As banks strive to digitalize to boost speed, innovation, and growth, IBM Cloud for Financial Services says it can help banks slash development and deployment times while also doubling the IT budgets for customer-facing innovation.
The bold new programs from IBM Cloud for Financial Services extend beyond its banking clients to ISVs and fintechs serving the industry, as IBM’s purpose-built compliance framework is designed to support the broad ecosystem of tech vendors helping banks move into the digital age.
“Among bankers, the main trend is definitely how do you drive more digitalization into your processes?” said IBM Cloud general manager and chief revenue officer Ivo Koerner in a recent Zoom interview. That path to digitalization involves a maddeningly complex web of regulations across banking services and geographies; compliance requirements that are updated frequently and vary widely across countries; and the often-bewildering array of legacy technology that banks still deploy but that were never designed to work in harmony with each other.
As a result, Koerner added, “Banks that are eager to build new digital products and services to keep pace with rapidly evolving customer needs and expectations are hamstrung because their IT budgets are overwhelmed by the need to fund those endless and expensive compliance projects. We’ve always had discussions with banking clients about the compliance and regulatory requirements that they still need to adhere to, but now IT leaders in the banking environment say they are spending 60% to 70% of their budgets just to maintain compliance.”
The forced allocation of two-thirds of precious IT budgets would be a heavy burden at any time, but in these days of rampant disruption, upheaval, and rapidly shifting customer demands, those huge outlays on compliance are stifling innovation and nimbleness.
“That leaves only 30% for innovation, which is certainly difficult, but on top of that, many of the economies around the world are talking about a recession, and those concerns mean the IT budgets overall are getting smaller, and the part that’s devoted to innovation is really small.
“So yeah, I think the pressure on banks to find new ways to innovate is even higher than it’s ever been, and the need for transformation is even bigger than it’s been in the last couple of quarters.”
Compounding that pressure is the pace of change among banking customers, including both consumers and businesses. And if the financial institutions they’re currently working with can’t match that rapid pace, then those banks are in trouble, Koerner explained.
The financial services General Manager and Chief Revenue Officer shared, “Today, your clients are not waiting — they will jump ship, especially in the digital world, far faster than they could or would in the past. In a minute, if they see a benefit in digital solutions, they will move.
“No one is willing to wait here because whatever you are used to as a consumer, you also want to see in the business idea. So that pressure is increasing constantly, and if you’re not innovative enough, you definitely will lose part of your client base.
“And again, coming back to what we said earlier about the recession, the banks are trying to keep as much cash as they can, and as a result, they are not innovating. And that really puts a lot of pressure on their business models.”
IBM hopes to alleviate some of that relentless pressure mentioned by Koerner on a couple of occasions by rolling out a sweeping set of in-depth compliance and regulatory solutions it has co-created with the global banking community.
Koerner continued, “Two years ago, we established the Financial Services Council where we basically invited Chief Risk Officers and CISOs from banks and financial services institutions to give us their feedback on what is stopping you from gaining the full benefits from the cloud in your organization so that you can free up innovation capacity.”
The feedback was immediate and consistent: the burdens of never-ending compliance projects were crippling the banks’ efforts to move at their clients’ speed and become end-to-end digital organizations.
“That’s why we developed the IBM Cloud for Financial Services with a compliance framework that allows faster deployment and gives you a way to have ongoing monitoring with the regulators to show that you are fully compliant in your workloads,” Koerner said.
“And then extending that framework into the entire ecosystem of ISVs and fintechs means they can greatly reduce their time to market for their solutions. So instead of competing with fintechs, we work with them, and we help them, and the ISVs get a faster ROI.”
Sounds good — but just how much faster?
Koerner said that because IBM took the time up front to create its Financial Services Council of 81 banks and has continued to work closely with them over the past two years, IBM Cloud for Financial Services was able to co-create with its Council members compliance solutions that were specifically tailored to the needs of the members.
Plus, it is now working with 50 ISVs whose solutions have been certified, which takes a huge amount of time-consuming work off the shoulders of the banks. So instead of such projects taking months or quarters, IBM Cloud for Financial Services can help banks be up and running in weeks.
“The minute you adhere to the compliance, we basically give the banks the ability to do constant real-time monitoring, which reduces their time to implement a solution to as little as six weeks or at the outside 12 weeks, which is significantly faster to what they had in the past year,” Koerner shared.
In addition to those strategic partnerships with ISVs, IBM also continues to work very closely with the world’s leading systems integrators to drive great outcomes for banking clients by helping them deploy and manage solutions in the IBM Cloud for Financial Services.
All of those ecosystem partnerships have become vital force multipliers for IBM in helping its financial-services clients — as well as those in many other industries — digitalize their operations and build cultures that prize customer-centric thinking and data-powered innovation. In a recent interview with Acceleration Economy’s Cloud Wars, IBM Ecosystem general manager Kate Woolley described the highly strategic nature of its global network of partners. IBM offers some additional perspectives on the value of its ecosystem in this blog post.
By offering that ability to move more rapidly, devote more resources to growth and innovation rather than to compliance projects, and tap into a wide range of ecosystem expertise, IBM Cloud for Financial Services can serve not just as new technology for banks but also as a new mindset, Koerner said.
“It is a new mindset because, first of all, you can optimize the way you onboard and manage third-party risk, and it gives you a better risk posture in your compliance and risk analysis. And that helps create a completely different mindset.
“It is now shifting completely in the discussions we have with IT and with the line of business because they fully understand it significantly reduces their time to market for their new offerings and new solutions.
“And that is resonating fantastically.”
For more details on the specifics of what IBM Cloud for Financial Services can do, please check out this page: https://www.ibm.com/cloud/financial-services.