1. © 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Tetsuo Iida
Amazon Web Services Japan
Use Case of AWS
In the Japanese Financial Services Industry

2. Agenda
 Where We are Today
 Market Drivers & Regulatory Environment
 To the future - Cloud Journey of Japanese FSIs

3. Where we are today

4. MUFG media coverage about its
contract with AWS – January 23, 2017
 MUFG Profile
• #1 in Japan
• One of G-SIFIs
• Over 50 countries
• Banking, securities,
credit card, asset
management, custody
and leasing

5. MUFG’s AWS Adoption – Media Quote
• $100M cost reduction in 5 years
• Standardize group IT infrastructure on AWS
• Gain agility for fintech business development
Nikkei – January 23, 2017
• Core banking system is not an exception
• Move 500 systems out of 1,000 to the cloud in the next 10 years
• AWS was the first choice because of its rich functionality and cost
efficiency
IT Pro – February 24, 2017

6. Cloud Adoption Status in Japan
Fintech
Tier 1
Tier 2
Tier 3
Startups
Branch-based
Internet-only
Regional
Mega Group

7. Cloud Adoption Status in Japan
Fintech
Tier 1
Tier 2
Tier 3
Startups
Branch-based
Internet-only
Regional
Mega Group
 2012 –
• Fintech startups emerged in the market
• Cloud enables disruptive services
 2014 –
• Internet-only FSIs started cloud journey
• Regulation was not well defined
 2016 –
• Mega FSI groups started moving
• Influence on all other segments

8. What is driving the market
 Market environment
• Extremely low interest rates put additional cost pressure
• Global banks started moving to the cloud
 Fintech evolution
• Collaboration / competition with Fintech startups
• Cloud is a norm for disruptive businesses
 Regulatory environment
• Conversation between cloud providers and regulators
• Fintech as a competitive strategy

9. Market Drivers &
Regulatory Environment

10. AWS is used by many Fintech startups
Financial Information
Marketing
Crowd Funding
Blockchain
Accounting / Back office
Personal Finance
Payments
Lending
Asset management
Insurance

11. Fintech evolution and cloud
 Fintech as a national strategy
• FSA enhances support for fintech startups
• Changes of Banking Act to accelerate innovation
 Fintech on FSI’s top agenda
• Collaboration, acceleration and investments
• Ecosystem through APIs
 Cloud as a norm
• Fintech business models are built on cloud
• LoBs wish faster deployments with cloud

12. Cloud Guideline in Japan
 FISC – The Center for Financial Industry Information Systems
• A public interest incorporated foundation
• Consists of 640 member institutions across FS industry
• Issues IT risk management guideline for financial institutions
 FISC Security Guideline
• List of over 300 guidelines that covers facility, operation and
infrastructure management
• Used as a reference by FSA examiners

13. How Cloud Guideline Evolved
Ver. 8 Ver 8 Rev-1 Ver 8 Rev-2
2011 2012 2013 2014 2015 2016 2017 2018
???
FISC
Guideline
AWS
Reference
FISC
Committee
Fintech
Committee
Cloud
Committee
Cloud
not in the scope
Minimum checklist
defined
Detailed checklist
defined

14. How AWS Influenced the Discussion
 Contribution to the FISC committee
 Member of Cloud Committee (Apr 2014 – Oct 2014)
 Member of Fintech Committee (Oct 2016 – )
 Issue AWS reference for FISC Security Guideline
 Provide mapping between FISC guideline and AWS security
information
 Collaborative work with Japanese major SI companies
(initially 3, and 9 today)

15. How will the Guideline Evolve?
 Basis of the guideline
 Past: Bank-owned datacenter
 Today: Cloud as an option
 Future: Cloud as a common infrastructure
 Ongoing discussion in the Fintech Committee
 Give more clarity to the cloud guideline
 Refer to guidelines of other countries such as US and UK
 Security control based on responsibility boundary
 FSIs should have access to the cloud provider’s business
location, but this does not necessarily mean data centers
( https://www.fisc.or.jp/isolate/?id=906&c=topics&sid=341 )

16. What UK and Singapore regulators say
"We see no fundamental reason why cloud services (including
public cloud services) cannot be implemented, with appropriate
consideration, in a manner that complies with our rules.”
UK Financial Conduct Authority, Guidance Consultation, November 2015
“MAS considers CS (Cloud Services) operated by service providers as a
form of outsourcing and recognises that institutions may leverage on
such a service to enhance their operations and service efficiency
while reaping the benefits of CS’ scalable, standardised and
secured infrastructure.”
Guidelines on Outsourcing, 27 July 2016

17. To the Future
Cloud Journey of Japanese FSIs

18. Sony Bank Case Study
 Sony Bank profile
• Established in 2001
• Owned by Sony Financial Holdings Inc.
• Internet-only retail bank with full banking service including
deposit, lending, credit card and investment products
• Over $1million accounts

19. Sony Bank AWS Architecture
OA Systems Core Banking Systems
Dev.
Env.
Direct Connect
Web OA Banking Apps Dev
File Server
Business Applications
AccountingElectronic Filing
Web Contents
Campaign
Risk Control
AWS Tokyo Region
Operation Logs
Dev. Env.

20. Sony Bank Migration Schedule
2013 2014 2015 2016
Evaluation
Cloud Guideline
Migration & Operation1st Project
FISC Ver 8 Rev-1
(Minimum Check List)
FISC Ver 8 Rev-2
(Detailed Check List)
*Sony Bank Schedule produced by AWS from Sony Bank presentations

21. Sony Bank – Cloud Journey
 Objectives
• Use of cutting-edge technology to produce creative
services for customers
 Why AWS
• Most rich in functionality and efficient in cost
• Proactive disclosure of security information
 Benefits Realized
• 37% cost reduction over 5 years
• Flexible IT resource procurement
• Agility for application development

22. Cloud Journey of Japanese FSIs
Evaluation Standardization Migration
Understand
AWS
Setup
AWS Team
Security Evaluation
PoC
AWS Guideline
1st Project
TCO Analysis
Training
Migration Plan
Organization
TCO
New Biz
Training
PMO
Project
Lift & Shift or New Project
Migration
Strategy
Policy Making
Organization
Wide
Strategic
Decision
Build AWS Architecture
Project
Project
Project
Project
Project
Project
Cloud Native

23. Challenges to the Future
 Lack of cloud specialists
 Legacy applications
 Formality culture – old checklists!

24. Summary
 It’s just beginning but already started
 Regulatory environment is changing to pro-cloud
 Cloud is a norm for fintech startups and new businesses
 Early adopters have already realized benefits
 Challenges ahead for acceleration

25. © 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Thank you