Microsoft and Silverlake partnership driving transformation for financial institutions in Southeast Asia

“We have a world-class platform, but I think where Silverlake comes to the picture is that they understand the customer in FSIs a lot better than us,” says Laurence Si, Managing Director, Microsoft Malaysia.

Financial institutions are often regarded as one of the most challenging industries to adopt new technologies. Yet, despite the need to adhere to regulatory and compliance requirements, Gartner predicts global enterprise IT spending in the financial industry to reach an estimated US$ 1 trillion by 2028.

A significant percentage of that growth and spending is expected to come from legacy financial institutions in Asia Pacific, with Southeast Asia seemingly focused to invest in more technologies. Tech vendors are aware of the need for banks and other financial institutions to modernize their infrastructure to support more use cases.

With AI clearly on the top of the transformation agenda, having the right strategy with the right vendor and partners is key to ensure projects go beyond proof of concepts. In Malaysia, Microsoft and Silverlake have partnered for about five years to drive the transformation journey for financial institutions in the country.

In a recent interview with CRN Asia, Laurence Si, Managing Director, Microsoft Malaysia and Cassandra Goh, Group CEO, Silverlake discuss more about their partnership, from the challenges to ensuring the customer gets the best results from their investment.

Describe the partnership between Silverlake and Microsoft in Malaysia.

Si: Silverlake and Microsoft have been partners for at least five years now, collaborating mostly in the financial industry. We started the MOBIUS infrastructure modernization. We have major customers in Malaysia who are actually using them as well. Over time the conversation towards what else can we do more, with cloud and now AI coming to the future.

We are now looking at where do we expand our success into a broader market not just in Malaysia, but how do we go to market in the rest of ASEAN, especially looking at where AI is going and how we can use Microsoft AI solutions to enrich Silverlake's whole offering to the market as well.

Goh: It is very important for both application vendors and infrastructure vendors to work closely together. Historically, back in the old days of the AS400 boxes, the choices of tools that you could use were very limited. But when we went into the cloud native open platform area, especially for banking, it got much more complex.

There were many choices, many tools and many different vendors. And I think with AI, it is going to become even more distributed with many more choices. So, in order for FSIs in general, or the banking industry, to have the resiliency that they need, it is important for Microsoft, a hardware vendor and an application vendor to make sure that whatever we build is integrated together. From hardware to software, it needs to be capable of hosting both new AI applications and also new ecosystem partners.

Si: We have a world-class platform, but I think where Silverlake comes to the picture is that they understand the customer in FSIs a lot better than us. For example, when it comes to Copilot and the right AI use case for customers, I think the partnership becomes a lot more impactful that way. We are a technology provider, but they have a very in-depth understanding of the customers that they have, especially if it's related to FSI and to core banking, because of the innovation that is happening there as well.

Can you share more about your recent customer success story involving a local bank?

Goh: There's a leading Malaysian bank that we work very closely together. I would say that it's a very successful business case in that it's helping the bank transform themselves digitally from an on-premises heritage core banking system, which is also ours.

I think more and more existing banks will face this decision in the future. How do you co-exist with your legacy infrastructure and legacy applications with new technology and new platforms?

Silverlake and Microsoft have worked together to create a co-existence model whereby the newest applications will run on the new core. And then over time, module by module, we will migrate over. So, the reliance on the old infrastructure, old applications will also go down.

Si: Banks for the longest time are extremely conservative. They're running in an environment that's highly secure. There's a key requirement of staying in-country, especially due to data sovereignty requirements and all the guidelines. We are indeed at an inflation point, especially with our upcoming Malaysia-West region launch as well.

We addressed a lot of that data sovereignty and the regulatory requirements. I would say this is definitely the right time to look at modernizing our platform as well.

Obviously, there are some customers who are at the early stage, but we are definitely seeing more and more of this coming as well. So, I think the timing of this partnership is perfect because we are definitely at an inflation point. And AI is accelerating the conversation 10 times more as well.

How did Microsoft and Silverlake address the customer’s pain points?

Goh: It's a parallel effort. Historically, when banks buy, they buy from in-file vendor, and they buy from application vendor. But when it came to really sizing up the project and delivering and fine-tuning, our teams have to work very closely together.

Because it's not that easy to just buy a new cloud box when you already have other things in your bank. So, when it comes to meeting the enterprise architect for a bank or proposing how we really want to solve it, both teams have to get together to make sure we are not making things worse by having a new box and a new application. It's about the wiring.

SI: The conversation started with customers reaching out to their software vendor. In this case, it was Silverlake on how we drive transformation and move to a new platform as well.

And sometimes there will be customers who come to us and say, hey, can you recommend, or can you go back to your previous software vendor and see how you can drive that whole transformation as well. Then there's a third option where I think if you look at the previous two, I think the one that drives the highest chance of success is the one that we both, the software vendor and cloud provider like us working together from day one and approach the customer as one voice. I think this way you see a higher rate of success as well.

The collaboration, I mean, let's not kid ourselves, driving platform transformation or cloud transformation or AI transformation, none of that is an easy task.

And if you do it in a complete silo, the chance of failure is very high as well. And I think this way the joint messaging and the joint engagement, from day one is important as well. And the earlier we do it, the better it is.

Do banks need to completely modernize in order to use AI, or can they still rely on their mainframes and legacy infrastructure?

Goh: Ideally, you want to modernize your entire infrastructure. There is a cost to managing two very different things. But for us, it's doable.

We can help you coexist between both, and we can also expose old and new to AI. However, if you can stomach the risk of a big bang migration, do the big bang migration. Because then you don't have to maintain an old system and the underlying cost of maintaining that system and then try to manage all the new things.

Si: I don't think there's anything wrong in either approach, be it the hybrid versus big bang approach to the cloud.

I think we have to do what's right for the customer that the bank is serving as well. Given that this is a highly complex transformation, you need to make sure that you have all the foundation pieces put in place on day one as well. You need to make sure that you have the right partner that's put in place as well.

You can't choose a cloud provider and a software vendor that are just having a very transactional relationship. That also will amplify your risk as well. So, there's a lot of components.

You also need to look at what your appetite for change is, how fast you want to try to change. Is it a 10-year journey or a 5-year journey? Some people say 3 years. So, I think there's a lot of things to consider as well.

Every customer has a very different kind of environment too. But the bottom line is customers, including FSI, are looking for transformation, looking for new innovation, looking for a new way to provide new experience to their customers.

Even people who in the past tended to be technologically conservative are now moving ahead with AI innovation to drive the rest of the other companies forward. Because they do recognize that AI is increasingly becoming a mainstream conversation as well. If you want to innovate and you want to either defense or attract new customers, you need to consider AI.