BNZ to join Fonterra as anchor tenant in new Azure region

Peter Griffin

Peter Griffin

Microsoft has another anchor tenant lined up for the new data centre region it will open here, with BNZ moving in as part of a major cloud migration push at the bank.

BNZ will lean on the Azure Cloud to undertake the “biggest technical migration project” in its history, said Russell Jones, Executive General Manager, Technology and Operations at BNZ.

“With this agreement, we’ll be able to create better, more reliable and more powerful experiences for our customers and pave the way for new digital tools that will allow them to do more,” he added.

The bank joins Fonterra in the new Azure region, which will consist of three data centres in the Auckland region. Canberra Data Centres, which is part-owned by listed New Zealand infrastructure investor Infratil, revealed last year that it will build two hyperscale data centres in Auckland. Microsoft doesn’t disclose build contracts or the ownership status of its data centres for security reasons, so hasn’t confirmed if CDC’s infrastructure will host its new Azure region. But Microsoft has previously disclosed its relationship with CDC across the Tasman, where CDC’s highly secure data centre are used to supply Azure services.

No date for the new Azure region being up and running has yet been given, but it is expected to be in business by the end of 2022.

1,000 apps in 1,000 days

BNZ and its parent company, National Australia Bank, already had a five-year strategic partnership in place with Microsoft to develop a multi-cloud environment based on Azure. Last July, NAB said it would aim to move 1,000 apps to the cloud in 1,000 days, part of a project dubbed ‘M1K’.

“NAB’s proportion of apps on public cloud will move from one-third, to around 80 percent by 2023,” NAB group executive for technology and enterprise operations, Patrick Wrights, said at the time.

NAB had typically been a stronghold for Microsoft rival AWS and the cloud push with Microsoft’s involvement was seen at the time as a changing of the guard when it came to cloud partners. Still, NAB has made clear it is packaging up its apps in a way that they can be migrated to any cloud platform.

ITNews reported last year that around 30% of those 1,000 apps related to BNZ. Microsoft said it would support BNZ staff with digital training and “engineer a custom cloud-based solution before migrating its core operations to the new data centre”.

Lower latency due to having applications closer to the banks and its customers was seen as a major advantage of being in the local azure region as well as the ability to scale up capacity to meet peaks in demand without any disruption to service, a requirement that was put to the test for many banks during the early days of the pandemic.

The local Azure region is also attractive from a compliance point of view, said Jones. 

“Currently we’re performing much of the physical admin of overseeing multiple datacenter operations ourselves, as well as regular security patching. Now our in-house IT teams will be able to focus much more on delivering and deploying new products to market, while our organisation is even more resilient than before,” Jones added.

So-called ‘data residency’, which sees key customer data stored within local borders, is increasingly a requirement of the financial industry keen to avoid disruption to international connectivity.

Data sovereignty has also been an issue for some of our government departments who are keen to protect citizen privacy and  protect sensitive information. But much government data is already cleared to sit in data centres in Australia. It is yet to be seen whether that data increasingly migrates to Microsoft’s local Azure region.

Microsoft New Zealand Managing Director, Vanessa Sorenson said she couldn’t wait to see BNZ take advantage of the “almost limitless” capacity on offer in the new Azure region.

Be nimble and innovate

“This past year, more than any other has shown how crucial it is for organisations to be nimble and innovate on how they can support customers from anywhere, anytime, however people want to engage with them,” she said.

Having two big corporates anchoring its new Azure region will go a long way to justifying the estimated $100 million investment the new data centres represent. However, the migration to Azure will come at the expense of some existing data centre operators, the impact of which is yet to hit home.

Microsoft reported its second-quarter earnings in late January and Azure was again a highlight, with revenue growing 50% year on year in the quarter, helping boost Microsoft’s server and cloud services revenue by 26% overall.

Microsoft’s Intelligent Cloud division, which includes Azure, is now the jewel in Microsoft’s crown. In the second quarter, it contributed the highest operating income of all of the company’s divisions – US$6.4 billion, 36% of total consolidated operating income.

Peter Griffin

Peter Griffin

Peter Griffin has been a journalist for over 20 years, covering the latest trends in technology and science for leading NZ media. He has also founded Science Media Centre and established Australasia's largest science blogging platform, Sciblogs.co.nz.

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