Picture: BLOOMBERG/DAVID PAUL MORRIS
Picture: BLOOMBERG/DAVID PAUL MORRIS

The future of banking is up in the clouds, as SA has become the continental epicentre for this new form of computing. In the past month Standard Bank announced it will shift its "strategic core banking applications" onto Amazon’s platform, Amazon Web Services (AWS), while Microsoft opened two enormous data centres in Joburg and Cape Town.

Standard Bank will "become Africa’s first bank in the cloud", says Andy Jassy, CEO of AWS, which is also hosting TymeBank, Patrice Motsepe’s new digital bank.

Bank Zero, the app-based bank that counts celebrity banker Michael Jordaan as a co-founder, is using IBM’s LinuxONE enterprise server. He says they partnered with IBM "as we wanted a very high level of encryption as well as the ability to scale fast. But the real saving comes from using the latest software and then using proven open-source code. We do not have to support legacy systems and can use reliable software that is accessible for free to create a revolutionary new banking system."

PODCAST | Consumers are fed up with Telcos

Subscribe: iono.fm | Spotify | Apple Podcasts | Pocket Casts | Player.fm

Hamilton Ratshefola, IBM’s general manager for SA, says this offers the computing firm "an enormous opportunity to power this unique and fresh approach to banking".

In the space of a few months, cloud computing has had a significant impact on the banking sector, for which security and, increasingly, ease of use are priorities. Having services hosted in the cloud is now considered as secure as the old model of banks owning and running their own servers.

It also offers banks — and customers — much greater flexibility and reach. Standard Bank’s move, says Jassy, will enable it to "innovate new services at a faster clip, maintain operational excellence, and provide secure banking services to customers around the world".

Group CEO Sim Tshabalala says that for Standard Bank "to remain a leader in African financial services, we recognise we need to adopt a cloud-first approach to our business". AWS’s cloud technology will create a springboard for the bank to rapidly roll out its digitisation and data strategy to better cater to customers, "whose needs are constantly evolving".

AWS is the largest provider of cloud computing in the world, followed by Microsoft’s Azure platform, which forms the basis of the software giant’s new business model. Windows, on which the world’s biggest software maker was originally built, is now a division of the Azure group. Its opening in March of its first enterprise-grade data centres in Africa "marks a major milestone for Microsoft", says Tom Keane, corporate vice-president of Azure Global at Microsoft Azure. It was the first global provider to deliver cloud services in Africa; these will eventually include its Office 365 and other services.

"In our experience, local data centre infrastructure — in addition to stimulating economic development for customers and partners — enables companies, governments and regulated industries to realise the benefits of the cloud for digital transformation, and bolsters the technology ecosystem that supports these projects," Keane says. Nedbank will also use the Azure platform, he adds.

The portents for the country are good, say analysts.

World Wide Worx MD Arthur Goldstuck says: "The arrival of what they call hyperscale data centres — essentially global cloud platforms — is a huge affirmation of the growth of the digital economy in SA. It is also the clearest indication yet of the expectations of global players of huge growth to come across Africa."

Jon Tullett, research manager for IT services in Sub-Saharan Africa for market intelligence firm IDC, believes it is a good sign for the country.

"Strip away all the feel-good fluff, and building a hyperscale data centre is a very big investment, and it requires a certain level of confidence in the return. For Microsoft or anyone to commit to a build means that they see enough revenue growth, and by correlation enough demand for their cloud services, to justify it.

"Basically, it all boils down to Microsoft making a multimillion-dollar bet that cloud uptake in SA has reached a critical mass."

SA is by far the largest territory in terms of revenue on the continent. "Public cloud is a billion-dollar market here," he says.

Meanwhile, telecoms giant Huawei has opened its own data centre in Joburg through a partner, ahead of similar launches in Kenya and Nigeria.

Edward Deng, vice-president of Huawei’s cloud business unit, says: "We are looking forward to Huawei Cloud’s innovative technologies and services, such as cloud computing and artificial intelligence, assisting African governments, carriers, and enterprises in a variety of industries such as finance, energy and agriculture, to leapfrog to a fully connected, intelligent era."

Goldstuck says the Huawei announcement "is of strategic significance but is nowhere near the scale of Azure and AWS. However, it does underline the sense that SA and Africa are finally being taken seriously by the world’s major cloud vendors."

Things are getting increasingly cloudy in SA, and like the rain that clouds usually represent, it’s a good thing.