Financial Services Firms Speed up the Move to Cloud and AI to Meet Customers’ Digital Demands

Today financial services providers find themselves in the midst of transformational change, spurred by rapid technological innovation and quickly shifting customer preferences.

Banking customers increasingly want the speed, instant gratification, convenience and customized service that digital provides. The number of digital banking users will jump 54% to 3.6 billion in the next four years, according to a March 2020 survey by Juniper Research. The COVID-19 pandemic has accelerated this shift as customers favor contactless transactions. Mobile banking registrations doubled and mobile banking traffic jumped 85% in April, according to a study by Fidelity National Information Services.

Whether it’s an equity trader buying a stock, a consumer swiping a card at the mall, or a customer at the ATM, the digital experience is critical to maintaining the relationship. Uninterrupted service is table stakes. Online-only financial services providers have staked their success on services that rely on continuous technological innovation. That’s ratcheting up the pressure on all financial institutions to modernize their applications and speed up their digital transformation.

Even though they have been at the forefront of developing digital applications for consumers the toughest challenge of financial institutions’ digital journey lies ahead of them. Shifting core systems to the cloud may be the only way to stay ahead of emergent rivals, but it can only be done in the context of protecting customer data and complying with regulations.

Financial companies’ legacy systems are built to meet regulatory requirements about how personal financial data is captured, accessed and stored, requirements that can vary dramatically from state to state or country to country. Security design that relies on closed systems complicates a secure move to the cloud.

“Our clients are recognizing these are no longer excuses for delaying the transition,” says Hillery Hunter, VP and CTO of IBM Cloud. “As they step up their digital transformations, we are seeing a mix of strategies that include public, private and hybrid cloud solutions.”

Bernard Gavgani, CTO of French bank BNP Paribas, discusses the challenges of migrating core banking systems to cloud

Three recent announcements highlight how financial institutions around the globe are being drawn to flexible cloud and AI strategies to customize their digital transformations. All three are relying on the deep industry expertise of IBM Services to implement bespoke strategies using IBM and Red Hat technology.

Banco Sabadell’s subsidiary, Sabadell Mexico is using a public cloud strategy. As the country’s first exclusively mobile bank, 80% of investment goes to technology that supports innovation and business continuity. Among these technologies is IBM’s API Connect, which helps create a workspace for fintechs and large companies to collaborate and create new online financial services and apps. In order to comply with local regulations and still be able to modernize applications and expand its banking as a service model, Sabadell Mexico has chosen IBM public cloud to host its IT infrastructure using Red Hat Enterprise Linux. Its longstanding relationship with IBM Services made IBM the logical choice for implementation of its cloud strategy.

“Being pioneers in a bank as a service model has represented a great challenge that required IBM's extensive industry experience,” said Fernando Boza, COO at Banco Sabadell. “We have chosen IBM as our global technology partner to support the development of a modern IT infrastructure based on IBM Cloud, which allows us to continue offering better services and improving client experience.”
 

IBM Services helps Banco Sabadell reimagine service for Mexico's first true digital bank

With nearly half of its 15.5 million customers using digital services, CaixaBank, Spain’s third largest banking group and biggest digital bank, cannot afford to lose its edge in innovation. Having already moved 50% of its core banking workloads to its private cloud, Caixa’s taking a hybrid cloud approach. It works with the bank’s legacy systems while taking advantage of the scalability of public cloud. With IBM Cloud Pak for Applications running on Red Hat OpenShift, Caixa can manage old and new workloads across its cloud infrastructure and still meet compliance requirements. It is deploying Spain’s first financial services virtual assistant, using Watson AI technology to manage more than 1.5 million client conversations a month. Caixa is focused on gathering deeper insights from data to deliver better customer experiences, and exploring quantum computing and blockchain solutions with IBM Services using IBM technology.
 

CaixaBank teams with IBM to speed digital transformation with hybrid cloud

The tech-savvy customers of Korean credit card company Lotte Card, are demanding ever-increasing levels of personalization and 360-degree access to credit card services. To meet the digital demand, Lotte will use technology from IBM and Red Hat and work with IBM Services to transition its entire enterprise system to a managed private cloud.  By simplifying its IT Infrastructure, the strategy should reduce costs and risk. It will also help Lotte achieve greater transaction visibility, scalability, security and speed.

These companies join financial services providers such as BNP Paribas, Banco Santander, Westpac, and others in pressing forward on their cloud journeys using IBM technology and IBM Services’ industry and implementation expertise. To keep pace with our financial services clients’ needs, last year IBM announced its design of the world's first financial services public cloud to help address their requirements for regulatory compliance, security and resiliency. IBM’s acquisition of Spanugo, in a deal announced June 15, 2020, will further enhance it's security and compliance capabilities in the cloud for highly regulated industries.

Financial services providers share a common goal: expand their capacities to develop innovative products and “sticky” client services using advanced technologies like AI and blockchain. But each of their paths is unique. 

IBM’s flexible approach to navigating the cloud and AI journey has convinced 19 of the top 20 Fortune 500 banks and financial institutions to use IBM Cloud. The company’s century of experience working with financial services clients has shown that each enterprise needs to determine its own roadmap to digital transformation.

“We see clients drawing on all the tools in our kit from IBM public cloud that incorporates all of our trusted security, to Red Hat OpenShift, to Cloud Paks, to co-developing private cloud solutions with  the deep expertise of IBM Services and cutting edge AI and other technologies developed by IBM Research,” says Hunter. “These innovations helped us create a public cloud specifically designed for financial services companies, incorporating the security and regulatory compliance features they need to move their mission critical applications to the cloud. We are prepared for the journey, wherever our clients want to go.”

Hillery Hunter, IBM Cloud CTO, and Jason McGee, IBM Fellow and VP, IBM Cloud, discuss the financial services-ready cloud