Itaú Unibanco, the largest Latin American bank, has migrated 50% of its computer systems to the cloud. The results are outstanding: it attained a 31% IT cost reduction and almost eliminated system failures, which decreased by 98%.
Moreover, since 2018, the bank has multiplied the frequency of software releases by ten. It gained agility to launch new financial products quickly and successfully compete against challenger banks and fintechs.
Ricardo Guerra, CIO of Itaú Unibanco, mentioned these numbers during a speech at Febraban Tech, Latin America’s largest financial technology trade show. In another session at Febraban Tech, Guerra debated financial systems on the cloud at a panel with Pismo co-founders Ricardo Josua and Daniela Binatti.
A changing landscape
“Customer expectations have changed a lot in the last 20 years. People didn’t get anxious in the past because someone didn’t answer a phone call immediately. Now, if someone takes a few hours to answer a WhatsApp message, we feel uncomfortable,” says Guerra.
“This same anxiety applies to financial services. It’s no longer acceptable to receive a customer request and say we will answer it in two weeks. People want immediate responses, and we cannot provide this fast service without modern technology.”
“So we modernised our systems and moved them to the cloud to gain agility. But we needed to preserve the service quality and keep an eye on costs while doing it. This is challenging since making big changes in computer systems may bring new failure points, and cloud computing costs may rise to the Moon if we don’t manage them properly.”
Continuous transformation
Itaú Unbanco achieved all three goals, reducing cost and improving service quality while gaining agility tremendously. The bank adopted cloud-based systems comprising microservices and APIs. It uses the Pismo platform to do the back-end processing of its digital bank iti, employing this platform for core banking, card issuing, and payment processing.
“This is a continuous transformation. We don’t need to migrate all our systems to the cloud because some of them don’t impact user experience. Our goal is to migrate 70% of them,” says Guerra.
“The good thing is now you have a componentised system that provides flexibility. You don’t have to stack things one over the other to build new features,” comments Daniela Binatti, Co-Founder and CTO of Pismo.
“There is also a change in the IT mindset. In the past, the IT team just received requests and executed them. Now, IT people must understand the business, the customers, and their needs. They must propose solutions to serve customers better,” adds Guerra.
In his previous speech at Febraban Tech, he explained how the IT team did this: “We built a robust data analysis system. Large institutions like Itaú Unibanco have distributed data accessed by various methods. We had to organise all this data to study the customers and understand their needs.”
Challengers x Incumbents
Ricardo Josua, Co-Founder and CEO of Pismo, notes that as the latest cloud technologies become available to all players in the market, the boundaries between traditional banks, challengers and fintechs are becoming increasingly blurred.
Guerra agrees: “In the past, we saw incumbent companies slowly evolving while newcomers were more aggressive and understood customer needs better. But the traditional institutions felt the pressure from these new competitors and started to move faster.”
Itaú Unibanco is the 73rd largest bank in the world and the largest in Latin America, with assets amounting to 500 billion dollars.
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