Turning to Cloud to Disrupt Financial Services

Disruption is the dream of young, hungry companies and the dread of the Establishment. Businesses face it every day. Many learn to disrupt themselves in order to remain relevant in the years ahead. Cloud computing technologies are allowing them to do just that. 

Nowhere is disruption more fiercely sought after than in the financial sector, which has become saturated with new contenders that have harnessed hybrid cloud to redefine banking. Seems like everyone wants a piece of the financial services pie – even Apple, Google and Facebook announced financial ventures within the past year. As banking giants scramble and throw billions into going digital to keep market share, consumer and commercial dollars are up for grabs to the boldest, brightest innovators that can prove their worth. 

Warba Bank and JamboPay are just two financial companies turning to cloud technologies to shape the future of fintech. 

Warba Bank: Upwardly Mobile Innovation

In 2010, as a reparative response to the global financial crisis, Warba Bank was established in Kuwait by Amiri Decree. As a newcomer to the highly competitive banking scene in Kuwait, Warba Bank had a lot to prove. The organization’s leadership wanted to differentiate the bank and developed an aggressive digital strategy to transform the way it served retail customers. 

Wael Shawareb, the bank’s senior director of cyber security and IT governance, led the project. He says they began to look at cloud solutions in 2014 with the goal of launching the bank’s first new digital services by 2017. Through his research, he knew that the cloud was the only way to deliver the fast, automated services that would help the organization stand out. The thing was, no bank in Kuwait had adopted cloud technologies in any significant way. Warba Bank was the first, and being an early adopter comes with a unique set of challenges.

The biggest challenge was security. Since the digital services operated differently, and organized and accessed data differently, they required new security features that weren’t found in existing products. 

“Even the well-known security vendors in the market hadn’t adapted yet to the DevOps model,” said Shawareb. “Most of them were still behind in the concept of agile development and integration.”

The team had to build their own security from the ground up, for their specific environment and in careful compliance with strict financial regulations. Other challenges included integration issues between third-party solutions and an extremely tight timeline to accomplish their goals. 

Despite the difficulties, Warba Bank met its 2017 deadline for launching the country’s first online account activation and electronic signature function. These express services allowed customers to request opening an account using their mobile device in just 10 minutes. The bank also developed a mobile application, through which customers could view balances, manage accounts, track spending, monitor family finances from a single dashboard, split bills and send payments to friends and family. 

Adopting the DevOps model and agile development was critical to creating the new products and putting the organization at the vanguard of digital banking services in Kuwait. When the mobile app was launched, the team was able to update it every month or so with bug fixes or new features. Now, thanks to an always-improving DevOps team and automation functions, they’re able to update the app on an almost daily basis.  

The bank has also implemented artificial intelligence and machine learning solutions that have further improved many services and processes. AI automates ID validation and identifies security anomalies in the system. It also enables chatbots and monitors system performance and resource allocation. 

Today, the bank is one of the leading financial institutions in Kuwait, due primarily to its pioneering digital products and services. It has gathered many awards along the way, as well. Its latest honor is the 2019 “Best Banking Innovative Application Award” from the Islamic Retail Banking Conference for the world’s first digital “Jam3eya”, a traditional Islamic concept where family members or friends get together to save money by agreeing on a monthly amount to be collected from each member. The amount is given to a member once a month based on a pre-arranged plan. This traditional way of saving has been automated end-to-end through Warba Bank’s new mobile banking application. 

For enterprises that want to survive the next decade, it’s no longer about whether they’ll embrace the cloud. It’s simply a matter of when. 

“The cloud has been a disruptor to everybody when it comes to the quality of services and the capabilities it delivers,” said Shawareb.

Shawareb advises other financial organizations seeking to disrupt the status quo to stay smart, agile and moving forward. 

“Never stop researching, looking for ways to improve the way you work,” said Shawareb. “Always look for what’s better than what you have now. Is there a better way to do this? Just do it. Take the calculated, educated risk to make things better.” 

Shawareb practices what he preaches – he’s already looking to the future with plans to delve deeper into AI and big data for more comprehensive insights into customers. Insights that will allow the bank to connect with consumers faster and more effectively. 

With Shawareb’s cutting-edge philosophy having already paid off in a big way, the future is bright for Warba Bank.  

JamboPay: Gateway to Financial Fitness

At the age of 25, Danson Muchemi recognized a need that banks in Kenya hadn’t fulfilled. He’d started an e-commerce shop but couldn’t find a reliable local gateway to process payments for his products. In the spirit of a true pathfinder, he teamed up with a friend and started JamboPay to bridge the gap. 

It was 2009 and the first six months of JamboPay’s business was done from a cyber café. It was difficult work because at the time, there was no framework or support in Kenya for startup businesses or for creating an online payment gateway. There were also no laws governing the digital payments industry at all. Most difficult of all was the lack of trust in digital payment systems and, in some areas, even awareness of the possibility among the population at large. 

Muchemi worked closely with the Central Bank of Kenya to ensure the gateway complied with national security and privacy regulations. He developed the platform to align with international financial standards, such as PCI-DSS (Payment Card Industry Data Security Standard), which regulates the way businesses handle major credit cards. He also chose his partners well. 

“Working with reputable, top-notch cloud technology providers helped us attain and maintain compliance requirements,” Muchemi said. 

The Central Bank of Kenya has since ensured that Kenya now has strong laws and guidelines for the e-payments industry, as well as a clear path for startups in fintech. 

“I commend the government of Kenya for the various measures it’s taken recently to nurture and groom young enterprises.” he said.

Muchemi believes in using technology to improve people’s lives. And he recognized early on that cloud technologies in particular would form the foundation of digital financial services. From the beginning, Muchemi and his partner had the goal to make JamboPay the premier Africa-based payment services provider for Africans.

The hard work paid off, Muchemi said, as JamboPay “quickly advanced from a simple online payment gateway into a full-fledged multichannel electronic payment services company.” 

Today, JamboPay allows users to securely send and receive payments in the cloud. It processes payments for more than 5,000 organizations in Kenya, Uganda, Tanzania, Rwanda and Ghana and has over 1.8 million e-wallet subscribers. It differentiates itself from competitors by customizing the payment platform to local users’ needs in both urban and rural areas. That means customers can transact business on their smartphones or the web, or visit a participating bank or one of 10,000 authorized agents across the country. 

In addition to making or receiving payment for products or services online, users can also pay utility bills, taxes, health insurance premiums, school fees and tuition. They can also donate to organizations, purchase tickets to events and make purchases on credit. In 2014, JamboPay signed a major five-year contract to provide digital revenue collection services for Nairobi City - the largest city in the East and Central Africa resulting in an 86% growth in the city’s tax collection.

Muchemi credits cloud technologies for enabling JamboPay’s rapid success. 

“The cloud gives service providers an efficient and effective way to extend services over vast regions, beating traditional physical barriers,” he said. “Providers can deploy services more quickly than ever today.” 

In addition to speeding up service development and deployment, says Muchemi, the cloud is much more cost-effective, especially for lean startups with little up-front capital. He also sees security and scalability as major cloud advantages. 

“With the right cloud technologies and service providers, you can assure better data security in a cloud environment. And you can scale your business better in the cloud,” said Muchemi.

Companies that want to develop cloud applications should opt for technologies that allow developers to stay agile and that offer flexible business models, according to Muchemi. 

“You can always opt for private or public cloud, or a hybrid cloud, depending on your organizational needs,” he said. He also advises companies to pay close attention to local laws and regulations governing data security and privacy. 

Looking forward, Muchemi has big plans for JamboPay. He plans to make the service available in five more African countries within the next three years. 

He sees exciting things in regard to the cloud, too, such as the emergence of financial services that are driven and enhanced by much more comprehensive customer data. 

“Versatile partnerships between financial services providers across the globe will spring up daily, enabled by data convergence in the cloud,” he said. 

If any of those partnerships arise in Kenya, they’ll have Muchemi to thank for paving the way.

This article originally appeared in NEXT magazine, issue 8, Fall 2020.

Erin Poulson is a contributing writer who specializes in IT and business topics.

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