Bank of Asia Increases Core Banking Agility While Halving Costs with AWS

In the past decade, regulatory agencies worldwide have increasingly applied pressure to financial institutions to tighten compliance and improve transparency. The Foreign Account Tax Compliance Act in the US and money laundering supervision in the UK have led to close scrutiny of banks, and many have imposed stringent conditions and restrictions on certain activities, such as cross-border transactions.

As one of the world’s first fully digitized global banks, Bank of Asia was set up to serve international companies and their owners through its advanced FinTech platform. Unlike traditional banks, customers can open accounts by simply providing the necessary information and uploading certified documents online, instead of visiting bank branches or speaking with agents. As a member of a group of affiliated financial services companies, Bank of Asia received its banking license in 2017 in the British Virgin Islands, where it maintains its physical head office. The bank leverages innovative technologies and robust Know-Your-Customer (KYC) and Anti-Money Laundering (AML) processes to ensure its customers and operations are legitimate.

Bank of Asia chose to build its platform on the cloud with a lean IT team to reduce transaction time and cost, resulting in savings that it passes on to its customers. The bank launched most of its services, including account opening, AML/KYC, and transaction processing on the Amazon Web Services (AWS) Cloud. Kevin Leung, head of IT at Bank of Asia, says, “AWS helps relieve some of the IT operational burdens around compliance because of its shared responsibility model. It meets the required security thresholds such as ISO 27001 and is used by many financial services providers worldwide, which gives our customers peace of mind.”

When Bank of Asia launched, it outsourced its core banking operations to a business process outsourcing provider in Singapore. Bank employees based in the British Virgin Islands would access the core banking platform via Amazon WorkSpaces desktop as a service, through an AWS Virtual Private Network (VPN). This setup met their business needs but was expensive, inflexible, and lacked scalability. For its other service offerings, Bank of Asia develops code using APIs and a microservices approach to accelerate time-to-market. However, the system version in use at the time was not API-based, and changes could take three to six months to implement, which was too long in an industry where the pace of change and service evolution is increasingly faster.

In 2019, Bank of Asia decided to migrate its core banking platform to a new, container-based system running on the AWS Cloud. The new system automates container deployment with Kubernetes, which is highly scalable and cost-effective. Bank of Asia’s IT team now relies on AWS managed services such as Amazon Elastic Kubernetes Service (Amazon EKS) for secure orchestration of core banking microservices and Amazon API Gateway to maintain APIs at scale.

The bank has deployed its solution on multiple AWS Availability Zones to provide high availability and fault tolerance. These aspects ensure a smooth online experience for customers accessing its service from anywhere in the world. Previously, the bank had plans to create a mobile app to improve user experience but was unable to do so because its previous system lacked APIs for development. By using its new system based on microservices and APIs, Bank of Asia was able to develop its mobile app, which it then launched. Bank of Asia customers can now access their accounts via the mobile app on iOS and Android, which has significantly improved user experience.

Bank of Asia had a fixed migration timeline of six months, which is considered short for migrating a core customer-facing function. However, the onset of the COVID-19 crisis presented an added challenge during critical User Acceptance Testing (UAT), because the team suddenly had to work from home. “We anticipated the project to be delayed but it wasn’t. With Amazon WorkSpaces, our teams could continue working from home, and we weren’t hindered by the crisis,” Leung explains. The migration was completed on time, within budget, and without any disruption to the business.

From the start of its cloud journey, the bank’s engineers worked closely with Amazon Solutions Architects, who conducted several AWS Well-Architected reviews within the six-month development cycle to identify areas for improvement and to minimize the risk of migration issues. They set up sandboxes in just a few days to check that processes were running correctly before switching them over to production environments. This gave the IT team sufficient time to diagnose and resolve any issues in pre-production. Bank of Asia’s IT infrastructure is now running 100 percent on the AWS Cloud.

When Leung and his team decided to migrate its core banking system to the AWS Cloud, they had specific cost reduction targets. Since migration, IT costs for its core banking platform have decreased by 50 percent and have remained low despite the increase in staffing required to shift from an outsourcing to an in-house approach. “With AWS’s help, we can effectively allocate our resources and our IT team is more efficient,” Leung says.

With its core banking system now running on the AWS Cloud, Bank of Asia has gained a level of flexibility that allows it to build integrations in one month or less. Connecting its new system with existing ones, such as KYC, is done quickly and easily using APIs.

By introducing API-enabled architecture to its core banking functions, the bank is also better positioned to extend its service offerings through the open banking initiative. Leung anticipates more collaboration with FinTechs and plans to share the bank’s open APIs to introduce more personalized services to its customers and ultimately create additional revenue streams. The bank has already launched initiatives with some international payment platforms that will diversify transfer options for its customers. Leung says, “With secure APIs on the AWS Cloud, we have new business opportunities to further improve customer experience.”