The strict regulation of the financial sector has historically prevented it from widely adopting public cloud services, due to strict security needs. Less than 10% of financial institutions’ workloads have moved to the cloud, according to Sarah Diamond (pictured), global managing director of banking and financial markets at IBM Corp.

Aware of the potential of the cloud in this sector as security services mature, IBM partnered with Bank of America Corp.,  one of the largest banks in the country, to build the first financial services-ready public cloud. This is an important bet for IBM, which has only 1.8% of the public-cloud infrastructure market, largely led by Amazon Web Services Inc.

“The first place to start is secure at an enterprise-grade level for financial services so [they] can provide the level of security and resiliency that’s needed as they run mission-critical systems for the world,” Diamond said.

Diamond spoke with Jeff Frick, host of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, during the IBM Think Digital Event Experience. They discussed the attributes of IBM’s new financial services cloud, the challenges for banks to meet regulatory requirements around the world, the digital transformation during a pandemic, and how Covid-19 will change the way business works. (* Disclosure below.)

Solving financial regulatory challenges

Financial regulation involves compliance, security, privacy and resilience requirements. For multinational institutions, the conditions are even more numerous, since they must comply with the rules of the country of origin and also of all parts of the world in which they operate.

“Whilst there is definitely a level of consistency across the regulations, they are not a single set of regulations,” Diamond stated. “So, it requires a great deal of knowledge, insight and preparation to make sure that they’re going to remain compliant in every country in which they do business.”

To ensure that its financial services-ready public cloud was built to meet all industry requirements, IBM relied on the know-how of Promontory Financial Group, an IBM company that was acquired three years ago. Promontory is a regulatory advisory organization for financial services.

“One of the huge benefits of having Promontory in our portfolio is to be able to leverage their expertise to do this,” Diamond said. “And then there are things like making sure that the cloud will support a rich catalog of the ISVs and the SaaS providers that our clients want to be able to work with and that it dovetails seamlessly into other infrastructure services, whether it’s VMware, cloud-native, Red Hat OpenShift, etc.”

How to face the pandemic

Although the widespread use of technology is important for business in general, it has become even more essential during the coronavirus pandemic. The ability of businesses to adapt to the lockdown and remote work imposed by COVID-19 appears to be related to the level of digitalization they have achieved before the crisis, according to Diamond.

“Clearly those clients that had moved already to a much more agile, hybrid environment were much more digital in their capabilities, had much better security around their data assets, were ones that were able to make the shift quickest,” she explained. “And those that were somewhat behind, lagged in those areas, are the ones that struggled or took longer to make the shift.”

The first necessary adaptation was the transfer of the predominant workforce to work at home. “With that, they needed both extra security to make sure that they were not going to open up any security risks in doing it [and] capacity, because obviously capacity peaked,” she said. “And then, obviously, just the tools and the know-how to work from home.”

Another necessary adaptation was to improve the way to serve customers remotely. Banks had high spikes in call center volume, for example, and challenges in terms of how to deal with it during the pandemic.

“That brings intense focus on the ability to leverage digital technology and be able to support both the employees and the customers in a seamless, secure way online,” Diamond explained.

Digital transformation will continue to accelerate

Some of the changes brought about by the coronavirus pandemic are likely to remain even after the crisis subsides, according to Diamond. “I think this is going to really, really accelerate the digitization of the industry on all fronts,” she said.

As customers have started to use many more digital banking services than before, financial institutions are now expected to move more quickly to expand online service offerings. In addition, not all employees are expected to return to the office after the pandemic.

“We are already hearing our clients … where they’re saying, ‘Look, even when this epidemic passes and we’ll feel confident about asking our employees to return to the office, we no longer want to just go back to where we were,'” she said. “There’s a lot of work already being done to look at different job categories to decide which ones can be done remotely just as effectively as onsite, and which ones will need to be onsite or in front of the client.”

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s coverage of the IBM Think Digital Event Experience. (* Disclosure: TheCUBE is a paid media partner for the IBM Think Digital Event Experience. Neither IBM Corp., the sponsor for theCUBE’s event coverage, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE