Disruptive Changes in Banking Technology

Aug 12, 2024

Lecture Notes: Disruptive Changes in Banking and Technology Challenges

Introduction

  • Banking is necessary, but banks are not. (Eric)
  • Presenters: Eric and Piot.
  • Agenda:
    • Short story of Vodino
    • Future of banking
    • Current changes in banking
    • Technology challenges in the banking API area and infrastructure
    • Costs perspective

Vodino Overview

  • Founded 24 years ago.
  • Received funding from Warburg Pincus in 2018.
  • Launched a fully operational banking platform in June 2019.
  • Migrated the Belgian Branch (one of the oldest banks) to the cloud in just 5 months.
  • Became a Google partner in 2020, focusing on technology, reseller, and services.

Changes in Banking

  • Past: Opening accounts and loans required visiting a bank branch.
  • Present: Banking services are embedded in shopping apps, allowing users to manage finances directly.
  • Technology companies can now implement changes rapidly (hours/days) compared to traditional methods (months/years).
  • Quote from Bill Gates: "Banking is necessary, but banks are not."

Examples of Embedded Banking Services

  1. Unit Plus: Helps invest in ETF portfolios; allows payments for goods.
  2. Money Flow: Provides funding for businesses.
  3. Three Count: Splits bills among friends using PSD2 interface.
  4. Metro Financial Services: Offers services to SMEs with debit cards for purchasing.

Technology Challenges

Banking as a Service (BaaS) APIs

  • Transitioned from internal development to providing well-documented, publicly available APIs.
  • Ease of integration is key – as simple as changing a Netflix subscription.

Infrastructure Details

  • Current infrastructure includes:
    • 20,000 ports
    • 9,000 deployments
    • 60+ Cloud SQL instances and VMs
  • Services offered in Poland, Germany, Sweden, and Belgium.

Compliance and Regulation

  • Must comply with European Banking Authority regulations:
    1. Data centers must be geographically separated.
    2. Capability for migration between cloud providers.
    3. Networking management requires shared VPC solutions.

Cost Management in Cloud

  • Pay-as-you-go model has pros and cons.
  • Do not rely solely on cloud cost calculators.
  • Importance of verifying billing against expectations.

Strategies for Cost Reduction

  1. Proactive Cost Models: Estimate costs based on applications.
  2. Reactive Cost Models: Allocate first billing costs across business units; check for discrepancies.

Cost Cutting Examples

  • Use preemptive VM types for savings (up to 70%).
  • Turn off unused resources to save costs and reduce carbon footprint.
  • Regularly review application architecture for efficiency.
  • Commit to long-term contracts with cloud providers for discounts (up to 55%).

Benefits of Cloud

  • Ability to perform large-scale performance tests that are difficult in traditional settings.
  • Flexibility in scaling resources without the delays associated with physical installations.

Conclusion

  • Open invitation to connect on LinkedIn or Twitter.
  • Invited attendees to visit their booth for discussions and gifts.