- IBM, working in collaboration with Bank of America, has created a public cloud that is tailored for financial firms.
- The new public cloud aims to ease security and resiliency concerns that many on Wall Street still have when it comes to using the technology.
- Bank of America spent 18 months working with IBM on developing the cloud and more than 400 controls for users to manage and oversee it.
- The bank had long resisted such a move, but now plans to eventually put customer data in IBM’s cloud.
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IBM is looking to speed Wall Street’s adoption of the public cloud, and it’s collaborating with perhaps the unlikeliest of allies to do so.
The tech giant has designed a public cloud aimed at meeting the needs of financial firms, built in collaboration with Bank of America, one of the industry’s longest holdouts from using the tech. And the bank, which has spent roughly 18 months helping IBM develop the cloud, will be its first customer.
Wall Street represents a huge opportunity for public cloud providers, albeit one incumbents like Amazon Web Services, Microsoft, and Google have not fully tapped into. While firms are increasingly investing more of their tech budgets into the public cloud, the industry has stopped short of mass adoption.
Despite the cost savings and innovation benefits they might achieve, most financial firms have hesitated to move critical tools and services or customer data into public clouds because of fears of security or resiliency.
Arvind Krishna, senior vice president of cloud and cognitive software at IBM, told Business Insider that his company’s public cloud will look to alleviate those concerns by offering customers insight into how the cloud was built, and is operating to ensure it meets financial firms’ high standards.
That approach, he added, will serve as a differentiator for IBM amongst the cloud providers.
“Transparency is the best antiseptic,” Krishna said. “It’s not just a question of, ‘Hey, trust me I’ll build it.’ … That I think is a big difference, and that is unique here, and that is perhaps not being met by the others.”
BofA a valuable collaborator for IBM
Bank of America set the bar high for IBM, Krishna said, noting the bank had more stringent requirements than anything he and his team had seen from regulators. The level of detail and scrutiny needed to make Bank of America comfortable with the product led to the development of more than 400 different controls around how the cloud could be managed, he added.
It shouldn’t come as a surprise, as Bank of America has been among the most vocal on Wall Street in its resistance over moving to the public cloud.
Instead, it’s focused on building out its private cloud. The seven-year journey of moving 80% of its workloads to the private cloud resulted in $2 billion in annual infrastructure savings this year, a point CEO Brian Moynihan was all too happy to point out on a the third-quarter earnings call in October.
But Moynihan also hinted that BofA would likely shift to the public cloud at some point in the future as it becomes a cheaper alternative, telling analysts the firm is “working with potential providers to take the next step.”
“We have to make sure that the external providers are safe, sound, leave the data just for us to use for our customers, don’t mix with other people’s data, etc.,” Moynihan had said on the call.
“We don’t need to own the hardware. We just need to find out who can provide it the right way,” he added.
To be clear, there is no financial arrangement between the two sides. Bank of America served only as collaborator, and will not be commercially incentivized to grow IBM’s cloud.
Howard Boville, Bank of America’s chief technology officer, told Business Insider a motivating factor was the desire to be able to more seamlessly work with vendors that choose to host their tools or applications in the public cloud.
Currently, roughly 10% of the third-party applications Bank of America uses reside in the public cloud, also known as software-as-a-service (SaaS). Each one is treated separately to ensure the proper security and controls were in place, thereby slowing down the pace at which the bank could try out new things.
“In the past, every single new partner that we onboarded required a lot of very unique processes to get them onboarded and a lot of time as well,” Boville said. “We want you to make it more efficient. We want to ensure that we could consume innovation from these Software as a service companies far more quickly than what we currently do to and integrate them in a connected fashion.”
Eventually, customer data will be put in the public cloud
Bank of America won’t just be looking for vendors they hope to work with to host their solutions in IBM’s new cloud. The bank is willing to put its money where its mouth is by hosting some of its own applications in the cloud.
Boville said initial tools the bank will look to move onto IBM include complex and large financial calculations for risk management. Financial firms stand to benefit from moving risk applications in the public cloud, as it allows them to only pay for increased server space when they use it — such as times of extreme market volatility — as opposed to all the time.
That’s only the first phase, however. Boville said once the bank is fully satisfied with how the controls are functioning it will look to move customer data into the public cloud.
“As we go through each milestone, and we get a degree of evidence that we are meeting all of those controls in the same way we look to meet our controls in our internal cloud, we will then start to put different types of what you call applications, workloads and data into the IBM cloud,” Boville said.
To be clear, Bank of America’s private cloud, which the bank took a $350 million charge for in 2017, will still get plenty of usage, Boville said. Large companies will always have the need to store certain data or applications internally.
Boville couldn’t give a specific percentage of what will remain on the private cloud versus what will move, but said currently the bank is evaluating some applications it believes could be a good candidate to sit on the public cloud.
“There will always be a need for our private cloud,” Boville said. “But we don’t believe all the applications that we currently have need to sit within our own physical data centers and our own physical hardware.”
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