Sainsbury’s Bank moves data to AWS cloud with Teradata UDA

Trying to change the engine of an airborne jumbo jet full of passengers while halfway across the Atlantic may not be advisable, but, metaphorically at least, Sainsbury’s Bank faced what could be said to be a similar challenge, says Greg Watson, its head of architecture and analysis.

When the company decided to lift its banking and data warehouse systems to the cloud, it had to do so without any of its customers or internal users noticing.

“There would be no detriment to them, we didn’t want them to notice we were fundamentally changing the banking platform under their feet,” Watson told delegates at the Teradata Universe conference in Madrid earlier this year.

The mission was completed on 14 March 2019, when the bank transferred the final part of its data capability from a legacy infrastructure to Amazon Web Services (AWS) – but it had started in 2014.

Sainsbury’s Bank was launched in 1997 as a joint venture with the Bank of Scotland, which became Halifax Bank of Scotland in 2001, which became part of the Lloyds Banking Group in 2009. In 2013, Lloyds decided to divest the joint venture and Sainsbury’s bought it out.

“This was starting a new bank from the ground up – the people and the process, everything,” says Watson. “We had to safely transfer all our products and services from the Lloyds legacy estate onto a range of new technology and banking platforms, including mortgages, credit cards, loans, savings and insurance.”

In creating a new data platform, the bank wanted to take advantage of group-wide data, which includes retailers Habitat and Argos, as well as the Nectar loyalty card scheme, which includes Eurostar, Pizza Hut, eBay, Expedia and Caffè Nero.

“As a principle, we decided very early on that anything we could treat as a commodity, that someone could already do better than us, we would seek to outsource as a managed service,” says Watson. “Anything where we could differentiate, we would seek to own ourselves. That does not just apply to our applications, but to our infrastructure estate.

“We don’t have our own datacentre – we use the parent company for some of the commodity datacentre activity, such as email, collaboration, finance and HR, but for those core banking systems, it was in someone else’s datacentre.”

But Sainsbury’s Bank did not want to move onto a new infrastructure with the same capabilities. Watson says the team wanted to take away some of the technical constraints the data community had been working with for the lifetime of the bank.

“We didn’t want customers to notice we were fundamentally changing the banking platform under their feet”

Greg Watson, Sainsbury’s Bank

“They had been battling against the technology to do their jobs,” he says. “We had people with multiple laptops, accessing data on different estates and with dedicated network cables under their desks connecting into the Lloyds environment.

“We wanted to build a data and analytics capability that really leveraged group data and, in particular, gave us that data advantage through Nectar.” 

At the same time, the new platform had to comply with established regulatory processes and controls. The team also had to train its technical staff in the new tooling and safely dispose of customer data from the old system. Meanwhile, the clock was ticking – the transfer had to be complete before its service agreement with Lloyds expired.

When Sainsbury’s Bank de-merged, the plan was to take its data platform from on-premise to a platform hosted by a service partner. But the arrival of a chief data officer, Andrew Day, three years ago brought forward the decision to create more expansive data capabilities and plan for the future.

Its approach is based on the Teradata Unified Data Architecture, which encompasses both a distributed Hadoop cluster as well as the supplier’s relational database. It can manage both real-time and batch ingestion of data.

For the first port of call, the architecture feeds all data into Hadoop, but the highest-value “smart data” is stored, modelled and looked after within the Teradata Enterprise Data Warehouse to support strong governance and efficiency in data science, says Watson.  

Other financial services organisations, such as Swedbank, are taking a similarly hybrid approach to their enterprise data architecture and are developing business teams to support new data initiatives (see box below).

Sainsbury’s Bank’s new system uses a range of Amazon cloud services: Elastic Compute Cloud for compute, S3 for object storage, EBS for block storage, as well as AWS and partnered marketplace services.

“When we made the decision to go to the cloud, it was an all-in decision,” says Watson. “We wanted to be able to leverage the benefits it brings us in facilitating new ways of working.”

While much of the UK banking industry remains uncertain about the suitability for cloud platforms for banking and its data analytics needs, Watson says Sainsbury’s Bank’s philosophy, as much as its technical approach, contributed to its success.

“You hear stories of chief risk officers horrified that their data might be in someone else’s datacentre and chief security officers not wanting to relinquish control, so why did we think the cloud was OK for us?” he says.

“Our IT department was formed five years ago to be focused on management and oversight of outsourced IT. If you apply the same policies and the same controls, if you treat vendors in the same way, and you do the same assurance, the cloud is just another form of outsourcing. That has gone down well with regulators in the UK and has allowed us to be quite permissive in our use of cloud services.”

But the transition was not without its difficulties. Watson shares his top dos and don’ts (see box below) for any banks or other highly regulated businesses wanting to embark on the same journey to the cloud.

Matt Aslett, vice-president for data, artificial intelligence (AI) and analytics at 451 Research , says firms planning to move their data to the cloud do not plan to replace like with like. “It is not just lift and shift,” he says. “More often, the next version of the application is being developed in the cloud. They want to repurpose and redesign their data and analytics architecture.”

Such a complex project may require outside business events to provide enough impetus, says Aslett. “Generally speaking, there needs to be a larger business imperative to change – company-wide digital transformation or M&As [mergers and acquisitions]. Cost saving might be part of it, but often it is a larger business driver that is the trigger.”

Aslett says researchers are seeing greater adoption of cloud in financial services, with firm plans in place to move data management and analytics within two years. If 451’s predictions are correct, many in financial services will be attempting complex in-flight re-engineering and hoping they do not plunge into the ocean below.