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DPR case study: Redwood Bank

18/03/2019 11:00:00
News Technology
When it launched in August 2017, Redwood Bank became the UK’s first 100% ‘born in the cloud’ business bank. The bank offers simple and well-designed business lending and savings accounts to small and medium sized UK businesses (SMEs). Redwood’s relationship-based banking model is underpinned by DPR’s award-winning technology.

Background

Redwood Bank’s core values are summed up through its strapline: “It’s about time”.

This frames the Bank’s approach to customer experience and its operations in providing consistent, fast loan decisions and deposit account openings, thereby fully respecting customers’ time.

To support its proposition, the Redwood team recognised that harnessing an outsourced, cloud-based core banking strategy would enable the Bank to implement the advanced digital solutions that it required, without the need to build a sizeable in-house IT team.
 

The opportunity

Redwood saw the opportunity to establish an effective operating model in challenging timescales, by engaging an experienced provider in the UK market.

The Bank was keen to implement an integrated cloud-based core banking solution, operating in the Microsoft Azure cloud, and in conjunction with Finance, Treasury and Microsoft Office 365 functions.

DPR had a strong pedigree, having successfully delivered its lending and savings solutions to numerous banks, building societies and specialist lenders across the UK.

The Bank needed a proven and capable core banking system which was able to manage each stage of its customer journeys, from digital origination through to online banking and account administration. It would also need to provide appropriate regulatory controls and oversight.

The implementation challenge included:

  • A demanding timetable required to meet a fixed launch date

  • First fully cloud-based DPR implementation

  • Compliance with applicable requirements of a UK regulated financial institution.

 

Selection process

Redwood carried out a detailed evaluation process, which considered the technical and operational capabilities of comparable vendors.

A technical proof-of-concept was performed to demonstrate the feasibility of the DPR system running in the Microsoft Azure Cloud.

DPR and Redwood collaborated to assess the capabilities of potential cloud hosting partners of providing a cloud-based operating environment, considering change management, business continuity and cyber security.

As Redwood was the first UK bank to deploy a core banking system in Azure, Microsoft’s Financial Services team supported the project to ensure that the target environment and legal agreements were compatible with FCA regulatory guidance for firms outsourcing to the ‘cloud’.

DPR was appointed as prime contractor for the core banking platform and sub-contracted a specialist infrastructure partner, CSI (formerly Niu Solutions), to support Redwood in the transition of DPR’s software into the Microsoft Azure Cloud.
 

Solution

The DPR platform consists of distinct but integrated modules for origination and servicing. The origination system is responsible for all aspects of on-boarding new loan and savings accounts, providing broker and savings portals, product definition, verification of customer identity and eligibility, and for lending, assessment of affordability, creditworthiness and property valuation.

The servicing system maintains account balances, accrued interest and payments processing. In addition to these core functions, it also includes an eBanking portal, enabling customer account self-service, and a library of wizards, workflows and document templates for account management, transaction posting, redemptions and arrears management.

Redwood’s personnel are able to access the DPR applications hosted in the Azure cloud in Microsoft’s UK-based datacentres via secure access from office, home and other remote locations. Integration with Microsoft Office 365 enables operational efficiencies in managing documents and customer messaging.
 

“The Redwood Bank team saw significant benefits in adopting a 100% ‘Cloud based’ strategy, and is delighted to be part of the first licensed business bank in the UK to fully utilise the Microsoft Cloud platform. We are proud of our achievements in implementing DPR to support the launch of our new bank, with a small internal team and within challenging timescales. We believe that it is beneficial to our customers, partners, colleagues and other stakeholders to share our story.”

Gary Wilkinson CEO and Co-Founder, Redwood Bank.
 

Delivery

Redwood’s implementation project was divided into multiple parallel work streams, including infrastructure and security, product design, risk and compliance, savings and loan origination, account servicing, and regulatory and operational reporting.

Key features were:

  • ‘Launchpad’ programme to accelerate design

  • Fast-paced implementation with parallel work streams

  • Azure platform support from Microsoft.

 

DPR and Redwood adopted a methodology which identified a Minimum Viable Product, in conjunction with Early Verification Testing, which was pivotal in achieving the implementation timescales.

Redwood Bank was awarded its banking licence in early 2017, setting the stage for a timely mobilisation period of just four months, following receipt of its initial restricted banking licence.

“The support of our technology partners, and particularly the collaboration of DPR, CSI and Microsoft, was critical in enabling us to establish a secure, modern digital banking platform, within regulator guidelines, in under six months. Going forward, the DPR core banking platform should enable Redwood to expand its products and operations and allow it to continue to focus on the optimisation of customer experience.” Michael Harriman Senior Advisor, formerly Director of IT, Redwood Bank.

Redwood received Retail Banking International’s “Banking Launch of the Year” award 2018.

The collaboration between DPR, CSI and Redwood was recognised as “Best Use of Cloud” at the Banking Technology Awards, 2018.

The Bank was launched just over 12 months after submitting its banking licence application to the PRA and FCA, and it is considered to be the fastest initial licence-to-launch of any new UK bank to date.

After 18 months of trading, the Bank has welcomed over 2,000 business customers, has already advanced or has currently approved over £100m in loans to small and medium sized British businesses, and has received over £130m of business deposits.
 

"Extremely professional, quick, and a refreshing change from the norm!"
"This is my first case with Redwood, and I am delighted at how smooth and efficient the process has been."
"Quick, easy and no fuss. Many thanks."

Feedback from Redwood customer surveys.
 

Customer feedback has been overwhelmingly positive, and the DPR and Redwood team have plans for enhancing even further the customer proposition, creating more streamlined and customer-focused processes across all of their products.

Redwood Bank is the first UK business bank to be 100% cloud-based. DPR’s core banking platform underpins the Bank’s core business operations, providing bank staff and brokers with a streamlined and efficient platform for on-boarding new applications and administering existing accounts.

 

Extract from DPR case study.
For further information, visit: www.dpr.co.uk.