Turning boulders into pebbles: behind Westpac’s cloud journey

Westpac decided to increase its investment in Microsoft’s Azure cloud services platform earlier in 2022, to underpin the wholesale modernisation of the bank’s technology environment in a five-year deal to help drive the bank’s digital and hybrid multicloud strategy.

The move supports the goal to adopt a standard for all new systems at the bank, whether created by its own tech team or sourced from others, to be built to continuously change using evergreen cloud-native technologies, according to David Walker, Westpac Group chief technology officer.

It might come as a surprise that one of Australia’s largest banks, known for spending billions of dollars on its technology assets each year, is only now just beginning to shift its infrastructure to a more flexible, cloud-based arrangement. But the wholesale move to Azure is only the latest chapter in an ongoing program of change at Westpac, which already claimed a dual cloud environment, albeit one in which Amazon Web Services (AWS) had historically played host to the bulk of its cloud-based applications and services.

But this is changing, according to Walker, as the Microsoft Azure offering begins to meet and, in some cases, surpass the capabilities of AWS in certain areas.

“The most important part of this arrangement was to create an environment where software engineers make the decisions on where to put the right hosting of their technology, not based on costs, or based on project managers or finance decisions, but based on what the right technology is for the use case,” Walker tells CIO Australia.

Building a simpler tech environment

The bank had built up a lot of technology assets over the years, and the first challenge for Walker and his team when he came on board as group CTO in late 2019 was getting the foundational fundamentals of running the technology right.

This saw Walker’s team spend a lot of time focusing on the stability and resiliency of the different platforms in use, the throughput, and the ability to change things quickly and efficiently, but also safely.

The existing systems were complex and Walker’s first port of call when it came to removing some of the bank’s tech complexity was to address the foundational elements underpinning the respective IT environments and the operating model. He also strove to get the ‘right people’ in while also elevating the people that the bank already had in its tech ranks to make sure they understood what the new ways of working would, and should, look like.

Less than two years later, these changes have started to pay off, according to Walker. He points to the success of Westpac’s ‘bank-as-a-service’ (BaaS) platform, aimed at enabling businesses without a banking licence to deliver banking services from a licenced bank digitally via application programming interfaces (APIs), as a proof point.

“So, it’s now twice as fast [for us] to develop things,” Walker says. “The cadence is lifted when we work in these new environments. We’ve really seen the ability to develop things in a new way, in a better way, and move towards the new environments.”

Today, Westpac maintains a hybrid multicloud strategy, including an on-premises infrastructure environment in addition to the dual cloud environments hosted by AWS and Microsoft Azure.

The complexity of the banking industry

Across the board, Walker suggests, the banking industry is too complex, in terms of technology. This is consistent not only across the banking environment, but also across most large-scale companies that have been building technology for years will have a number of environments that could be referred to as legacy systems.

But Walker is quick to stress that although the term ‘legacy system’ often comes with bad connotations, some older systems actually run quite well and very efficiently. Although Walker doesn’t like to brand every legacy system as bad, he does concede that some are, particularly those systems that are monolithic by design, making them very large and unwieldy.

Walker doesn’t suggest that Westpac previously had such systems, but there was certainly no small amount of complexity in the incumbent systems that were in place when he came on board to take charge of the bank’s technology strategy.

Making digital pebbles out of technological boulders

For Walker, it’s all about ‘turning boulders into pebbles,’ a philosophy that lies at the heart of his efforts to break down the old monolithic and complex infrastructure models into something more agile and manageable.

Walker likes to apply the ‘boulders to pebbles’ thinking across the bank’s entire digital landscape, taking what he refers to as big boulders and breaking them down into smaller, nimble, more efficient pebbles.

This makes sense as an agent of change for an organisation that, like other large enterprises, typically buys big software packages and builds big applications that have, over many years, grown into hundreds and thousands, and even millions, of lines of code.

Such blocks of software can become unwieldy, according to Walker, making them difficult for engineers to understand and tricky to deploy.

By breaking these monolithic software structures down into smaller units such as microservices or micro front ends, smaller teams can operate them independently of each other and be more agile in their approach.

With the bank’s new Azure deal, Walker is extending the pebble approach more readily to some of the systems that have, until now, been held in the bank’s on-premises environments.

At present, Westpac is tapping into Azure’s data management and processing capabilities, using the Microsoft cloud platform for its big data assets and data mesh architecture. It is here, according to Walker, that Westpac has started to build out new data products and evolve a new pattern around how it builds its software assets.

“Azure has been great for that [data processing], and we’ve seen a real expansion of our capabilities and our skills to develop in that area,” he says.

The data centricity enabled by the Azure move has given Walker a lever with which to build out insights for Westpac’s customers as well as insights for its staff to better support customers and other areas of the business.

Settling on Azure’s strengths

Walker has been selective about how Westpac uses Azure, focusing on the platform’s strengths and avoiding its weaknesses, a factor that feeds into his desire to achieve parity between the two cloud platforms for his developers.

The data assets that have made the transition to Azure came from on-premises environments, not from AWS. In fact, nothing has been migrated from AWS to Azure, or vice versa.

AWS continues to be used as the primary cloud platform for Westpac’s general compute functions, supporting assets such as its websites and other internet-facing environments, along with related functions requiring the solid compute services that AWS is known for.

Westpac’s bank-as-a-service platform, for example, is hosted on AWS. And Walker continues to build out capabilities around the bank-as-a-service platform with a number of partners.

But as compute requirements have been shifted to AWS, the bank has, until recently, continued to maintain certain legacy on-premises environments, including big data warehouses, that have been built up over the years into extensive assets. Not every environment would support such an asset optimally, Walker notes.

As Westpac has worked to evolve these systems into something more fluid and agile, Walker and his team have thought long and hard about what kind of environments and tools would suit them best. As it turns out, Azure offered the best tools for the use cases that were in play.

“It’s not just about where the data sits, it’s also all the tools that we get there, the machine learning and the AI [artificial intelligence] and the capabilities that are readily available,” Walker says.

Moreover, Azure is loaded with tools and solutions from third parties, many of which are presumably of interest to Walker and his team. All of this made for an environment in which Westpac’s software engineers could access the tools needed to evolve the bank’s data assets.

This element comes back, once again, to Walker’s desire for parity. With Azure now being used as one of two platforms in a dual cloud environment, Westpac’s software engineers can easily look at the capabilities of each platform, assess the strengths and weaknesses, and make the right technical choices. This way, nobody is making technical decisions because of commercial arrangements, favouritism or pre-existing partnerships.

Westpac’s IT works towards a transformation continuum

More broadly, the adoption of Azure as a second cloud platform feeds into Walker’s endeavour to build a company-wide IT infrastructure environment that is perfectly positioned to weather and drive an evolutionary continuum of change over the long-term.

The microservices enabled by the dual cloud model, for example, are making Westpac’s IT environment nimbler across the board. The capability to change things rapidly without breaking part of a monolithic system means that, if Walker and his team don’t like a particular small component, it’s easy to switch it out, regardless of whether it is something Westpac has built itself or a third-party software as a service.

Instead of building to last, Walker and his team are building for change. As the industry’s pace of change accelerates, designing things to be evolutionary is a big goal for Walker. The cloud-based microservices enabled by Azure and AWS make this style of evolution possible.

Walker thinks of this state of perpetual evolution as evergreen technology, meaning that the technology has the right performance and security characteristics to be entirely self-sustaining over the long-term.

This is not a standalone project but rather a way of operating in an ongoing capacity.

“For me, it’s about getting to this state of flexibility and nimbleness,” Walker says, noting that his ultimate goal is the ability to transform at will. “That’s the key thing we’re heading towards,” he says.