Bank of America is arguably the most powerful bank in the US, if not the World. As a result, what they do other banks tend to follow. This week IBM announced that BofA is the first Bank to collaborate with IBM on the creation of what should be the first Financial Services-Ready Public Cloud. This announcement is big for several reasons. Banking hasn’t been comfortable with the public cloud due to security concerns, which suggests an off the shelf solution like AWS can’t be adequate. IBM got badly thrashed by AWS, and targeting is arguably the best way for them to fight back. And, finally, folks still follow what IBM does, and this could result in a major change to how other major cloud providers create all enterprise cloud services, package, and sell them.
Let’s talk about all three aspects this week.
I’d just seen Bank of America’s CEO on stage at a Blackberry event in New York, and he spoke to how critical security was for his industry, and he seemed to imply the industry was still underserved by most generic suppliers. Bank of America has long been an IBM customer and advocate, which would indicate they are also an exception to this rule and likely why the two firms are collaborating on a focused Cloud offering.
This industry’s unique needs make it very difficult for smaller vendors or those that don’t understand the unique performance and security requirements of the industry to provide critical solutions for it. This problem is one of the things a focused service can provide, a virtual onramp of services and help that can transform a vendor who can’t play in this large sandbox into one that can.
That’s why a targeted cloud service targeting any industry with unique requirements like government, healthcare, or finance can be such a huge game-changer. It isn’t just about the service itself, it is about using the targeted services and capabilities to bridge the limited resources of vendors who don’t know the industry well enough allowing them to participate in it.
IBM’s Financial Services Ready Public Cloud
Now IBM is one of the leading experts in providing solutions to vertical industries, and one of the industries they are most competent with is Financial Services. Even decades ago when I worked there when a bank said jump, the entire firm would generally respond with “how high.” Some of the most powerful accounts I worked on were Bank of America and the Royal Bank of Canada, and if you wanted to scare the crap out of an executive you reported that one of these accounts had a severity one problem. To say they took that kind of problem seriously was an understatement. For instance, I found that a call center wasn’t taking one of these problems seriously enough, and their entire group got disciplined and managers got fired. In short, IBM takes this segment very seriously.
The way to compete with a dominant vendor like AWS is to target, and that’s what IBM is doing here — using their massive segment knowledge to create an offering that is matched to the unique needs of the segment. But even the most informed vendor can sometimes get it wrong, so it is critical if you want to get it right initially, to partner with a powerful user to make sure what you are building is what they want. And that is where Bank of America comes in. To assure that the industries need for security, compliance, resilience, privacy, and their customers’ satisfaction are all met.
Cathy Bessant, who is the Chief Operations and Technology officer for BofA, appears to agree and is quoted as saying “This industry-first platform will allow Bank of America to use the public cloud, putting data security, resiliency, privacy and customer information safety needs at the forefront of decision making. By setting a standard that addresses the concern of hosting highly-confidential information, we aim to drive the public cloud to a safety level that is unmatched.”
IBM does business with 47 of the Fortune 50 and all ten of the top financial institutions in the world so it makes sense that they’d not only determine that a targeted service would be critical to the financial industry but that partnering with an industry leader was on the critical path to success. Their unmatched skills in terms of security and resiliency coupled with their deep knowledge of Blockchain, their leadership in enterprise-class AI, and their development of Quantum Computing all make them an ideal firm to create a Financial Services-Ready Public Cloud.
This offering not only reflects on IBM’s unwavering focus on the financial industry but Bank of America’s unchanged focus on providing the best and most secure financial services in the segment. But I also think this will force the other major cloud providers to consider also creating focused services that should change the Cloud Services market considerably. IBM has again taken the lead; let’s see who the fastest follower is.