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Wells Fargo's move to the cloud could save the bank as much as $1 billion over the next decade, one of the bank's top tech executives told Insider.
After revealing the outlines of what the firm called a new "digital infrastructure strategy" last fall, Wells Fargo is gearing up to retire much of its on-premise tech stack and kick off a multi-cloud migration. Chintan Mehta, Wells Fargo's chief information officer and head of digital technology & innovation, said that while the efforts will involve "heavy capital outlay," time savings is the target.
Wells has forged partnerships with both Microsoft Azure, who now serves as Wells' primary public cloud provider, and Google Cloud, and will also rely on third-party data centers. Azure will bear the bulk of the bank's cloud tools, including those that face customers and employees alike. But Google Cloud will handle its "advanced workloads," which includes its efforts in big data and artificial intelligence.
Wells Fargo CIO Chintan Mehta
Chintan Mehta, the chief information officer and head of digital technology and innovation at Wells Fargo. Wells Fargo
As part of a renewed focus on digital tech, Wells Fargo has also touted a new virtual assistant — aptly named Fargo — that's slated for launch at the end of this year.
Behind the scenes, Mehta and his team are re-architecting a key data platform that the bank uses to personalize online customer experiences and anticipate customer needs. Putting the so-called customer experience engine on the public cloud will allow the bank to scale the platform and perform "billions" of calculations a day while still protecting data, Mehta said.
Rebuilding Wells Fargo tech stacks for the public cloud — where the bank will need to rewire its security and privacy protocols — will involve "heavy capital outlay" and "heavy opex outlay," Mehta said. But the end goal, however, is time savings.
"Money is one part of it, but then the amount of time you end up expending and building out an infrastructure before something productive happens on it shrinks significantly when you have something like cloud," he said.
Wells Fargo's move to the cloud comes as Wall Street powerhouses embrace the technology. Banks, once hesitant to make the jump to the public cloud, have deepened relationships with Big Tech firms providing the infrastructure. Meanwhile, buy-side firms like hedge funds, asset managers, and private equity firms have also widely opened up to the tech. Cloud is now playing a critical role in how these firms scale compute capacity, use and find data.
The nation's
largest banks
have long signaled the importance of the cloud as a driver of both innovation and, crucially, efficiency. It's equally about ripping and replacing legacy tech as it is about spurring new innovation. Other firms like Bank of America have also pegged the cost savings tied to cloud projects in the billions of dollars. In 2019, Bank of America said it saved roughly $2 billion by forgoing partnerships with big cloud providers like Google and Microsoft to build its own private clouds, although the bank has since partnered with IBM on public cloud efforts.
As Wall Street integrates the public cloud into its tech stacks it's begun to experience a sea change in how people do their jobs and, subsequently, its talent pool. And Wells Fargo is no exception, as the bank is actively upskilling its employees to reflect its cloud ambitions. The bank is hiring 2,500 technologists to its 42,000-strong tech org this year, the company's chief technology officer, Steve Hagerman, recently told Insider. And it will look to have 50% of its engineers be cloud-certified
Like other banks, Wells Fargo is also no stranger to questions about its spending, especially because the bank has been on a well-publicized mission to cut costs under CEO Charlie Scharf. In January, for example, the bank said it planned to reduce expenses across the firm by $1.6 billion in 2022.
Wells Fargo's chief financial officer, Mike Santomassimo, underscored the evolving nature of the firm's efficiency goals during the bank's first-quarter earnings call this April.
"As I said a number of times over the last couple of quarters, it's not a static program. This is something that we're embedding in the DNA of how we run the place and it continues to evolve, and we feel good about executing on that," Santomassimo told industry analysts.