Need to Know
- EQ Bank is migrating its core banking systems to become the first fully cloud-based bank in Canada.
- This signals a major shift in the financial services industry as more banks look to move away from hosted data centers.
- The move will prepare EQ Bank for the future of open banking in the country, though the Canadian government is still playing catch up on implementing industry standards.
EQ Bank will be the first bank in Canada to be fully hosted on the cloud. The digital arm of Equitable Bank announced they will move their entire core banking system to the cloud, selecting Microsoft’s Azure as the cloud platform for its banking services.
In 2016, EQ Bank became the first banking platform in Canada to launch mobile-first. In the three years following their launch, the bank has surpassed $2.5 billion in deposits, faster than any previous branchless bank in Canada.
According to Dan Dickinson, SVP and chief information officer of EQ, “Moving the EQ Bank core banking system to the cloud is an industry-leading change toward a new future of financial services… We are leaving behind the traditional industry approaches of armchair technologies to innovate faster and serve Canadians better, right now.”
This announcement signals a move toward massive change in the financial services industry. “We’re on the cusp of enormous transformation of banking in Canada,” adds Andrew Moor, president and CEO of EQ. “At EQ Bank, we’re working with world-class partners to evolve our platforms and services, drive industry-leading change, and provide Canadians with a far less complex and much more secure banking experience, while at the same time allowing them to earn more.”
In partnership with Temenos T24 Transact, a core banking software that is cloud-native and cloud-agnostic, EQ Bank will maintain existing products including their completely digital, branchless services and high-interest savings accounts. EQ is also promising to build a better banking service for Canadians by reducing overhead costs for customers, further strengthening security, and creating a more agile banking system that is ready for the next banking innovations—such as open banking.
So what does this mean for open banking in Canada?
Open banking is a framework that would allow consumers and businesses to let third-party companies access their financial transaction data via secure online channels, which would allow companies to design products and services with the data, as well as possibly enable easier account-switching.
And while the fintech industry has been moving quickly, the Canadian government hasn’t quite caught up with implementing legislation and setting industry standards to allow for an open-banking framework. This means customers are left to choose between either the security of a traditional bank or the convenience of a digital bank.
While the change towards cloud-based banking seems to be inevitable, these major banks must be realistic and practical when making the transition.
In the case of TD Bank‘s shift to the cloud, CIO Jeff Henderson says, “It’s about being pragmatic as we go, and it will be even more controlled as we move from here. We have a saying we use for our strategy here. Crawl, walk, run. Take it carefully and understand what we’re doing.”