THE POWER Be more nimble:

How event-driven

OF DATA cloud banking is

unleashing the
power of data
THE POWER OF DATA

Contents
Introduction
03 Cloud-based event-driven core banking is unlocking the value of
data and enhancing banking services to customers.

How can banks operate in a data-driven world?

04 Banks have vast quantities of customer data flowing in every day.
The challenge is simply how to best unlock that data.

How can banks turn data into insights?

05 With a real-time event-driven microservice approach banks can
enrich the customer experience.

How can data solve challenges for banks?

07 Unlocking the value of data can create benefits across
the business - from operations to boosting customer satisfaction.

Moving from monolithic to event-driven microservices

10 Cloud-based core banking systems help banks become more
nimble when innovating or simply updating the system.

Bringing data back into your power

11 With greater control over data, banks can be more innovative and
creative when enhancing services and developing new products.

Five key takeaways

12 Event-driven cloud banking is unleashing the power of data
for banks.

02 | Contents
THE POWER OF DATA

Introduction
Be more nimble:
how event-driven cloud banking is unleashing the power of data

Traditional banks have always recognized the Now, with the emergence of cloud-based event-
value of their data. The challenge is that many driven core banking microservices architecture,
banks’ legacy infrastructure makes extracting banks have the opportunity to stream data in
and transforming that data into actionable real time across all of their business functions,
insights a slow and brittle process. When the unlocking the timeliness and hence value of
data is finally processed and ready, it is often their data, enhancing how they deliver banking
stored in systems that are not accessible in real services to customers.
time and often in undocumented structures. The
amount of effort banks spend on transforming
data is huge; from financial and hiring resources
to time spent on making data useable. That
means the data is usually out of date by the
time banks can use it, limiting the ability to
provide contextual promotion, pricing and
decisions.

This matters because customers have already

come to expect real-time insights and more
personalized experiences in other areas of
their lives, such as media streaming services.
Therefore in order to remain competitive and
relevant, traditional banks urgently need to
adopt technology that allows them to access
that data faster and rapidly transform raw data
into real-time insights and decisions that can
help banks learn more about their customers
and improve the customer experience.

03 | Introduction
How can banks operate in
a data-driven world?

One key challenge traditional banks face is Challenger banks have been one step ahead
that much of their critical data, such as what on how they are using data compared to
customers are spending their money on, is traditional banks, such as offering personalized
locked up in legacy systems that are difficult products that reward customer behavior (for
to access. With main-frame banking systems, example, receiving enhanced interest rates if a
this typically means running a batch process customer’s balance is above a certain threshold
either daily, weekly or (worse case) monthly to for the whole month) and personalized or
extract the data in bulk (usually in the middle location-based rewards or cashback. Yet the
of the night when fewer people are using financial services industry is still behind other
their bank accounts). While that process is industries when it comes to using data and
clunky and can place a lot of strain on a bank’s turning it into better outcomes and benefits for
operational systems (given that it means lifting customers. However, banks are at an advantage
huge amounts of data in one hit), it largely here - they already have vast quantities of
worked in a pre-digital banking age where customer data flowing in every day outlining
speed was not as important. Now, as customers how and where their customers are spending
increasingly expect real-time experiences such their money. The challenge is simply how to
as personalized offers based on where they are best unlock that data.
shopping at that moment in time, one-day-old
data will have already gone stale.

With the right technology, banks can aggregate

a range of data in real time to provide relevant
financial products and services to customers at
the point when they actually need them. Take a In the UK, Chase has launched
car purchase, for instance. The customer’s bank their neobank on the 10x
app could pull together device data for their platform, enabling them to
location (at their local car showroom), income offer some compelling customer
and spending data to assess affordability propositions. This includes a
(perhaps that Ferrari is a bit out of reach), credit cashback offer where, depending
data to assess worthiness (will they actually on the merchant, they will
pay the money back), identity data to be sure
give you a different amount
it is your customer, customer data to check if
of cashback straight into your
there are any red flags (are they a vulnerable
current account, immediately,
customer?) and other relevant data to price
in real time.
the offer. By accessing all of that information
in real time, banks can create personalized
offers instantly - not 24 hours later when the
opportunity has passed.

04 | How can banks operate in a data-driven world?

How can banks turn data
into insights?

Raw data on its own is worthless - the value is this data available, it is the responsibility of
generated by what a bank does with the data to each individual business domain to make it
create actionable insights. And it is how fast a accessible and in a format that others can easily
bank can turn raw data into actionable insights use. This brings in the concept of the data
where banks can potentially gain a competitive mesh - a way to organize and distribute data
edge - and where, today, many are still lagging. so that it can be accessed by anyone in the
business as and when they need it. The benefit
While traditional banking processes involve of this approach is that a data mesh enables
data being held in an operational system and businesses to scale more easily compared
then being extracted via a daily batch process to a centralized data-sharing model, as the
and moved to a data warehouse for analysis, owners of the data are best placed to make it
the next generation of cloud-based core available to consumers with the right level of
banking systems take a different approach. documentation and context, allowing faster
Every time a customer performs an action - a innovation.
card transaction, say - a series of ‘events’ will
be generated in real time. For instance, when a
customer taps their card on a payment terminal,
an event is generated and sent to the bank in
milliseconds. That data can then be integrated
however a bank wishes, giving banks real-
time context and analysis about what their
customers are doing instead of having to wait
for a batch process to extract that data from the
system many hours later.

This is effectively a new way for banks to

organize data in which source data domains
– for instance the customer domain, ledger
domain or accounts domain – emit events to
so-called aggregator domains which allow
banks to provide real-time experiences for
customers. Those could be things such as
geofenced offers, dynamic products and better
fraud detection. With this real-time event-driven
microservice approach, data should be viewed
as a product that business domain teams
share with other domains, who then consume
that data. This process is decentralized -
no central team is responsible for making

05 | How can banks turn data into insights?

The technology that makes this ‘event’
streaming approach possible is called a
publish-subscribe message bus - or a ‘pub sub’ Choosing the right solution
model where the owner of the data publishes to support event streaming
it, and other services subscribe to the data. architecture
Whenever an event happens on the cloud
banking platform, those events are sent to the Now that the technology behind
message bus, which is a single integration point the event streaming architecture is
that allows all of a bank’s different business understood, it is equally important to
functions to connect with each other and share understand the technology solution
their data. Data platform Confluent describes that one chooses to execute this
the message bus like a nervous system, with with. As discussed, event-driven
the services that connect to it acting like architecture enables decoupled
neurons. What makes this unique is that it microservices, and Kafka is an
allows multiple consumers of the same data - in obvious leader within that domain
this case, the different services within a bank. technologically - battle tested, used
Take an example where a customer is making a in many large companies with a rich
transaction in a supermarket. That transaction ecosystem and community. However,
is sent to the ledger as the core accounting Kafka alone is not enough. Companies
entry and the data is then published by the choosing to embrace event-
ledger, which other services can subscribe to. driven architecture must choose a
The customer’s banking app would then use technology solution that allows them
that information to show where the transaction to focus on their core product while
was made, with other microservices adding in the solution takes care of running
details such as a dot on a map and the logo of the distributed resilient data store.
the supermarket. In other words, the data only As an example, Confluent offers a
needs to be captured once but can then be fully managed, cloud-native data
reused many times by different microservices streaming platform that can stream
to enrich the customer experience. massive volumes of data, while
maintaining the scaling, resilience and
availability needed for banks. Banks
should choose the right technology
partner offering a solution that is built
on these kind of cloud-native data
streaming platforms.

06 | How can data solve challenges for banks?

How can data solve
challenges for banks?

Unlocking the value of a bank’s data can create benefits right across its business -
from operations and maintaining regulatory compliance to boosting customer satisfaction and
being more competitive. Here is a rundown of the key areas and use cases where data can help
banks perform better:

1. Operations 2. Compliance

One area where data can support more efficient Ever-tougher regulatory requirements for
operations is with payment reconciliation. This banks are increasing the need for risk and
involves the payments processor, typically a compliance teams to find more cost-effective
clearing bank such as ClearBank, and the core ways to maintain regulatory compliance. Take
banking system where the payment will be customer addresses, for example. In a worst-
recorded on the ledger, with banks then having case scenario, some banks may hold several
to reconcile the two to ensure the payments different addresses for a single customer. If
processor’s view of what happened matches that customer has taken out a consumer loan,
the core banking system’s view of what regulators require that the bank must send out
happened. Traditionally this would mean at the a letter summarizing the annual interest the
end of the day, a bank’s accounting department customer is being charged. If the customer
would receive a file from the payments doesn’t receive that interest-rate summary, then
processor and a file from the core banking the bank is disentitled to any interest charged
system, and there would be a custom batch and must repay the balance to the customer.
process which compares the two files to ensure So if a customer has moved house and they
they match in terms of monetary volume and update the address on their current account,
value. With an event-driven cloud-based core the customer might forget to do it for the loan
banking approach, the payments processor can account. Because a bank’s internal systems
emit an event that outlines the transaction that don’t talk to each other, the bank is now non-
has taken place, which can then be instantly compliant for the customer’s loan.
matched with the entry on the core banking
system, meaning reconciliation can happen in In the past, some banks have tried to fix this
real time instead of at the end of the day. by grouping all the customer records together
and then manually trying to figure out which
address is correct - sometimes involving
hundreds of employees sitting around manually
sifting through addresses and inputting data.

In an event-driven banking system world, this

scenario can be avoided by having just one
master address that is published as an event
and then subscribed to by other microservices
so there is no need to update customer address
records for every single product - there is just

07 | How can data solve challenges for banks?

one single source of truth that all parts of the those transactions will be married with the app’s
bank can link to. If a customer then changes geo-location in real time, reducing the need for
their address, all the bank needs to do is false fraud blocks - the last thing a customer
update the master address and all the other will want if they are travelling overseas.
microservices that subscribe to that master
(e.g. statements) will automatically be updated. This is one advantage of next generation core
banking systems: customer data is stored
securely in the cloud, enabling banks to access
more joined up information on customers
and act on it accordingly. Legacy technology
systems also typically can’t fully utilize the new
payments messaging standard ISO20022 and
therefore end up with an incomplete view of
what their customers are doing.

3. Fraud detection

Another area where data can help banks

improve the customer experience is with fraud
detection. While most banks have the ability
to do real-time fraud detection already (they
can flag straightaway if a transaction looks
suspicious), they often struggle with siloed data
and therefore having to base fraud decisions on
potentially incomplete data. Take an example
where a customer has travelled to New York
for a weekend of shopping. A traditional bank 4. Competition
may see the customer’s elevated card activity
on Fifth Avenue and put a fraud block on it Smarter use of data can give banks a
because it is a departure from their usual competitive advantage by helping them create
spending behavior. Meantime, the customer’s better products that actually benefit customers,
banking app probably knows the customer is such as personalized rewards (spend £50 a
in New York, but because that data is stored month at your three favorite merchants and
in a different location and won’t be extracted get £5 cashback, for instance). Banks could
until the daily batch process is completed, the also offer products based on lifestyle events
two data points can’t be combined. Using an (if a customer’s income drops because of
event-driven core banking system where data is unemployment, they could offer the customer
streamed to one single integration point means a mortgage holiday) or offer rewards based

08 | How can data solve challenges for banks?

on merchant spend trends (similar to Tesco’s to cashback offers based on participating
Clubcard vouchers). merchants located nearby and then credits
any cashback due in real time - that way
Sharing data across different business customers get progressive rewards rather than
functions can also give banks a 360-degree just receiving a lump sum at the end of the
view of their customers, enabling banks to month. By being able to access customer data
build up a more detailed profile of who their in real time, banks can act on that information
customers are and what products and services immediately. Maybe the customer has received
they use or might be interested in. That can a significant pay rise that unlocks certain
help banks provide more relevant offers to products or it might be that they have just taken
customers that in turn can increase loyalty and out a loan with another provider, in which case
wallet share. their loan eligibility might need to be revised or
removed.
The ability to make changes faster with an
event-driven core banking system also means
that banks can respond rapidly to initiatives
launched by their competitors. If a rival bank
puts out an enticing cashback or savings rate,
the offer can be matched or bettered quickly,
reducing the risk of losing out on business. In a
legacy world, those changes could take weeks
or even longer to process, by which point the
business may have taken a sizeable hit (either
directly or through lost opportunity).

The availability of that data also makes

broader real-time communications possible to
proactively engage with customers at the point
of need - whether it is merchant offers based
on location data or product offers based on
imminent purchasing decisions. A letter in the
post two weeks later is not going to cut it in a
digital banking world.

5. Meeting Customer Expectations

Customer expectations for more personalized

banking experiences is an area that is entirely
Such technology allows
dependent on data. Often that can require
banks to respond more
banks to be able to make location-based real-
rapidly to changing market
time offers—something that is not possible
when they rely on end-of-day batch processes conditions or issues with
to extract and analyze customer data. Take their existing products.
Indian digital bank Jupiter. It alerts customers

09 | How can data solve challenges for banks?

Moving from monolithic to
event-driven microservices

Traditional banks have typically relied on The reason why event-driven microservices
monolithic core banking systems where all of a are superior to standard microservices
bank’s services are bundled into one software is because those services don’t need to
application. A major challenge with that is if be hardwired to the core banking engine.
a bank needs to make changes to a single With standard microservices, which are
service e.g. information about cashback offers hardwired, everything is connected, creating
where the bank has to make amendments a ‘distributed monolith’ that is like a house of
in a single codebase that governs the entire cards - if you change one thing, the whole
application. That is not only complex, but system collapses because of the hardwiring.
also a super high-risk change; if you make With event-driven microservices, those
a mistake, you take down the entire system. microservices simply subscribe to whatever
This results in banks being significantly risk data they need. If 100 microservices need
averse when it comes to making changes and to access transaction data, in the old world
therefore they tend to avoid tinkering with the that would mean having 100 hardwired
system wherever possible - which is a broader connections going into the system to retrieve
drag on transformation and the reason many that data. Now the data just needs to be
banks are still lagging on their digitization published once to an event and all of those
efforts. 100 microservices will simply read the
published data.
By contrast, cloud-based core banking
systems that are built using an event-driven
microservice architecture enable banks to
make changes faster and with less risk. That
is because microservices effectively divide
a bank’s services into independent chunks -
so everything related to current accounts or
loans or mortgages and whatever it might be,
will all be designated as standalone services.
Therefore, if a bank needed to make changes
to its cashback offers, it would only need to
change the code relating to cashback offers.
That means if something went wrong, it would
only impact that individual microservice and
not the core banking system, minimizing the
potential blast radius. This creates a more
controlled change environment and helps
banks become more nimble when innovating
or simply updating the system.

10 | Moving from monolithic to event-driven microservices

Bringing data back
into your power

By having greater control over their data, banks can start using data in more innovative and
creative ways to enhance existing services or develop new products to generate even more value.

Avoiding data siloes Data governance

One potential risk with traditional Given that financial institutions have strict
microservices is that data related to a rules on data and governance, it is important
specific business function (e.g. transactions) that data is published in a federated manner
can end up getting siloed. With event- so that all the different business domains
driven microservices, it is possible to within the core banking system have the same
create ‘aggregate’ functions (or domains, view of the world. For instance, all domains
as they are often called) which marry need to share the same definition of what a
data from different business domains to transaction is - you can’t have one domain
create other microservices. Take customer defining it in one way and another domain
recommendations, for instance. This would defining it differently. That means when banks
instantly combine data from the transaction publish data on the mesh, there should be
domain and the customer domain to some common rules about how the data is
recommend products or services based on published—for example, it should always have
previous transactions and customer info a transaction key or it should always have an
such as demographics. Aggregated domains amount attached.
therefore depend on data from other domains
as they don’t have their own raw data to Having an event-driven approach is also more
draw from. This is another way banks can helpful for record keeping and compliance
be more nimble. In the old microservices because every event produces a schema and
architecture, the application would connect that schema is tagged with metadata, for
directly with the relevant service via API and instance whether or not that data contains
extract the data that it needs. But this can personally identifiable information. That
be problematic because it is not possible for means for GDPR requests, any data that could
the aggregate domain (in this case, customer identify a customer is clearly tagged, making it
recommendations) to know when something easier to retrieve or delete as needed.
has taken place in the source domain (in this
case, the transactions domain). That means
having to request batches of data from the
source domain API at set intervals, making it
harder to access the data in real time.

11 | Bringing data back into your power

Five key takeaways
With cloud native core banking technology reshaping the way data is used to enrich the customer
experience, banks can no longer delay their digital transformation efforts. Banks must embrace
event-driven cloud banking if they want to create products and services that are fit for this new
digital world and if they want to remain relevant to their customers in the future.

Here are five key takeaways from our whitepaper that underscore how event-driven cloud banking
is unleashing the power of data for banks.

1 Slow data retrieval reduces business opportunities

Banks have traditionally relied on end-of-day batch processes to

extract data from the core banking system so they can run analysis
on it and generate insights. Not only is that a cumbersome process
that puts unnecessary strain on the system, it also means banks are
likely to miss out on potential sales opportunities. With customers
increasingly expecting real-time hyper-personalized banking
experiences, sending offers to customers based on what they
were doing the day before means the opportunity will likely
have already passed.

2 Event streaming makes real-time data a reality

Next generation cloud-based core banking systems that use an

event streaming approach enable different microservices within
a bank to access data in real time by sending it to one easy-to-
access integration point and in a structured format that makes it
easy to read and use. Every time a customer performs an action,
an event is generated and that data is made available to whatever
business function needs it. This eliminates the need for end-of-
day batch processes and reduces the risk of extraction errors
(such as wrongly mapped data fields).

12 | Five key takeaways

 3 Data can solve multiple banking challenges

Unlocking the value of data can help solve challenges across a

bank’s business. From operations (enabling real-time payment
reconciliations) and compliance (making sure customer addresses
are accurate by having one master address that other services
can access), to competition (onboarding customers faster) and
meeting customer demand (providing more personalized services),
better use of data can help banks run more efficiently while also
enhancing the overall customer experience.

4 The end of monolithic core banking

Monolithic mainframe architecture is not designed for 21st century
banking. Making changes is cumbersome and risky - one mistake can
take down the entire system - which also discourages banks from
innovating or improving functionality. By adopting an event-driven
microservice system architecture, banks can split their business
functions up into chunks, making it possible to carry out changes
without popping the hood on the core banking system - minimizing
the damage if something goes wrong. That event-driven approach
is an upgrade on traditional microservices technology where data
extraction is hardwired into a database (making it brittle to changes).
In that world, multiple microservices would likely be hardwired into a
database to extract the same data. With events, data is published only
once and multiple microservices can subscribe to that data without
needing to reach into the database directly - significantly speeding up
changes and aiding faster innovation.

5 Rethinking data

Digital transformation is changing banks’ relationships with their

data. In this new world, data is a product that each business
function produces and shares with other business functions to
consume. This is supported by the concept of the data mesh - a way
for banks to share data across the business through a decentralized
model where all of the business functions are responsible for
ensuring their data is fit for consumption (as opposed to it being the
responsibility of a central data team). The data mesh ensures data
that is published conforms to a consistent structure and that it is
schematized and clearly tagged so people can easily identify what
the data is and how it should be used—something that is particularly
useful for record keeping and compliance.

13 | Five key takeaways

ABOUT US

10x Banking (10x) is on a mission to transform financial services to make banking 10x better
for customers, banks, and society.

Founded in 2016, 10x empowers banks to move from monolithic to next generation core banking
solutions delivered through the world’s most comprehensive and powerful cloud native SaaS bank
operating system.

With its secure, reliable, scalable, and modular core banking platform SuperCore®, 10x supports
highly-customizable product behaviors and accounting rules, integrates with banks’ wider technology
estates, and harmonizes with local and regional compliance and regulatory requirements. SuperCore
enables banks to deliver products, services, and customer experiences to retail and SME customers
faster and more cost-effectively.

KEY FACTS

Founded in 2016 by 600+ staff with decades Serving global markets,

Antony Jenkins, CBE, of deep banking and with hubs in the
ex-CEO of Barclays big tech expertise UK and Australia

CONTACT US
Request a demo to explore SuperCore capabilities

Learn more about our client success stories

Chat with us about how to make banking 10x better

[Link] | hello@[Link]

© 10x Banking Technology Limited, 2022. All Rights Reserved.