IBM, BoA developing financial services-ready public cloud

IBM says for its Financial-Servicesready public cloud it will add a stringent, financial services policy framework, financial-grade resiliency and offer a large catalog of financial ISV and SaaS solutions. Neither IBM or Bank of America named these ISV or SaaS players, but I have a sense they will be current financial ISVs plus a crop of FinTech startups. You see, many financial ISVs have to create bespoke solutions per banking customer as they have unique requirements for security, compliance and auditing driven by different countries and even different states. You can imagine how hard that would be for a startup. Many of the incumbent banking ISVs aren't cloud-native and I think this could be an opportunity to modernize in a lower-cost fashion across a multitude of end customers.

IBM will start the Financial Servicesready public cloud with three environments; VMware, cloud-native, and Red Hat OpenShift as its primary Kubernetes solution and says it will support 190 API driven, cloud-native PaaS services to create new apps. These environments make a lot of sense given these are the current and future environments I hear the banking industry talking about. For what it is worth, the financial services industry considers Red Hat its operating system.

Most of my cloud analysis has consisted of horizontal IaaS, PaaS and SaaS solutions. While most technology markets start vertically until the shared vertical elements connect to create horizontal opportunities, the cloud market has done quite so far in its horizontal orientation. The current cloud market has addressed 20% of IT workloads, but the other 80% of those workloads aren't in a cloud. Yet. There are many reasons for this, but many times, a horizontal cloud doesn't yet meet the needs of a highly-regulated industry like banking. IBM sees this and is creating what it is calling as "the world's first financial services-ready public cloud" and partnering with Bank of America, who is a committed collaborator and who will be the first customer to use it. Interesting, right?

It might help to review some of the unique needs of financial institutions to appreciate why this sector might need something special in the cloud. Banks are regulated like no other industry short of healthcare because so much is at stake. Did you know banks have regulated uptime for its systems? Banking regulators are chronically crawling all over banks in what seems like perpetuity for some very good reasons. In Bank of America's case, there are 2.354T reasons as it holds $2.354T in assets across 66M customers. Here are a few data points to illustrate this:

This doesn't mean banks can just stand still, lock down their systems at the risk of under-serving their customers. Banks need to transform the experience just like consumer demands and technology has transformed media, shopping, and transportation industries. Like media, shopping and transportation, to transform the experience, banks need to improve their agility and do things faster while protecting security and privacy, complying with the regulators and with uptime guarantees. Easy, right? Not really.

I'd like to start with what the horizontal IBM Cloud offers and then talk about how the Financial Services-read public cloud adds on top of it. The IBM Cloud already offers a rich set of enterprise-grade security services including the highest level of encryption (KYOK, BYOK). IBM Cloud also offers a security SaaS offering called Hyper Protect Crypto Services that allows firms to take control of their cloud data encryption keys (so IBMers cannot access customer data) and cloud hardware security modules, and is the only service in the industry built on FIPS 140-2 Level 4-certified hardware.