UnionBank Gains Agility to Innovate and Hyperscale with Infosys Finacle Digital Banking Suite on AWS

Faced with diminishing profit margins and a thriving fintech scene, the challenge for most banks in the Asia-Pacific region is to improve customer satisfaction while reducing costs. Digital transformation is leading banking agendas, and speed is vital to retain customer loyalty.

Instead of viewing fintechs as competitors, Union Bank of the Philippines (UnionBank) has embraced the concept of ubuntu, an ancient African word that means “I am because we are.” For UnionBank, ubuntu emphasizes the spirit of collaboration it has adopted, and the belief that innovation results from working together rather than against one another.

In 2019, UnionBank launched its technology company, UBX, both to build financial solutions for individuals, institutions, and micro, small, and medium enterprises (MSMEs) and to increase technology adoption in the Philippines. “Through a collaborative approach, we combine the unique value propositions of fintechs with our own to provide better value for our customers,” says Dennis Omila, chief information and operations officer at UnionBank.

To facilitate collaboration with its partners and deliver value to its clients through a superior customer experience, UnionBank is working with Infosys Finacle, an Amazon Web Services (AWS) Partner. They are migrating its core banking platform from an on-premises deployment to the Finacle Digital Banking Solution Suite on Cloud, a software as a service (SaaS). Finacle is an industry-leading digital banking solution suite from EdgeVerve Systems, a wholly owned product subsidiary of Infosys.

The move is part of the bank’s larger vision to become the first bank in the Philippines operating fully on the cloud, with AWS as its platform of choice. The transition to the AWS Cloud will help UnionBank to scale both its retail and corporate banking operations, rapidly develop and deploy new capabilities, and deliver frictionless, personalized, and highly secure digital banking services to its customers in a cost-efficient manner.

Venkatramana Gosavi, senior vice president and global head of Sales at Infosys Finacle, says, “At Infosys Finacle, we believe that cloud adoption can dramatically change the way banks operate. With AWS, we are helping banks gradually adopt the cloud to cope with ever-changing customer needs, operational pressures, and volatile business demands.”

The Finacle SaaS runs on Amazon Elastic Compute Cloud (Amazon EC2) and uses Elastic Load Balancing with Amazon Simple Storage Service (Amazon S3). Built in a microservices architecture, it allows banks to use the entire suite of Finacle solutions or choose to implement specific offerings such as Finacle Core Banking, Mobile Banking, and Online Banking.  

Although cloud migration is still underway as of March 2022, UnionBank expects Finacle on AWS to improve agility. The Finacle SaaS provides a full range of open application programming interfaces (APIs) and flexible data access. Omila explains, “The key for us was the ability to expose Finacle banking capabilities to external partners through our API gateway. The fintechs we work with can now directly access a highly secure API sandbox to develop and propose new services catered to our customers. We benefit from a steady stream of innovations and quick time to market, and our fintech partners can serve many more Filipinos by working with UnionBank APIs. It’s a win-win situation.”

UnionBank helps ensure secure access to its API sandbox by leveraging two-factor authentication and the OAuth 2.0 protocol for logins through a trusted site. API access tokens are also limited and specific to each set of user credentials.

One innovation introduced in collaboration with partners is the UnionBank chatbot, called Rafa. UnionBank was the first bank in the Philippines to introduce a 24/7 chatbot, which customers use to activate cards, check account balances, and get real-time responses to general queries. “We exposed our chatbot via APIs to create complementary systems with our partners,” says Omila.

The Finacle SaaS also enhances UnionBank’s ability to autoscale its banking services and accompanying features such as the chatbot without affecting the resilience of other applications. It does this by isolating scaling to target areas of its application stack.

“If we want to enhance one aspect of our mobile check deposit, this is the only code we change. The benefit of this approach is we’re able to bring ideas to life at a much faster rate,” Omila says. One of UnionBank’s latest ideas borne on the AWS Cloud is the first bitcoin ATM in the Philippines, where UnionBank customers can buy bitcoins and exchange them for cash.

Migration of any core system, particularly in financial services, requires significant expertise to ensure high availability and strict governance controls. With Infosys Finacle as UnionBank’s SaaS partner, the bank’s IT team can assume more strategic roles to further innovate new digital banking services. Infosys not only manages the base Finacle product and interfaces, but also handles customizations and monitoring of the entire banking stack on AWS to guarantee end-to-end application availability.

The managed services aspect of Finacle’s SaaS offering facilitates consistent business applications and preventive maintenance for mission-critical service delivery. Patching and updates deploy automatically as soon as they become available. The “as-a-service” model ensures that UnionBank always has the latest Finacle capabilities on demand to keep pace with changing consumer expectations. Meanwhile, complexity decreases and technology barriers diminish as UnionBank further integrates its core banking with other systems on the AWS Cloud.

Ram Prasad V, regional business head for Southeast Asia, Greater China, and Japan at Infosys Finacle, says, “UnionBank’s implementation of Finacle SaaS is an important step in our journey of tailoring a digital banking on-demand platform for the Philippines.”  

UnionBank estimates a lower total cost of ownership (TCO) after moving to Finacle Digital Banking Solution Suite on the AWS Cloud. Greater flexibility around deployment and scaling are primary drivers for the bank’s cost reduction, with annual cost savings projected at about $380,500 for storage alone.

The project team also anticipates reduced backup time, from 8 to 2 hours, and 75 percent faster data retrieval post-migration. “I have no doubt we can achieve these numbers,” Omila says. “We benchmarked against other overseas banks using Finacle SaaS and have seen the results they’ve achieved.”

Omila continues, “We onboard 1.2 million new customers each year and aim to open 25 million new accounts in the next few years. With Finacle on AWS, we can hyperscale to keep acquiring and delivering transactions for our clients without worrying about capacity or underlying infrastructure.”

To learn more, visit aws.amazon.com/financial-services/