Multi Cloud Becomes The New Norm For Banking

Multi-cloud for banking has moved from an oddity to a popular buzz term in the course of just a couple of years.

But the journey is just getting started, said Shanker Ramamurthy global managing partner banking and financial markets at IBM Services and president of IBM industry Academy. Banking regulators are growing comfortable with cloud implementations and even requiring multi-cloud in some cases, so if one cloud provider fails the other can take over.

“We believe that we are only 20% of the way to the hybrid cloud journey. For an industry like financial services, much of the mission-critical regulatory compliant highly secure environments and workloads are going to migrate to cloud.”

Late last year IBM announced a public cloud for financial services that helps “address the regulatory compliance, security and resiliency requirements impacting financial institutions. It’s the only public cloud platform with a policy framework purpose-built to support financial services regulatory workloads with proactive and automated security, while leveraging the industry-leading encryption services of the IBM public cloud,” as the company said in its announcement.

Multi-cloud for a single application, like Temenos is fairly new, but banks and other firms, and even individuals, have been using multiple clouds for years every time they turned to Salesforce, Office 365, Workday or Xero accounting software.

“The typical large bank is already grappling with multiple cloud environments, private and public, and has to decide which workflows to put where, how to manage the complexity and avoid vendor lock-in.”

In early June IBM announced that Banco Sabadell, the first 100% mobile bank in Mexico, will host its infrastructure on the IBM public cloud and use Red Hat Enterprise Linux to modernize applications and deliver innovative services to its customers.

CaixaBank, a leading financial institution in Spain and Portugal, serving more than 15.5 million customers, will use IBM Cloud Pak for Applications running on Red Hat OpenShift to manage workloads and applications across its overall cloud infrastructure. The bank serves more than 6.5 million digital clients and its AI virtual assistant, built with IBM Watson, conducts more than 1.5 million chats each month. 

“The open cloud environment will allow the bank to accelerate its innovation and offer a more agile way to bring new digital services to its customers with added flexibility and security,” said Juan Zufiria, senior vice president for IBM global technology services.

Banking will become more digital because it has to, Ramamurthy said.

“Winning in a world of hyper competition and low interest rates means our clients, almost to an enterprise, are fundamentally rethinking their workflows to become more and more digital,” said Ramamurthy. “Digitalization is not an option.”

Covid-19 has sharply accelerated the move to become more digital.

“Three years of digitalization happened in 3 months, with more machine learning and artificial intelligence (AI),” he added. “If this continues for 12 months, you could see a decade’s worth compressed into a year. The digital trends will continue to accelerate. The future is going to get invented faster.”

People will remain important, but they will play a smaller role in routine transaction processing, which can be done better by computers, and do more exception processing. How they work, and where they work, will change.

“Bankers around the world have told me productivity has gone up with work from home, although come also report work fatigue from employees who no longer have a commute home to break off the office day.”

As, or when, we come out of the pandemic, work will look different, he said.

“When you get to new normal, it will definitely be new, not the old normal. We will be much more comfortable with a range of work styles. Digitalization and remote working won’t replace the need for people to physically be together to collaborate, but that may become part of what we do rather than the only way we work. Chances are international travel is likely to be reduced for some time and for multiple reasons — it’s more economical and less wear and tear on the individuals who do a lot of this travel. It will be a combination of efficiency, cost, lifestyle and greater productivity. Still, events like Sibos (the SWIFT conference) will be eagerly awaited. Human beings are tactile animals — nothing can replace physical collaboration.”