How AWS helps transform lending

Banks are using the cloud and digital capabilities to change the way that they
do business. The cloud makes it easier to build solutions that use data to
develop a more holistic understanding of customers and use this insight to
transform those customers’ experience.

For example, banks are using advanced analytics and AI/ML tools to automate
repetitive manual tasks, reducing costs and removing errors in origination and
servicing. PennyMac, a leading US mortgage lender and servicer, used AWS to
process a 3,000-page mortgage application in less than 5 minutes. Previously,
PennyMac’s mortgage document processing required several hours of
reviewing and preparing for loan package approval. Cloud enables lenders to
develop AI/ML capabilities and gain economies of scope applying common
models across their organization for similar processes and tasks.

Cloud also makes it easier for lenders to match costs to the cyclical nature of
new business volumes so that they are not left with unused capacity at the
bottom of the cycle or constrained by capacity at the top. Banks are using AWS
data lake house architectures to develop 360-degree views of their customers
by integrating third-party datasets. This holistic approach to customer data,
alongside AI/ML, is helping underwriters make better credit risk decisions by
using more data and advanced modeling techniques. Cloud technology makes
it easier to create data lakes and simplifies many aspects of data wrangling
from a variety of different sources, bringing analytical data tools and
governance to business users.

For example, OakNorth Bank, a UK-based fintech lender, uses AI/ML to

modernize SME lending in the UK through its banking operations. OakNorth
has created a product from this capability and offers its ONI platform for third-
party banks and lenders to consume and modernize SME lending operations.
Banks are using APIs to build flexible microservice-based architectures on AWS
that integrate with partners to create richer customer-orientated service
ecosystems. This helps banks to build trust, so that lending relationships are
expanded to provide customers with a full suite of capabilities to help increase
loyalty and support business growth.

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Cloud-based APIs are also better integrated with services such as security and
authentication, helping developers to be more productive. For example,
Snapdocs, a US-based real estate technology company, has shortened the
mortgage closing process from 1-to-2 hours to 15 minutes. AWS is a key
enabler of digital change. Feature-rich, flexible, and adaptable, it helps
organizations become more innovative, agile, and data-driven

Case Study:-
Transforming pension fund management with the cloud

Navigating the investment landscape can be challenging for anyone

responsible for managing pension funds. Leaders must keep up with the latest
investment trends and opportunities, all while supporting the needs of
stakeholders. However, traditional investment processes can be slow and
outdated, posing obstacles when it comes to managing large sums of money
on behalf of workers.

What if there was a transformative solution for managing pension funds?

Amazon Web Services (AWS) offers personalized investment solutions for
investment firms using cutting-edge machine learning (ML) technologies. With
AWS, pension fund managers can benefit from improved risk management
through a highly reliable cloud infrastructure and operational support.
Additionally, AWS supports 143 security standards and compliance
certifications, more than any other offering, which can help firms in protecting
sensitive data, meeting compliance requirements, maintaining business
continuity, and more. These factors can help firms minimize financial risks and
maximize investment opportunities.

By utilizing cloud-based services, pension managers can harness advanced data

analytics, gaining valuable insights that inform investment strategies. This
empowers leaders to make well-informed decisions that align with the needs
of stakeholders.

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Pension fund management from past to present

The history of the pension fund industry dates back centuries, but the modern
pension fund industry can be traced back to the 19th century when pension
plans were established for government employees in the United States and
Europe. Today, the pension fund industry is a global industry with trillions of
dollars in assets under management. Before the advent of cloud technology,
pension fund investment firms operated through manual processes involving a
lot of paperwork, phone calls, and in-person meetings. Investment firms
conducted research and analysis to identify investment opportunities; traders
executed trades through brokers and trading floors; portfolio managers
decided which assets to buy and sell; and reports were generally provided
through paper statements or in-person meetings.

As the pension fund industry has evolved over the centuries, so too has the
technology used to manage and invest vast amounts of money. In the past,
investment firms relied on manual processes and paper-based reporting to
make informed decisions about which assets to buy and sell. However, the
challenges facing pension funds today need a more sophisticated approach,
one that uses data analytics and cloud technology to maximize returns while
minimizing risk.

How can cloud technology help pension fund managers?

Pension funds manage and analyze vast amounts of data, such as investment
data, member data, and regulatory data. They need to use this data to make
informed investment decisions, manage risks, and comply with regulatory
requirements. AWS provides a suite of data analytics tools, such as Amazon
Redshift, Amazon EMR, Amazon Glue, and Amazon QuickSight, which enable
pension fund managers to process and analyze large volumes of data quickly
and simply. These tools can also help identify patterns and trends that are not
readily noticeable to human analysts, allowing pension fund managers to make
more informed investment decisions. The National Bank of Canada’s Global
Equity Derivatives Group (GED) used AWS to process and analyze hundreds of
terabytes of financial data, conduct data manipulations in one minute instead
of days, and scale and optimize its operations.

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Pension funds must also manage risk. The complexity of financial instruments
has made it difficult to effectively manage different types of risks, such as
market risk, credit risk, and operational risk. High performance computing
(HPC) on AWS offers cloud-based services that provide access to HPC resources
such as networking, storage, and compute on demand. By utilizing HPC,
pension funds can perform complex risk simulations and stress tests to
manage and mitigate risk more efficiently without the need to manage and
maintain the on-premises infrastructure. For example, the Bank of Montreal
(BMO) used AWS to build an elastic platform for calculating risk metrics, run
multiple risk metrics and regulatory stress calculations in parallel, and scale
computational capacity for future regulatory requirements. Using HPC on AWS,
pension funds can analyze vast amounts of data, run simulations and models,
and identify potential risks and opportunities more accurately. Additionally,
HPC can reduce the time needed for complex calculations, resulting in faster
decision-making and shorter time-to-market for new investment products.
Through HPC on AWS, pension funds can simulate different market scenarios
and evaluate their impact on the fund’s portfolio.

Cybersecurity is another significant challenge for the pension fund industry.

Pension funds deal with vast amounts of sensitive data, including personal
information of members and investment data. As cyber threats become more
sophisticated, pension funds must have robust cybersecurity measures in
place. AWS offers various cloud-based services that can help pension funds
strengthen their cybersecurity strategies. These services include Amazon
GuardDuty, AWS Security Hub, AWS Identity and Access Management (IAM),
and Amazon Inspector. GuardDuty and Security Hub can provide continuous
monitoring of the pension fund’s AWS environment for threats and
vulnerabilities, while IAM allows administrators to manage user access to
resources securely. Amazon Inspector is an automated vulnerability
management service that continually scans AWS workloads for software
vulnerabilities and unintended network exposure.

Finally, pension funds must meet increasing demand for personalized

investment solutions. Members want more control over their retirement
savings, and they expect pension funds to provide tailored investment
solutions that meet their individual needs. AWS provides a suite of services,
such as Amazon Bedrock, Amazon SageMaker, and Amazon Personalize, which
can help pension funds develop personalized investment solutions for their
members. These technologies use machine learning (ML) and artificial
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intelligence (AI) to provide investment advice based on an individual’s goals,

risk tolerance, and financial situation.

What’s next for pension fund management in the cloud?

To embrace the benefits of cloud technology, pension fund managers can

assess the following strategies for using the cloud:

 Establish a digital transformation strategy – Develop a

comprehensive plan for using technology to improve operations, reduce
costs, and enhance the customer experience.

 Invest in data analytics tools – Implement tools such as AI and ML

to help manage and analyze data more efficiently and accurately.

 Prioritize cybersecurity – Make sure that robust cybersecurity

measures are in place to protect sensitive member and investment data.

 Embrace cloud technology – Develop a cloud strategy that aligns

with business goals and objectives and assess the suitability of cloud
providers. Customers can use the AWS Cloud Adoption Framework (AWS
CAF) to identify their cloud enabled strategic business outcomes.

 Provide personalized investment solutions – Invest in robo-

advisory technologies to provide personalized investment advice to
members. You can build a conversational interface such as chatbots and
virtual assistants to provide personalized experience for your customers
using Amazon Bedrock, a fully managed service that makes foundational
models (FMs) from leading AI startups accessible via an API.

 Foster a culture of innovation – Encourage employees to

experiment with new technologies and approaches and provide
resources and support to help them do so. AWS Skill Builder provides
resources and training to help customers acquire the necessary skills and
knowledge to build and deploy applications on the AWS. It offers a range
of learning paths, hands-on labs, and self-paced courses designed to
enhance proficiency in AWS services, architectures, and best practices.

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Conclusion

As the pension fund industry evolves to meet the dynamic needs of their
members, technology can help address some of these emerging needs. AI,
ML, advanced analytics, and robo-advisory technologies can help pension
funds manage data, mitigate risk, improve cybersecurity, and provide
personalized investment solutions. As the pension funds industry continues
to evolve, pension fund managers can embrace technology to provide
better retirement savings solutions for their members

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