Finra and AIG Reap Benefits from Cloud Migrations

AIG’s Jim Gouin had a problem. The insurance giant had made significant investments in different ways to gather data, but it still needed to find one critical piece of the puzzle—a way to actually use that information, and filter it through to the business lines that needed it.

“Data has always been important for the insurance industry but it’s even bigger now. We invested in tools to get different data that we need to pull in for analytics,” Gouin, chief information officer for the Americas and the global claims business at AIG, said. “But what use is that data if we can’t bring it into the organization and have the agility to work with it?”

To solve the issue, he turned to Amazon. Or at least, Amazon’s cloud services. Gouin said that the service has become a key component in AIG’s digital transformation for claims, as it offers increased business agility, reduced information technology spending as a whole and provides the firm with the ability to use and experiment with emerging technologies, including machine learning.

AIG worked with consultancy Deloitte as part of its migration to the cloud, which meant moving critical and complex applications, including legacy databases. Despite the operational risks attached to such a move, it was necessary—the cloud, Gouin said, is one of the technologies that are changing the industry.

“There are technologies that are coming into the marketplace today that are driving and influencing business strategy,” Gouin said.

Speakers at the Amazon Web Services (AWS) Summit held in New York on August 14, including Gouin, said industry players are also using the cloud for more nuanced requirements. This includes the construction of so-called “data lakes”, and efforts to make information more easily accessible for analytics.

Part of the problem facing financial institutions today is that there is simply too much data. That creates issues for areas such as reporting, when firms have to figure out how to access and gather the right kind of data for specific purposes. For the Financial Industry Regulatory Authority (Finra), the answer was to create a data lake on a cloud infrastructure, which allows users to search for the information that they require in a more intelligent fashion.

Building this lake was no small challenge for the regulator. John Hitchingham, director of performance engineering at Finra, explained that its legacy infrastructure at the time could not keep up with the pace of data growth, on a panel at the same event.

“One of our challenges was the legacy infrastructure did not scale well,” he said. “We were seeing processing spikes and with the growing data volume, there were higher maintenance costs involved.”

As a regulator, Finra collects data from the entities it regulates and is mandated by law to store that information, accessible on request by analysts.

Once more, it turned to the cloud, using the power of the technology to create its managed data lake. Hitchingham added moving to the cloud allowed the firm to remove silos for data and have one repository for the information it gathers, while removing the laborious process of having to go through multiple tabs in order for people to gain access to the information they require. Moreover, the move has ended up saving the regulator money.

“In the end, it gave us a 30 percent cost reduction and became a more effective data storage strategy,” Hitchingham said.