Salesforce, Inc. (CRM) Earnings Call Transcript & Summary

Hello, and welcome to today's Forrester live webcast, making cloud-native a reality for financial services firm, a session from Forrester's APAC Financial Services Webcast Week 2020. This webcast is now being recorded. Just a warning, we may need to turn off a presenter's camera if they begin to experience some unstable Internet connectivities. [Operator Instructions] It is now my pleasure to introduce the host of today's webcast, Fred Giron. Over to you, Fred.

Thank you so much, Kat. Good morning, good afternoon, and happy Friday, everyone. It's great to have you join this fifth session of our Forrester Financial Services Webcast Week. Today, we're going to talk about making cloud-native a reality for financial services firms. And I'm very excited to be joined with a fantastic panel of thought leaders from technology vendors that are really specialized in financial services to talk about this topic of digital transformation for banks, in particular, and looking, in particular, at cloud and the move to cloud-native approaches. So today, I'm joined with Vincent Caldeira, who is Chief Technologist at Red Hat; Stuart Ward who is the Director of Industry Strategy for Financial Services at Salesforce; Nick Wilde, Managing Director of APAC at Thought Machine; Laurence Thiery, Head of Financial Services, Asia Pacific at Amazon Web Services; and Anand Subbaraman, General Manager for Retail Banking Solutions at Finastra. Thank you so much, guys, for joining me to talk about this particular, very exciting topic today. So before we dive into this conversation, I thought I would open this session with a couple of thoughts and data points. Some of you might have joined the session yesterday morning, which was a very interesting session in between one of my colleagues, Liu Meng, based out of Beijing and Lead Architect of MYbank. And MYbank is a digital-only bank that is based out of China, was part of the end financial ecosystem. And the conversation was around how MYbank has been going through this transformation of their entire technology stack to move towards a cloud-native approach, leveraging container-based infrastructure, leveraging DevOps methodologies as well as microservices-enabled architecture, right? So very interesting conversation, and I encourage you -- for those of you who have not listened to this particular session, we'll share the recording early next week. But there's a couple of interesting messages that were sent by MYbank, one of which was this idea of continuous transformation that MYbank is going through and they started on this cloud-native transformation about 3 years ago, right? So very challenging, very ambitious transformation, but also some of the outcomes that were -- they were able to get out of this transformation in terms of speed and also in terms of customer value and business value, which was really interesting. What I found also interesting was some of the questions related to this session and some of the questions that the audience asked during that session in terms of how incumbent banks could actually replicate such a transformation. Was it something that was possible to do? And especially looking at smaller banks, I mean, would smaller banks be able to do this type of transformation to make them -- their technology stack more cloud-native. And I think this is what I would like to talk about this -- today with the panel. But before we do that, just to share a few data points that we collect from our surveys with financial services institutions and with banks. And this particular one is quite interesting because we look back to 2010, so 10 years ago, and every couple of years, we have asked the same question. When do you think your company will start a major digital transformation project regarding its financial services business application? So we're not really talking about the front end. We're not really talking about mobile banking apps or online, but really the core banking business application, right? And the key message here is that it's been going on forever, right? For the past 10 years, a large proportion of banks have been saying either we're working on it or we will work over the next 2 years, basically. And that's not really changed over the years, right? So in 2019, 61% said they are working on it and 26% said, we're going to work on it in the next 2 years. The second message is really that banks are still not ready for the digital world. So in spite of working on these digital transformation, there's another key question that I find quite fascinating. In your opinion, will your firm have the right technology infrastructure and banking applications in place to deliver great differentiating experiences that meet the needs of your customers? And in 2019, only 14% of the bank said, yes. Sorry, I need to go back to this slide. And 81% said no. And we asked the same question for 2021 and 2024. So this is a progression, and banks expect to be ready within the next 2 years, within the next 4 years. But you have to wonder, given the focus, the strategic focus on digital transformation of transforming their core infrastructure and application for the past 10 years, even here in 2019, only 14% of the banks said that, yes, they are ready, right? And this is a key thing that I would like to talk about, especially when we consider the new reality, when we consider the impact on COVID-19, what is going to be the impact, right? Are these situations going to delay some of these works? Because you have to understand that this particular question was asked before the crisis, right? And the last point I wanted to share is the fact that, obviously, banks are seeing a number of obstacles on their digital transformation journey. It might be related to skills, regulation comes up a lot as well. And maybe, especially here in Asia Pacific, maybe obstacles related to the fact that there's no real acceptable banking-specific offers from a banking application perspective. Maybe the Software-as-a-Service solutions are not available in their own jurisdiction, right? And this is basically the key -- the first theme I would like to talk about with the panel today, looking at the challenges and whether these challenges are real or perceived or -- and how banks can actually tackle some of these challenges. The second theme that I would like to discuss is the current demand. So we have the chance to have thought leaders from really important technology providers operating in Asia Pacific, so I'm keen to understand the type of demand that they're seeing from their clients. And then the third one that we'll talk about is more around how do you start on this cloud-native journey, transformation journey with a foot on the business case? So with that, let me turn it over to the panel. And again, thank you guys for joining and sharing your thoughts on these particular complex topic of technology transformation within banks. And I want to start -- we have the chance of having the entire stack represented here, right, the infrastructure, the platforms, the middleware as well as the applications.

So let me start maybe by the infrastructure piece and starting with Laurence. So Laurence, you're Head of Financial Services for AWS, Amazon Web Services in Asia Pacific. What are the key challenges that you see your clients or prospects having to deal with in the region?

Thanks, Fred, first of all, for having me today. And frankly, welcome to the audience and my colleagues on the panel. So in light of the context that you set up for us, I want to share a little bit what we are seeing in the industry, globally as well as in Asia Pacific. So financial services organization around the world are transforming and innovating on the cloud. To your point, it's a long journey. Now those companies, such as National Australia Bank or HSBC or DBS or Goldman Sachs, have shared actually how they are progressing on their cloud journey. And they shared how they are transforming their business, changing culturally, building cloud-native applications, migrating to the cloud, security and at scale. Now the way we look at where we are today is not so much about the challenges for us, but rather about the transformation imperative to be successful. And our CEO, Andy Jassy, has shared some of those top 4 transformation imperative that he has seen. And to your point, Fred, they are not technical in nature, it's more about the people and the process. And these are things around having senior leadership conviction and alignment to make sure that you are actually making the change, having the need to have an aggressive top-down goal to make sure that you are setting up that motion. And then training your builders, so that you can actually execute and then making sure that you don't get paralyzed because we see a number of organizations getting paralyzed and making sure that they keep going on to the motions. And we have many different ways we can help our customers there. But I want to go back to maybe one point that you highlighted in your list, the skills challenge and the perceived lack of in-house expertise that came out of your survey. And what we're seeing is that, frankly, the customers that are being successful are the ones that have builders that love to reinvent that customer experiences that you were talking about. And for that, you need to train them with all of the technologies that are available and these technologies are evolving very fast. And so one good example is what National Australia Bank has done, they've launched -- I think it was about 2 years ago, a cloud training at scale for the organization that they call Cloud Guild to empower their builders with cloud technologies and to drive their digital transformation agenda. And fast forward today, NAB has trained more than 5,000 people. They've certified, I think, over 1,500 by now, and that includes specialized certification on areas like machine learning. And they've also managed to reduce attrition rate to 8% amongst their trained people. And that's something key because you want to keep those talents in-house. And we've seen that with other organizations closer to home like DBS and RHB, where they have started those training programs as well.

Right. So they took that opportunity as a way to transform the bank -- the core processes and skill set, but also as a way to retain some of the key talents?

Correct, yes.

Yes. Let's move to Red Hat, Vincent, you’re Chief Technologist at Red Hat also specializing in financial services. What do you see from your vantage point?

Yes, Fred. So thanks for this opportunity. So I think from my perspective, we see that actually, in terms of the key concerns, they have remained pretty much the same over the years. It's really about compliance and also acquisition of new skill sets that are required to manage cloud workloads. But we also see a deep evolution in terms of how customer approach those 2 topics. So from compliance perspective, a few years back, SSI, in particular, used to have a very tick box approach towards compliance. So it was really pretty much applying all the existing set of technology, security controls, technology risk controls and then trying to ensure that they can actually be met on cloud. Now what a lot of those customers realize is that their situation is they have to pretty much manage workload across their existing data center, public cloud, private cloud and to some extent hosted systems as well. So what we realize is we now need to have a more, I would call it, process and control approach where they look at the entire technology platform as a whole and they actually start to adapt their security guidelines to the requirement of running modern cloud-native workloads pretty much everywhere. The second part of it, I think to bounce on what Laurence mentioned, the set development is still very much there. But obviously, from a banking perspective, having hundreds of legacy system running in their existing data center and definitely not being able to modernize those systems in the next 1 or 2 years, they have to go through this long transition phase on technology stack. So one of the key focus now is how do you actually operate in an efficient manner across very, very diverse technology platforms and stacks across the different types of infrastructure you have to manage. So a lot of focus is now on process and enabling people to do things in a very similar way across the different platforms.

So I'm hearing from what you just said is that the level of complexity, as time goes by, the level of complexity is basically rising tremendously within banks. So not only they need to transform, they also need to deal with this rising level of complexity, right?

Exactly.

Which is compounding the difficult -- I mean, the complexities and the challenges, I guess. Nick -- so Nick, you are Managing Director for Thought Machine in Asia Pacific. So Thought Machine is a bit of a newcomer, I guess, in this panel in this region. Where do you see the most challenges from your clients' prospects?

Sure. So being in the core banking space, I'll sort of comment on it from there. I think the big challenge and Vince had just referred to it from our angle is complexity. So for the last 10 or so years, banks haven't been doing nothing. They've been wrapping -- they've been hollowing out the core, wrapping some of these monolithic legacy systems, factory oriented, all that sort of thing in digital lipstick, if you like, in order to try and insulate the customer from the limitations of their legacy organization. And they've had to run flat out just to keep up. I mean, customer expectations evolved at the pace of the wider market, not just banks. So people are being compared to the Amazons of the world or the Alibabas or whatever. And then they're doing all this and again, Vincent talked about complexity. They're doing all this inside a highly regulated regime and one that they can afford, given that the basic currency of banking is not money, it's trust. They've got to go ever so carefully. So there's the old cliché, the old story about, it's like changing an engine halfway through a flight. I mean I would say the position we're in, in banking at the moment is it's like they've taken off and they've been flying in the prop aircraft, and now they've got to stop it over to jet engines. I mean, it is a massively complex undertaking and they got to burn down that massive integration estate. They got to componentize it. They got to shift across to an entirely new kind of technology platforms and capabilities and all without missing a beat. So nobody undertakes a core banking transformation for fun, right? I mean they notoriously run over time, over budget, finished careers, end up in lawsuits, all that sort of thing. So it's not something you do lightly, but I think we're now in a position in time and space where banks realize now is the time they've got to do it.

Thanks a lot. Thanks a lot for that, Nick. So we're going to stay a little bit in the core banking space with Anand from Finastra. So more traditional, but also working on your own transformation, right, to make your solutions and portfolio cloud-ready?

So thanks a lot, and I think good morning or good afternoon, everybody [indiscernible] as well as people on the webcast. From Finastra's point of view, I mean, we see all of the same challenges that all the panelists have alluded to. We see -- when you look at our customers, we really see 3 kinds of customers. You have traditional banks in developed APAC markets, we see the emerging neobanks across the markets, and we also see traditional banks in emerging markets. And we see a different kind of beat in all of these spectrums as they all undertake their landscape modernization towards the cloud. Some of them to the point earlier from Nick Wilde are looking at replacing their jet engines mid-flight. And that happens, especially if I'm doing a mainframe to cloud transition. Why don't I leapfrog an entire generation of software? The people who do a more revolutionary approach are the ones who have actually undertaken a transformation in the last 10, 15 years. They really want to run the system, continue to run the system and move pockets of their landscape over into the next-generation cloud transformation. And finally, we see the neobanks going to cloud, they're the easiest ones and a lot of people are looking at them. So we have a few of those stable who are pretty much going all cloud-native with our software on all of this just because they can just have the skills, the structures and all of that to make it happen. So I really look from a customer lens and see that the challenges are there but the gradations of the challenges vary by these customer segments and is also throttled by countries, right? Funnily, we'll see one of -- some of the more -- one of the most underdeveloped markets, frankly, moving much faster into a cloud-native world for banking just because they have new people coming out of school, getting into those banks. And it doesn't need to be in a public cloud environment out of Sydney or Singapore, it could just be the same contours within their own regulatory landscape. And we see that dynamic also taking place across these geographies.

Great. And they probably also have less of a challenge from a legacy systems perspective, right?

That's right.

Thanks. Thanks a lot, Anand, for that. And last but not least, Stuart, you are Director for Industry Strategy, focusing on financial services. So where do you see the biggest challenges for your clients in financial services?

Thanks, Fred and the team at Forrester for having us here today. Look, firstly, I think the challenges are real, not perceived. Prior to joining Salesforce, I spent 20 years in dealing rooms of JPMorgan, Citi, ANZ Bank and the role of these banks is to be trusted, is to be that place where people stick their money, have it -- are advised on their financial wealth. And so there's a great deal of responsibility for these institutions to do the right thing by their customers. And around the same time as I was starting my career, Marc Benioff was setting up Salesforce in a garage in San Francisco [ at any of the same valley ], like that trust is core to building a successful Software-as-a-Service business. And so we have trust.salesforce.com where all of our certifications relevant to the financial services industry, all of the performance of our many redundant systems in place are made available for our user base to see. But I would say the regulatory compliance is a real challenge, and firms across Asia and particularly those in multi-jurisdictions have a great deal of due diligence to undertake when moving loads from in-house or on-prem into the cloud. And so to that end, we have our first team that works with our customers to navigate those regulatory compliance processes, aligning our technology and our capabilities with those regulatory guidelines so that customers can have confidence when submitting -- making submissions to various jurisdictions. I would say on the in-house skills, again, is a challenge, whether the industry is all looking toward the same types of skills when moving loads to the cloud. And Salesforce anticipated this and set up a capability called Trailhead.com where we offer training in our skills and in the skills of the Fourth Industrial Revolution for free. And we found that this was really important for professionals that were looking to pivot into technology, pivot away from traditional skills into those in demand today. And it's really crucial not only to the developers of cloud-based technologies and capabilities, but also just workers that are looking to optimize their teams like contact centers. And so with AMP, they train all their contact center staff using Trailhead.com, and they use that as a source for ideas on how to improve service for AMP customers. On the bank's specific office, yes, again, fully agree. Our capabilities started very much in that CRM space and sales, service, marketing optimization. We found though that bankers, insurers, wealth managers wanted to be having more specific capabilities. And so 4 years ago, we released financial services cloud. And that has a data model specific to financial services with like household, with life events, financial holdings as well as capabilities that enable task orchestrations to enable financial institutions to be more compliant as well as scheduling meetings with like mobile lenders or insurance adjusters. This gives 2 main benefits to the industry. It allows them to realize benefits sooner. So I think one of the criticisms and challenges, I think, that's not listed here is that -- and we've been promising this for decades, this rapid realization of benefits, having launched transformation projects, but having prebuilt industry solutions enabled to innovate at the edge and take a core set of capabilities common to the industry, but also gives an industry standard for our ecosystem of ISV partners, of which there's almost 4,000 apps. They can take a standard and build things like account orchestration, know your client or customer and many other compliance and marketing extensions onto a solution, which is specific to financial services. So with these, I understand, there are absolutely real concerns and ones which we contemplate all the time. As Software-as-a-Service supply, we have a shared responsibility and we share that the risk, frankly, with the financial institution, you're successful and we're successful and the opposite means that the subscription ends. So we're acutely aware of these challenges.

And it's probably in between the financial services organization, the tech vendor and the regulator as well, right?

Absolutely.

It has to be this tripartite type of collaboration, I guess. I want to move to the second theme around the current demand that you're seeing and obviously address the elephant in the room, I guess, in terms of how is COVID-19 situation impacting this demand. I mean, are you seeing -- yesterday, we had a panel discussion focused on the insurance. And the key message that were shared was the time is now. We can't delay the transformation any longer, right? The customer -- the way customers are engaging with us, the way customers -- the way organizations need to support these customers has to be a lot more digital, a lot faster, a lot more adaptive. So there's a lot of, I would say, drivers that would push the financial service institutions to make this transformation or accelerate this transformation. But I wanted to get your point of view, and this is free flow, so anybody can take it. Let me know who wants to respond to this question first. Nick?

Sure. So I'd agree. I don't think COVID is transformational. I think it's an accelerator of some dynamics already seen. So here in Asia Pacific, an awful lot of the banks have been growing at a very healthy clip, especially compared to their European and U.S., North American counterparts. And a lot of that had to do with the fact that we have a lot of the Tiger economies in this region, we're close to China and all of those sorts of things. So a lot those banks have been growing on the back of GDP. Even before COVID, that had started to slow down. And so you were seeing banks starting to think more about the cost line than the top line. And I think what COVID has done has brought that home at very high speed. And you now have banks -- certainly banks that we're talking to that are saying that even after COVID is over, they're foreseeing 2 or 3 years where the top line is going to be enormously challenging. And so they really need to be thinking about the cost line in a way that they haven't had to for the last 10 years. I think also people talk a lot -- talked about all about digital transformation. There are 2 maybe themes or means that I think are appropriate for the last 10 years. One is software is eating the world and the other one is, we need banking but we don't need banks. And that clearly kind of has had some impact, but not really in financial services. I think a whole bunch of stuff, social, generational shifts, transfer of wealth, politics and regulators getting more comfortable with what technology can do for the consumer and those kind of things. And if you want to see what digital transformation really looks like, look at print media and music industry. And I think that's what banks -- it's going to happen. I know people have been talking about it for the last 10 years, but it's going to happen. And I think cloud is the technology enabler that at last makes that possible, even amongst the complexity and the regulatory and all those sorts of things. So -- and then if you look at the complexity, this kind of transformation is for a major bank, we're working with Lloyd's in the U.K., they're looking at 5 to 7 years for moving multiple systems, tens of thousands of financial products, tens of millions of customers across to a truly componentized, cloud-based platform that will allow them to be agile and cost effective and all those sorts of things. And if you talk to the execs there, what they've said is, whenever we start, it's going to take us 5 to 7 years. We could do nothing for the next 5 years because there isn't -- we're not on fire. We've been growing with the fintechs on really kind of taking huge lumps out of us. But if we don't start now, in 5 years' time, we will be -- have an existential threat and we'll still have 5 to 7 years of transformation. So I think now is the time and I think through the work of people like AWS and Red Hat that the technology capability at last is an enabler rather than an inhibitor.

Maybe I can add to this a few thoughts on what we see at the platform level, right? So with the COVID situation, in particular, we have actually seen, I would say, a more focused approach in terms of the banking investment in technology going really to efficiency and automation. So here, we see actually 2 types of investment is that if you look at horizontally, there's investment going on in terms of portability. So having a technology platform that lets your technology team, in particular, operations operate in a very similar and standardized way across the different infrastructure you have to manage, is something that is now getting, I think, a lot of interest. If you think about the organization as well, so from a vertical point of view, I think investment into DevOps tooling is not new. I think pretty much at this point, all our customers have been, at least for some of their development capabilities, they've been investing for the past few years. But now we see a realization as well, but the rest of the organization also did some form of automation. So we are talking about DevSecOps now to support security teams in terms of compliance as code and automation type of implementation. We see emergence of DataOps as well, supporting data scientists engineer as well with all their data-related automation need. So we think that this is a team where now there is a lot of interest in investing and then getting process more standardized and more efficient across the board.

Let me add to the...

Sorry, Anand, go ahead.

Yes. So let me add to that from both what we are seeing with our client base is we've had 2 sets of customers, people running our traditional software and people running our cloud basic business as well. And what we have seen here is post COVID, the ones running our cloud-native banking have been much more agile to respond to their customer needs. And so in similar markets that we have seen in emerging Asia, for example, we have challenger banks, electronic in the Philippines, it's night and day. Their agility in responding to what the regulators want, their agility in responding to what their customers want in terms of new products, new services, their ability to turnaround for government regulations on lending moratoriums and all of that and quickly turning it back to their end customer, for some of the cloud banking clients that we have has been a matter of hours or perhaps just over a weekend, while the more traditional ones have taken a much longer time. And that really -- and it's a comparable market. So that is giving the other banks food for thought and pause saying if their competitors are being that much more agile, they are going to gain market share, right? And that's going to provoke, in my view, a harder look at some of this underpinning modernization because they can see the stark difference in their own markets. And that's important. It's underpinned by technology. It's underpinned by infrastructure. It's underpinned by cloud-native software, and they can see that difference.

And that's a good point and something that we haven't talked about, but the regulators are trying to shake things up a little bit with the introduction of virtualization in Hong Kong, Singapore and then soon to be followed by other markets, I guess. But I wanted to come back to what Vincent was saying in terms of -- I think the transformation has taken hold in the technology teams, right, the infrastructure and operations, and they have been investing in these toolings, this automation and so on and so on. But the ability for the banks to really make a difference from a business perspective is by involving the business teams, which have been there probably a little bit late to embrace these new approaches and new processes.

So Fred, maybe let me jump in on a couple of points that were mentioned here. For example, you guys talked about regulation, right? And I think the survey was actually global. And obviously, the regulatory landscape is very diverse globally. So I'm just going to focus on Asia. And what I would say in Asia is actually we've seen regulators over the past several years being actively encouraging innovation. And frankly, recognizing that cloud can provide the foundation for financial institutions to actually not only improve their residency and strengthen their security posture, which is obviously very timely, like Anand was saying, these organizations have been able to react much faster in the context of COVID. But have also enabled those organization to pursue a new line of business, to launch new products and offerings and more exciting customer experiences. And to your point, Fred, we've seen those regulators across the region, launching and issuing all those digital banking license. And these are new players. And typically, these players are building natively on the cloud, and they are running their core banking platform on the cloud. A number of them have been public about it and how they are actually leveraging AWS across the different functions. Xinja is one of those players, for example, in Australia, and they've been using AWS to build part of their cloud banking applications. And so there is also you mentioned Hong Kong and the open banking as well that's happening over there as well as the virtual banking. There are players like HSBC in Hong Kong that are building their open API platform on this to build those ecosystems, to create those new customer interactions. And on the core banking side, those digital banks again, in Hong Kong, like WeLab or Standard Chartered Banks that have said that they are building on the cloud as well and have launched actually, even in the context of COVID, they are launching those businesses. Now to your point, we're still very early days in that journey. And there's still a number of players that are looking at what's the best way to rethink completely their core banking platforms because if they really want to innovate and transform those customer experiences, they need to transform the core as well. And so there are players like National Australia Bank or Westpac that I've shared publicly that right now they are experimenting with some of the born-in-the-cloud banking platform. And obviously, there is a long way to go, but they know they need to get there. The other part that I think I heard from some of my colleagues here is also the need for some of the existing incumbent players and core banking platforms to raising their own architecture and to transform themselves to go on microservices and to generate some DevOps capabilities and being able to modernize some of the platforms that they have been out there for a while. So we have what we call the AWS partner network where we have thousands of system integrators and hundreds of thousands of SIs and SaaS providers, you were talking about SaaS. And all those incumbent platforms are actually now running on the cloud, in production for some customers, so you think about like Finacle and Temenos and TCS BaNCS and Intellect Design Arena. And obviously there is the born-in-the-cloud platforms that obviously are ahead because they used all of the native tools to do this, like, obviously, machine or like -- platform like Mambu. But we are seeing customers of all sizes still going with a diverse set of core banking platforms as they go on to the cloud, and it's really figuring out what's the right fit for their needs, making sure that they continue to earn trust, to store its point and that they feel comfortable with the way they are going forward with their core banking platform. Now in terms of COVID specifically, we've seen a little bit of a shift. So when we see still those motions going, there's been a number, I would say, of specific applications that are focused -- that our customers are focused on and to Anand's point, our customers have been able to move and operate much faster to address those needs, working from home, desktop as a service. Sounds a little bit basic, but a lot of people didn't have desktops to work from home. So we have the Amazon Workspaces, for example, and the number of customers have implemented those applications and these are real banks, SuMi Bank in Japan and RBL Bank. They’ve implemented those in just a couple of days to help their employees work from home. And then the other one is actually setting up call centers. There is a massive demand for calls, insurers and banks that are -- have to respond to those inquiries. And there are cloud-based capabilities. There are Amazon Connect. These are platforms that actually Amazon uses as well. And we've seen customers both increase their capacity with that omnichannel cloud contact center as well as deploy those new contact centers. And again, superfast. We're talking about like Cbus in Australia, they were using that internally, they deployed it for their customers in a matter of days. Customers are deploying those contact centers net new, like in a couple of weeks because they are familiar now with the cloud and the capabilities. And then the last 2 applications we've seen that are important and probably a little bit more in the U.S. than here is around how to manage the new risk calculations that needs to happen, especially with the volatile market. So think about market risk or even credit risk since we are talking about lending and the ability to be able to launch a lot of computes to be able to run those risks as needed. So being able to scale up and scale down, we are seeing a lot of more customers doing that. And then addressing their BCP and DR, this has been key for a number of customers on how they're tuning their DR process and their BCP, including frankly backups. A number of people are still relying on tapes in the region. And that's not a good way to go forward, especially when you need to restore those data in a matter of minutes sometimes. So these are some of the...

Thanks a lot, Laurence. Yes. I really like what you said about the importance of data, which I think is critical as organizations are preparing for the recovery. I want to move to the last point of -- or last theme of this discussion around where should banks start, right? And probably looking also from a money perspective, right? How do they get the budgets from their leadership to be able to start on this cloud-native transformation journey? Anybody? And then we'll take -- there's a lot of questions coming in. So we'll take the questions in the next 5, 7 minutes, I guess?

Yes, sure.

Stuart, start with you.

I think when you look at the drivers that we've seen in standing up business case and particularly in a post-COVID world, there's a couple of things. One, firstly, is an oldie but a goodie and it's cost out like organizations are looking not only to milk the most out of their existing assets, the existing system. So we're looking to like integrate into existing core banking platforms or policy administration systems. And they're looking to consolidate systems so that they can build a platform which allows incremental build to take place on the same investment. And I think the large challenge that we're going to see in the next 6 months to 1 year is the widespread financial hardship that's going to be experienced both from individual consumers and businesses as an effect of COVID-19. And so a large number of our customers are talking to us about how do we invest in systems which help us help our customers out of pain. In Australia with -- and many countries across Asia, banks and lenders are providing loan holidays. So those are going to expire and they're going to want ways to reach out to their customers to educate their customers in financial wellness and frankly, to take more of our ownership into how they communicate, how they help customers out of this situation here. And so I think that, that is a real shift in the industry and one which is bought out of perhaps personal financial management platforms and open banking has a role here to assist. And the other classic is compliance. We've had regulators wanting banks, insurers, wealth managers to improve their complaints handling, which again is set to rise in COVID-19 and responsible lending obligations in the way that AI is perhaps used to aid in decision-making and having the ability to provide justification and like be able to justify those decisions. And finally, like design and distribute observations where -- obligations where you need to be able to prove that you've sold the right product to the right customer and be able to again check back on it that the right customers were marketed to and, in fact, onboarded to those products. So I think cost out, compliance and customer wellness are 3 large ones we're seeing now. I think the pitfall we're seeing financial institutions are buoying now is large scale, all-in projects are really giving way to incremental, more agile type of build where the vendor and the technologists and the bank, for example, are getting joint confidence in ability to deliver on those promises. And they might start a safe complaints management and build out to build a platform of engagement for their customer, which is quite ambitious and maybe the North Star. But those incremental investments are only achieved in reinvestment upon success of its predecessor. So each party is on the hook for delivery, which is a good model, I think.

Thanks, Stuart. Anand, I think you had a point of view as well.

Yes. And I think just to add on to Stuart's point of view. Again, I go by the customer lens, I see them committed from 3 perspectives to build a business case. Perspective one really tends to be COVID-19 has exposed woeful inadequacies in their current systems itself with people not able to go into the office, people not able to do DR properly, any BCP stuff that really needs to happen. And that has provoked a business plan to say, what does it really mean for a full enterprise transformation? That's one set of customers. A larger set of customers have gone through that, but are looking to say, how I can be much more agile and that's really where the agility projects, be it in the data space, be it in the digital transformation come in play. So it's all about the customer journey. And I think the acceleration that I'm seeing from Finastra perspective is really in camp A, people stating their core banking systems couldn't handle things well fast enough, agile enough, all the regulatory demand during this particular situation we are in. And what's -- how we can move that forward -- going forward so we don't have this kind of situation ever again. It's exposing that Achilles' heel, and that is translating to business needs. And I mean you---

Yes. Just to jump on what Anand was saying. So you're saying basically that, I mean, cost is important, but they also need to think about other type of metrics to measure the success of this transformation, including speed and time to market, which basically hinges on the ability to -- for the IT department to change some of the metrics that they traditionally use. And I'm thinking metrics that are looking at the viability and probably efficiency, you're right. I mean, a key metric in the IT domain, 2 metrics that are more looking towards effectiveness of -- and business outcomes, right, which is not something that I'm seeing a lot across IT departments in the region.

I [indiscernible] as a metric for the business case. If the IT department is able to deliver a very high Net Promoter Score with their end customers measuring it, that is really going to change the game as far as the business gets on this issue.

Interesting.

Yes. Yes, I'd agree with that, and I pick up on it. I mean, I think customer experience has been a rallying cry for all organizations, not just banks for years. But I think in the banking case, this now needs to go beyond just having a super slick app or anything like that. I mean, a lot of the mobile banking apps now are table stakes. And in the '90s, Peppers and Rogers had the 1:1 marketing push. And I think that was an idea that was ahead of the ability of technology to support that. But I think, again, now with cloud and the things that, that enables, you'll start to see, a, customization will come back, financial products as code rather than being locked in the black box. So financial products and codes. So we can create financial products to specific customers' needs and adapt them rapidly when things like COVID hit. So for instance, many banks found kind of giving payment holidays not a simple exercise, right, because their legacy core systems did not enable that. So I think we're going to see deeper customization focus in banks. It's going to go all the way to hyper personalization of products. And you're going to see these agile teams, which are combinations of IT and business working together and the metrics will be how fast could we get this product out, how fast could we get anything like payment holidays to customers when we're in a disaster like COVID. So I do think metrics will change. And I do think cloud enables business to -- IT to much better integrate with business and focus on the outcomes for the end customer, at the same time as they're meeting the regulatory and compliance things that they need to do and drive down costs, which is kind of somewhat of a tough iron triangle.

Thanks a lot. This is great. I think we have covered a number of the questions that have been coming in as we converse around this topics. So this is great. There's one, in particular, that I thought I would like to discuss because it's getting back to some of the challenges that we're seeing around skills and skills availability and the fact that banks need to compete against hyperscalers, right, to be able to get access to these skills. So I was wondering if you had any thoughts on how can bank needs to do anything different to attract and retain these skills that are a key challenge for them.

I had some thoughts on this question. So I think we've just heard quite a bit about building a business case for digital transformation and cloud adoption. But one other area that decision taker are also looking at is, do I have confidence in my own technology department ability to perform this transformation? If you are not able to answer this question, the risk associated with not just the business investment, but also the delivery and the change required is actually quite high. And it will actually put a lot of emphasis on the decision manager to maybe avoid the risk instead of going for a transformation. So skill set is all about the answer to that question. I think that there is no other choice for any organization who wants to transform in terms of having to insource the skill set. You cannot outsource DevOps because DevOps is about the culture and the process behind how you enable change in an efficient manner, right? This is not something that you can pretty much give to a system integrator or an external resource, right? Now I would argue that the competition for banks is not a competition for talent against hyperscaler. Because if you think about it, the operating environment of banks actually requires as well the knowledge of the environment, the processes and the compliance that their existing staff already process. So they should be looking at a bit differently in terms of how do I enable key staff on this transformational journey. And obviously, this is a type of engagement that I love and that we provide ahead at -- typically with customers, who are starting the journey, where we start to have those kind of digital labs engagement, which is a 6 to 8 weeks, very, very focused engagement with a customer to deliver value that can be observed by that decision maker. So it could be something as simple as enabling self-service functionality for the development team, which is a project delivered by the infrastructure team internally. So you enable an internal function using cloud-native capabilities, developing the culture and the process of the bank, and then you are able to showcase to your decision-maker, your CEO that, hey, we're actually able to get progress.

Yes. I love that. So probably starting by ensuring that you have the proper skill set as well as the culture before you engage in these transformations. Laurence, maybe one quick answer, if you want...

Yes, very quick one. I want to go back to the culture point, actually, Frederic, because I think that's a very important one as well. And that's an important discussion. Frankly, that comes up very often with customers where they're asking us, they really want to build a culture of innovation. Because essentially, in financial services, we had a very product-centric approach versus a customer-centric approach. And so there are a lot of changes that needs to happen around culture. And they often ask us, frankly, how do you innovate like Amazon, right? And so what we've done is we have actually packaged what we call a digital innovation program to help our customers. And that's been built around our own Amazon distinctive working backwork from the customer mechanism. And this is really to help those financial institutions or even across other industries to help them really think hard about how they can address their most pressing customer needs and how they can build new capabilities using AWS platform. And so I think this shift in culture is really what's enabling those organization to move faster to all of the points that we mentioned earlier. And that element is super important, not just the business case, if you will.

Yes. That's a great point. Thank you so much. Listen, I think we could go on forever talking about these topics, these questions with a very inspiring panel. So thank you so much, guys. I want to end with one word. If you could give one word to banks and the recommendations that you would give banks on how to go the next step -- going to the next normal, I guess, what would be this one word? Vincent, you want to try?

Well, I mean, the key word for us is also our DNA is really open source and the adoption of open source to steer your innovation capability and then your ability to take this journey.

That's a lot of words. But open source, yes, I'll take it.

Right. Open source.

Thanks a lot. Laurence?

I would say, agility, it's all about the customer experience and having the agility to get there.

Thanks, Laurence. Nick?

I'd say now and the meaning behind that is, if not now, when because every day you delay is a day you're closer to dying.

Anand?

Revolution. Think big, think revolution.

And last, but not least, Stuart?

Be a platform probity. Probity would be my word. We are in times where you need to look after your colleagues, your customers and your community, and I think that business is the best platform for change.

Thank you so much. Thanks a lot. So yes, it's been a real pleasure. It's been really inspiring. Thank you so much for taking the time to share your insights and your experience. Thank you, the audience as well for dialing in and for asking questions. Over to you, Kat.

Ladies and gentlemen, this concludes today's webcast. All unanswered questions will be followed up by e-mail. As a reminder, please complete a quick survey before you leave the webcast. All attendees will receive a link to watch the on-demand version next Monday. Once again, thank you for your time today. We look forward to seeing you in our final session of the series this afternoon. The Future of Work is Closer Than You Think at 3 p.m. Singapore time today. You may now disconnect, and have a wonderful day.