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October 02, 2023

​​Hokkoku Bank reimagines banking innovation, saves 10 percent on costs with Azure and the Microsoft Cloud​

Hokkoku Bank needed to modernize and keep pace with technological advances, but as a regional bank, its resources were limited. The bank laid the initial groundwork for modernization by moving its entire on-premises estate to Windows Server. This created a seamless path to full cloud transformation on Microsoft Azure. Currently, most of the bank’s operations run on Azure, and it plans to move to a fully cloud-based estate. By adopting a wide range of Azure solutions, Hokkoku Bank has been able to stay competitive, reduce infrastructure costs, and streamline processes for greater efficiency.

Hokkoku Bank

“With our old systems, a new deployment took two to three months to get up and running. Now, we just set up in the Azure portal and it’s usable in five minutes.”

Atsushi Shintani, Executive Officer, General Manager of the Information System Department, Hokkoku Bank

In today’s increasingly cloud-based IT world, many businesses are searching for innovative ways to increase their advantages in the marketplace and stand out from competitors. Hokkoku Bank, a regional bank headquartered in the city of Kanazawa, Ishikawa, has occupied a leadership role in the Japanese banking industry by focusing on digital transformation as a core element of the company’s vision and future roadmap.

The bank is bringing about its digital transformation, referred to as “DX” in Japan, by deploying Microsoft Azure at all levels of the company. DX is a countrywide priority in Japan, and the Ministry of Economy, Trade and Industry created a “DX-certified business” designation. Hokkoku Bank received this award for being at the forefront of technology integration and services enhancement in banking, a sector in which technological innovation has been lacking in the past.
 

A cloud journey accelerates with Azure


Hokkoku Bank’s cloud-first transformation is affecting all levels, including internal and external systems and customer-facing capabilities. With the goal of becoming fully cloud-based once the migration is complete, it currently operates in a hybrid mode with some minor tasks remaining on-premises, but its core banking systems and internet banking environments run on Azure.

The bank began its transformation earlier than many Japanese financial firms when it kicked off a collaboration with Microsoft in 2015 by moving its on-premises datacenters entirely onto the Windows Server operating system. Even then, Atsushi Shintani, Executive Officer, General Manager of the Information System Department at Hokkoku Bank, was thinking years ahead. “When we decided to update our systems, we always had the cloud in mind,” he says. The impetus to begin migrating in earnest came when the bank grew concerned about its potential disaster response to earthquakes and its ability to maintain connections between regional branches and facilities that the bank opened in Tokyo and Osaka. Hokkoku Bank decided that Azure best addressed its needs.

Collaborating with Microsoft and a partner, BIPROGY, the bank began migrating its Windows Server–based estate to the Azure platform.  
 

Driving broad transformation with a deep set of Azure offerings 


Today, Hokkoku Bank maintains a range of Windows Server versions in different parts of its estate and relies on an expanded set of Azure-based capabilities in all domains, including using Azure and Windows Server on the back end to control the company’s ATMs. “We developed a process for this in-house, and it currently covers the cash functions at our ATMs,” says Shintani. “We’re also working on developing further capabilities to cover tasks such as customer information updates.”
 

Shintani also relies on the tight interoperability of GitHub and Azure for accelerating the company’s IT team development tasks. “By using Azure, we’ve been able to use tools that we couldn’t before, making our programmers’ jobs far more seamless and easier,” says Shintani. “We can do automatic testing, and we also use the automatic coding features in GitHub Copilot.” Hokkoku Bank uses all the Microsoft 365 products and views Microsoft Teams as a key tool, which the bank has used to transform the traditional communication flow between management and employees. “We consider Teams to be indispensable,” says Shintani. “We have a more open and flat communication structure since adopting Teams, which has helped change the company culture for the better.”
 

Hokkoku Bank takes advantage of the data visualization capabilities in Microsoft Power BI and Azure Machine Learning while storing data with Azure Data Lake. Using Power BI helps the bank analyze and create visualizations that are used internally and externally to directly benefit customers. With the strong interoperability between Power BI and the Azure ecosystem, Shintani’s team has gained an advantage over some other Japanese banks. “Other financial institutions in Japan are doing similar data projects, but many are using more vendor-based systems,” explains Shintani. “We want to do more with our data analysis. When we use Azure-based machine learning, we get more capabilities, avoid vendor lock-in, and can develop our own tools to use in Azure, which is much more powerful and useful.” Using Azure solutions, Hokkoku Bank has developed its own methods for analyzing data to help prevent money laundering and other fraudulent activities. 
 

Reliability and security get a boost in Azure


Microsoft gives the Hokkoku team confidence in all of its interconnected systems, including security. The bank’s IT team relies on Microsoft Sentinel for threat intelligence and comprehensive visibility across its entire digital estate and on Microsoft Defender for Cloud to help protect its Azure and Windows Server environments. Hokkoku Bank values the seamless processes in place for addressing compliance and auditing requirements from the financial services agencies in Japan, and it’s reassured by Microsoft’s international reputation and experience. “Defending our systems takes a lot of resources,” says Shintani. “It’s a relief to be protected by Microsoft’s world-class security, which is something a small regional bank can’t accomplish on its own.” 
 

With the optimization of Hokkoku Bank’s digital estate, costs have decreased, and capabilities have increased since the rollout began. And the bank’s time to market has dramatically decreased by using Azure. “With our old systems, a new deployment took two to three months to get up and running,” shares Shintani. “Now, we just set up in the Azure portal and it’s usable in five minutes. We use only the Azure capacity needed, and we don’t have to match our peak usage. This is leading to cost reductions of approximately 10 percent, and we expect that to grow as we make the system more cloud native.” 
 

A cloud-based future of AI and sustainability


Azure offers potential solutions for many challenges that Hokkoku Bank faces around innovation and sustainability. Shintani anticipates newly evolving AI capabilities for the bank and has already realized gains in customer service using digital assistants. “We used to have to prepare simple sets of questions and matching answers. Now, we’re beginning to use Azure AI capabilities to develop more intelligent chat services and create new functions, all while tying those in with our information in Azure,” says Shintani. “OpenAI’s ChatGPT capabilities have been very effective and impactful, and soon we’ll be able to refer to the bank’s entire support manual for answers.” 
 

Sustainability and confronting climate change are challenges that any expanding business should address, and Hokkoku Bank considers its deployment of Azure to be a powerful step toward minimizing its climate impact. This is a core element of the bank’s cloud migration. “We get a lot of questions from investors about our CO2 output,” says Shintani. “We know it’s an important mission to make reductions.” Shintani points to metrics provided in a Microsoft whitepaper showing that the Microsoft Cloud can be from 22 to 93 percent more energy efficient than traditional enterprise datacenters. “We share these figures, and it’s very helpful,” he says. “It’s an important reason why we want to move our entire estate to the Azure platform.” 
 

Find out more about Hokkoku Bank on LinkedIn and YouTubeTo learn more about Hokkoku Bank’s use of Microsoft Cloud, please read this customer story.

“We have a more open and flat communication structure since adopting Teams, which has helped change the company culture for the better.”

Atsushi Shintani, Executive Officer, General Manager of the Information System Department, Hokkoku Bank

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