to enhance customer experience in our stores and contact centre so that customers can interact online or in store as they choose. We are investing simultaneously in digitisation and in stores, which we see as a fundamental part of our proposition," says Young.
"For instance, when we built our mobile application, we ensured that customers could interact through the mobile channel only if they chose to, but they could also use our stores, which are open seven days a week and where we can print new cards for customers and set them up for mobile or online banking. The store plays a crucial role and is fundamental to what we do, but the experience in store must blend with other channels."
Robust and resilient
The fast and efficient management of data underpins not only digital channels but also the in-store experience at Metro Bank. It defines its ability to allow customers to take control of how they interact with the bank.
"Digital services can offer in-pocket or in-hand capabilities that customers don't have in our stores, and our mobile application is already our most popular channel for transactions, but we tied it in with other channels through innovations.
"For instance, when designing the mobile application we found that customers often lose their bank cards, so we built in a function that allows them to put a temporary block on a card, rather than having to cancel it, so they can turn off the block if they find the card," says Young.
"A cross-channel offering is about providing a consistent level of service in store or online. It is about convenience, surprise and delight across all channels. We don't discourage customers from using any channels, because it is about choice. Our data centre capability is essential to supporting all channels," he adds.
The importance of data for a cross-channel offering cannot be overstated, which puts risk management high on the agenda. This means ensuring backup and creating sufficient capacity. As the way banks operate is increasingly defined by their use of data stored in central repositories and accessed remotely, they operate to some degree in the cloud.
"The risk of failure in the data centre is, in extremis, the loss of all IT capability. We mitigate this risk by having a good partner in Rackspace. We mitigate it through resilience - we have two data centres, each of which can run the bank independently. Everything is replicated twofold or fourfold to mitigate the risk in each of those data centres. The cloud is a critical component of what we do," explains Young.
"We chose Rackspace as a partner because it has a very good, proven track record, and that is what counts when it comes to ensuring reliability.
"We spoke to other Rackspace customers and made sure that there was a good cultural fit, which is very important. It looks for the same kind of relationship that we do. We also work with Microsoft, and both of those partners get what it is we are trying to do. They provide amazing service that we can pass onto our customers. The resilience comes from doing thorough due diligence when choosing our partners, and that was a priority for us."
A bank must have a high degree of confidence in its data centre partners if it is to hand over business-critical data and applications.
"With Rackspace and Microsoft, we visited the data centres, and saw how the data is stored and managed. Other factors, such as energy usage and efficiency, were taken into account, but we are simple folk at Metro Bank: our partners are good at running data centres in an optimised way, and we are good at running a bank, so we stick to our roles and have confidence in our partners," Young remarks.
"The cloud is a set of services in a data centre, so we have been cloud-based since our inception. We have no servers at all in our stores or in our head office. Microsoft applications like Office 365 and our CRM suite are run in Microsoft's cloud, and we are comfortable with that.
"Our own cloud sits in Rackspace, which holds our core banking system and other applications. We started with this model, so it is hard to compare with other banks' systems. We have no legacy systems," says Young.
Metro Bank will continue to develop its digital services in line with what its customers want. Already on the slate is a corporate internet banking application designed in line with customer feedback and, later this year, a business mobile banking application will see the light of day. These will place greater demands on the bank's data centres and, therefore, emphasise the importance of resilience and reliability.
"We will never reach a status quo; everything is always changing, and we will always have to invest in technology to improve the customer experience," says Young. "That includes ensuring our data centres match the needs of our customers as the bank continues to grow."