Q&A: Hillery Hunter on the Latest developments in IBM Cloud for Financial Services

IBM has announced that BNP Paribas will join a growing ecosystem of financial institutions and technology providers adopting IBM Cloud for Financial Services. In addition, the news marks a milestone in IBM’s collaboration with Bank of America, with the availability of the IBM Cloud Policy Framework for Financial Services.

Hillery Hunter, IBM's VP and CTO, IBM Cloud, explains what the news means for these banks and for the financial services industry.

What’s the significance of today’s announcement about the IBM Cloud for Financial Services?
To me, it’s about momentum and investment.

Today’s announcement marks some significant additions to our financial services cloud ecosystem, and it’s a very important milestone in the migration of the financial services sector to the cloud. BNP Paribas is the latest global bank to sign on, and our network of Independent Software Vendors (ISVs) is now more than 30 strong and growing including partners like Adobe and VMWare.

That’s the momentum piece, but the initial investment happened in 2018.

It’s been clear for several years that our banking clients wanted to make the jump to cloud. They saw it as the best way to deliver the kind of services their customers are demanding – banking transactions anywhere at any time, stock trades in the blink of an eye – all the things that public cloud enables so efficiently. These days the digital interface provides the bulk of a financial institution’s client interaction. It’s how the relationship is built and maintained, so it has to be seamless. Aside from the very largest, banks cannot do that on a private cloud alone.

Given that banks handle their clients’ most sensitive data, the conundrum was how to provide this level of service in a hybrid cloud environment so that they don’t need to sacrifice security, while maintaining the strictest regulatory compliance. IBM has a unique window into financial services based on decades-long relationships across the globe, and that gave us a deep understanding of the issues. So, about a year and a half ago we started working on a public cloud that could provide the transactional flexibility and speed financial services clients want, in a secure, compliant environment.

That was the beginning of the drumbeat.

In November of last year, we announced we are designing the world’s first financial services-ready public cloud, and Bank of America had signed on as a collaborator. As more global institutions are signing on, we continue to invest in both the technology and the ecosystem that will keep the IBM Cloud for Financial Services secure and up to date on regulatory requirements.

IBM and BNP Paribas had an existing relationship. So, what’s new?
This announcement is the next step. BNP Paribas is one of the largest banks in Europe. By adding its weight as our European anchor client, the bank has underscored the importance of migrating to the cloud. Today BNP Paribas is taking a leadership position on how European financial institutions can move securely to the cloud, just as Bank of America is doing as a key collaborator with us on this mission. Additionally, MUFG Bank plans to explore the deployment of IBM Cloud for Financial Services in Japan.

BNP Paribas is spending more than €6 billion annually on IT to drive innovation in the banking space. Over the past several years the bank’s approach to adopting a hybrid cloud strategy has evolved. It began its digital transformation by working with IBM to create a dedicated cloud. The next step is adoption of shared public cloud using IBM Cloud for Financial Services, which has the controls framework and industry-leading data-protection capabilities to meet BNP Paribas’s exacting standards.

Why would a bank want to encourage its competitors to join the same cloud environment?
There is economic advantage to everyone in sharing space. You pay only for what you’re using, not all of it. BNP Paribas and Bank of America have committed, and their partnership with us will help create technology and solutions attractive to others. The more people participate, the more innovation and co-creation can flourish. More ISVs will join, increasing the number of available services, and enabling the faster refresh of the technology. The public cloud enables collaborative innovation and also, the opportunity to set the right standards.

How has IBM made IBM Cloud for Financial Service Secure?
With a focus on data protection, we’re leveraging Hyper Protect Crypto Services and Keep-Your-Own-Key encryption capabilities – giving the customer full control of the keys used to encrypt its data. We literally cannot see our clients’ data. Our data protection capabilities are rooted in over a decade of IBM industry-leading work in confidential computing, and we’re excited to leverage this core technology in a way so vital to our clients.  It’s important not just to talk about security, though, because IBM Cloud for Financial Services is an end-to-end compliance program, encompassing many regulatory considerations over and above security.

How can IBM’s Financial Services Cloud help ensure banks comply with regulatory requirements as they move their data to the cloud?
A unique feature of the IBM Financial Services Cloud is its emphasis on regulatory compliance. It uses the IBM Cloud Policy Framework for Financial Services, developed by IBM, Bank of America and Promontory, a global leader in financial services compliance consulting. The framework establishes a set of cloud security and compliance control requirements – more than 400 of them – to operate securely with bank sensitive data in the cloud.

We have also announced the formation of the Financial Services Cloud Advisory Council to help us bake ongoing regulatory compliance into this framework. The Council will work to bring together major financial institutions to help evolve our cloud security and keep up with compliance in this highly regulated industry. Bank of America and other global banks will be the members of this council.

We are also launching IBM Cloud Security and Compliance Center, developed in collaboration with IBM Research. The built-in tool will enable clients to continuously monitor and enforce their security and compliance across their workloads, and provide a seamless, automated process for improving cloud security. With the recent acquisition of Spanugo, the IBM Cloud Security and Compliance Center will include the ability to equip the developer workflow with automated security and compliance checks and will enable our clients to generate views and reports needed for risk and compliance purposes.

We’ll also be launching the IBM Research Cloud Innovation Lab to enable financial services clients and ecosystem partners to influence and benefit from the emerging cloud technologies being created at IBM Research.

How has COVID affected banks’ journey to the cloud?
What we have lived with banks in the last few months has been incredible. Companies everywhere had to re-think their business models to survive in a world where digital interaction with customers is the new norm. Everyone had to digitize and move to modern cognitive solutions. We knew digitization would happen over time, but now it’s on a much faster timeframe. That digital imperative is driving the financial sector to a hybrid cloud adoption model.