IBM Corp. hit a key milestone today when it announced that the world’s first financial services-ready public cloud is now ready for prime time.

The company has been working on IBM Cloud for Financial Services for a long time. The offering was first revealed back in 2019 when IBM said it was working alongside Bank of America Corp. to create a cloud platform that’s tailored to meet the specific requirements of financial services customers. The IBM Cloud for Financial Services makes it possible for banks and other financial institutions to move to the cloud quickly while ensuring that all of their critical data and workloads are protected and in compliance.

One of the main attractions of IBM Cloud for Financial Services is that it means banks can now safely build and run cloud-native versions of their applications using the RedHat OpenShift service, which is IBM’s primary Kubernetes environment for managing containers that host the components of modern apps. They can also migrate VMware-based virtual machines to the cloud, IBM said. The offering features numerous built-in security and compliance controls to safeguard both apps and VMware workloads, the company said.

Security is one of the major concerns for any financial services institute and is therefore the central theme of IBM Cloud for Financial Services. One of the ways IBM secures workloads is through its “confidential computing” capabilities that ensure critical data is processed in a secure enclave within a shared cloud environment.

It also provides “Keep Your Own Key” encryption through IBM Hyper Protect Services that’s backed by what IBM says is the “highest level” of commercially available security certification. As a result, IBM said, enterprises hold their own encryption keys so clients are the only ones who can control access to their data.

Meanwhile, the built-in IBM Cloud Framework for Financial Services is a set of security and compliance controls that was developed in partnership with Bank of America and Promontory Financial Group to ensure that “bank-sensitive data” can be secured in the cloud.

Along with the enhanced security measures, IBM Cloud for Financial Services is backed by a large ecosystem of more than 90 independent software and software-as-a-service providers such as SAP SE, Adobe Inc., Avaya Inc., Infosys Ltd. and VMware Inc. that have all been validated via a technical and security assessment. Customers will be able to access those third-party offerings directly through the IBM Cloud for Financial Services.

Howard Boville, head of IBM Hybrid Cloud Platform, said the launch of IBM Cloud for Financial Services will drive a change in cloud adoption for highly regulated industries. “With a focus on data security delivered with IBM’s confidential computing and sophisticated encryption capabilities, we are helping to de-risk the supply chain for banks, insurers and other financial services industry players, and at the same time accelerating the time by which they can drive and consume innovation,” he said.

The launch of IBM Cloud for Financial Services is part of a wider trend of vertical cloud services that are tailored to meet the needs of specific industries, such as telecommunications, healthcare, energy and even retail. Google LLC, for example, has developed an offering exclusively for energy supplies, while Microsoft Corp. has previously announced cloud platforms for the retail and healthcare sectors.

Cloud providers argue that these vertical cloud offerings are necessary. In the case of financial services, IBM contends that many organizations have struggled with moving to the cloud because of concerns around compliance and security. In a May 2020 interview on theCUBE, SiliconANGLE Media’s video studio, Sarah Diamond, IBM’s global managing director of banking and financial markets, spoke at length about the challenges banks face in trying to meet the various regulatory requirements that they must adhere to when moving to the cloud, for example.

Diamond explained that financial regulation is a complex business, involving numerous regulations around compliance, security, data privacy and resilience. And for multinational institutions the conditions are even more onerous since they must comply with the specific rules of both their country of origin and each of the territories in which they operate.

“Whilst there is definitely a level of consistency across the regulations, they are not a single set of regulations,” Diamond said. “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.”

Diamond said IBM was lucky to be able to tap into the know-how of Promontory, which is a regulatory advisory organization for the financial services industry that it acquired four years ago.

“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.”

IBM said the combination of security, compliance, cloud-native services and support for third-party software has proven to be a hit with early adopters of IBM Cloud for Financial Services. The French financial services provider BNP Paribas S.A. is already in the process of onboarding key workloads to the cloud and so far has migrated more than 40 line-of-business applications.

“IBM has been our longtime partner in large part for their knowledge of cloud technology, security, including data encryption, and deep industry expertise associated with banking regulations,” said BNP Paribas Global Chief Information Officer Bernard Gavgani. “We’re collaborating with IBM to establish a BNP Paribas-dedicated cloud that is compatible with all the constraints that are imposed by regulators throughout the world.”

The launch of IBM Cloud for Financial Services shows that the vertical cloud trend is accelerating and is now into its third year, said Holger Mueller, an analyst with Constellation Research Inc. “It’s a big milestone for IBM and its customers, with the company bundling Red Hat OpenShift with its confidential computing capabilities and its compliance tools together with a major partner push,” he added.

However, the analyst cautioned that vertical clouds are still in their infancy and that IBM has a lot more work to do in order to build out the IBM Cloud for Financial Services. He said the main focus so far has been on horizontal innovations such as compliance, confidential computing and various PaaS tools.

“Vertical clouds need more vertical software assets and functionality and that’s where IBM needs to grow more if it’s to keep its lead in the financial services segment,” Mueller said. “Horizontal innovations are valuable, but what organizations really want to see are automation assets that can help them to be more successful with a cloud offering that reaches the SaaS layer.”

Photo: IBM