For MoneyGram International, migrating workloads from the mainframe to the cloud has been a boon for the bottom line \u2014 and a lifeline against increasing market disruption from digital money-transfer upstarts.\n\nAs expected, operating in the cloud has enabled the 80-year-old company to significantly reduce the cost of running its data center in Minneapolis. It has also increased top-line revenue by enabling MoneyGram to execute far more transactions in the 200 nations it serves \u2014 exceeding the volume of business its infrastructure could handle in the past, says CTO Joe Vaughan.\n\n\u201cWe were maxed out on our on-premise data center as most organizations get,\u201d Vaughan says, noting the company now enjoys bigger business bumps during the holiday season when customers send cash gifts and end-of-year spending increases. \u201cWe\u2019ve had our highest volumes ever in the 4th quarter. Our executive team came to me after and asked me how that was possible. The answer was the elasticity of the cloud. We were able to ramp up on the technology side.\u201d\n\nThe Dallas-based money transfer service provider continues to derive roughly half its annual revenue from traditional sources: international money transfers at retail storefronts and customers paying down payments for cars and rent by purchasing money orders. For example, in Mexico, the company\u2019s market remains 95% cash pickup.\n\nBut the development of new app stacks atop the core application used at retail store point-of-sale kiosks and versions for iOS and Android will allow MoneyGram customers to transfer money from PCs and smartphones, a key advancement for the company as the flood of banks, fintechs, and apps such as Apple Pay, Venmo, and Cash compete for its legacy business, Vaughan claims.\n\nMoneyGram\u2019s IT makeover\n\nWhen CTO Joe Vaughan joined the company two years ago, MoneyGram moved roughly 8% of its workloads to the cloud. Then after going on COVID hiatus and re-opening, MoneyGram needed Vaughan to accelerate the process, which he did with a few adjustments.\n\n\u201cOur cloud journey continues to mature,\u201d says Vaughan, who decided to modernize 75% of MoneyGram\u2019s microservices in Kubernetes but not all applications out of the gate. \u201cWe\u2019ve made a little progress, but we\u2019re still toddlers.\u201d\n\nStill, more than 90% of the company\u2019s workloads are running on Google Cloud Platform and AWS. The last 10% still run on the mainframe, but Vaughan plans to phase that out and modernize the company\u2019s legacy applications for the cloud using a combination of microservices, serverless technology, DevSecOps practices, and lift-and-shift strategies.\n\nVaughan\u2019s multicloud strategy is targeted to grow revenue and profits. Much of the traditional transaction processing is performed by eight core applications, such as Oracle Fusion running on AWS. To automate backoffice functions, such as payments and receivables, the IT chief is using UiPath.\n\nSimultaneously, MoneyGram is adding or replacing legacy applications such as Cognos and moving to Power BI and Tableau, as well as Google Analytics and Looker on GCP, to generate new business insights and create new value streams.\n\nThe third aspect of Vaughan\u2019s cloud strategy is adopting more SaaS solutions, such as Salesforce to manage MoneyGram\u2019s call center, which supports agents at retail locations and customers from PCs.\n\nThe company is ahead of schedule on the cloud front \u2014 and it is paying dividends in terms of evolving MoneyGram\u2019s business, Vaughan says. \u201cWe\u2019d set a goal as an organization to get 50% of our international money transfers onto digital platforms by the end of 2024. We passed that goal at the end of the first quarter [of 2023].\u201d\n\nBolstering business, building opportunities\n\nBut it\u2019s not just about digitizing money transfers. Vaughan says being on the cloud gives MoneyGram a better understanding of its customer populations and how precisely to market to them \u2014 as well as the ability to innovate new products to create new data and revenue streams.\n\nWithin the past year, MoneyGram has built a product management team to develop new businesses and do more with traditional lines of business using advanced tools such as analytics and chatbots. For example, using Google Analytics, the team has gained deeper insights into its customer base.\n\n\u201cWe have a population of customers that come to us for one-time money transfer and never come back. We have a population of customers that do money transfers every day. We are able to use analytics and some AI tools to provide a differentiated experience for these consumers,\u201d Vaughan says, pointing to innovations such as enhancing its loyalty program and improving targeted marketing. \u201cAs a result, we are reducing our cost of customer acquisitions or capex costs.\u201d\n\nAs for AI chatbots, Vaughan didn\u2019t see much of a business case prior to using them. But that has changed. \u201cWe have a number of consumers that are choosing to use chatbots to get the status of their transfer or requesting rates. It\u2019s a great efficiency tool,\u201d he says.\n\nMoneyGram is also entering new markets as it modernizes, partnering with Stellar Development to engage in the crypto-currency space with an eye toward allowing customers globally to buy and sell crypto-currency and convert currency to crypto and vice versa. \n\nA third area of focus is fighting fraud and ensuring regulatory compliance. For example, MoneyGram is using analytics to ensure that businesses using its service are licensed. One major benefit to date is flushing out fraudsters and detecting anomalies, especially important in complying with various global regulations.\n\n\u201cIt\u2019s a constant game of cat and mouse,\u201d Vaughan says of fraud and stolen identities. \u201cAs we got digital, managing fraud can be challenging, even in the US and Europe.\u201d\n\nVaughan says digital growth tends to reduce traditional revenue and margins but MoneyGram is experiencing increases in its traditional business and new revenue from its crypto-currency service, which is still under development.\n\n\u201cWe allow wallets to subscribe to our core. These wallets can help consumers and other countries buy and sell US stable coins tied to the US dollar,\u201d he says. MoneyGram is also enabling customers to buy Bitcoin and Litecoin; while in preliminary stage, these services are adding additional revenue steams and opportunities.\n\nThe last mile\n\nModernizing the final 100 services in Kubernetes is still on Vaughan\u2019s to-do list. Even with an IT team that has increased from 350 to 520 (including contractors) over the past two years, to enable visibility and monitoring, lifecycle management, cluster standardization, multi-cluster access management, and auditing has required bringing in Kubernetes expertise.\n\nTo that end, MoneyGram partnered with Rafay Systems in January 2022, leveraging its Kubernetes Operations Platform to accelerate its application migration to the cloud.\n\n\u201cMoneyGram\u2019s aggressive modernization goals required a solution to help them move quickly to the cloud, scale operations with a small team, and do so with the highest level of security, given the particularly sensitive nature of MoneyGram\u2019s data,\u201d says Rafay Systems CEO Haseeb Budhani. \u201cWe helped MoneyGram move to the cloud more quickly by removing the complexities of Kubernetes.\u201d\n\nIt\u2019s a heady balance, to build new business models while preserving MoneyGram\u2019s bread-and-butter business, Vaughan says.\n\n\u201cOur digital transformation is not just about a technology change but changing the way we as a company think and act \u2026 teaching my team to have a cloud-first mindset,\u201d Vaughan says, adding that training his developers to change how they do everything is not easy. \u201cIt\u2019s a major cultural change to tell my team to go and rewrite all of our DevOps software pipelines so that we can deliver higher-quality software faster.\u201d\n\nAccording to IDC\u2019s Cloudpath survey data, payment processing is the most frequently cited workload that financial institutions have deployed in the cloud so it\u2019s a no-brainer that a firm like MoneyGram has invested in cloud computing.\n\nAaron Press, an IDC research director who specializes in global payment strategies, says rewriting the software and moving to a modern cloud architecture represents an investment in the future for a company that will be under continuing duress due to increasing competition and a dated business model.\n\n\u201cThere\u2019s no question that the legacy remittance market is under pressure from fintechs, especially as the market becomes more fragmented,\u201d Press says. \u201cThe incumbents will need to build on their legacy advantages of a broad range of services and strong physical networks, and add significant innovation in technology, products, and business models if they are going to remain relevant in the long term. \u201c\n\nThrough his cloud migration, Vaughan is betting that MoneyGram has.