Related News

Roundtable: The energy transition speeds up

Making capital work in a challenging environment

Industry Perspectives: Reliable systems – are they really something new?

The trade finance gap – a new solution?

Industry Perspectives: Procurement’s growing role in the working capital conversation

Christopher Doroszczyk, Head of Strategy and Business Development at IBM Cloud for Financial Services, provides an overview of a new generation of cloud that meets the unique demands of financial service providers.

 

Q: Tell us about IBM Cloud for Financial Services: what does it deliver to banks, and what are its key differentiators over other cloud solutions?

Doroszczyk: Multiple forces are motivating banks to modernise legacy systems and digitise manual processes, including customer demand, competitive threats and regulatory pressures. At the same time, banks must maintain or even enhance current levels of customer service, security, transparency and compliance.

Modernisation challenges are magnified within banks’ trade finance divisions, where processes are highly manual and paper-based, single transactions span multiple – often cross-border – parties, and regulators hold banks accountable for not only security and compliance but also know your customer (KYC) across every party in the supply chain. In the past, banks have hesitated to move mission-critical workloads to the cloud because no public cloud provider could meet the industry’s stringent security, privacy, compliance and regulatory requirements. Moreover, moving applications and processes from on-premises to the cloud was perceived as costly and time consuming, hence a diversion from investing resources in customer experience enhancements, analytical capabilities, compliance, security, and more.

From the outset, IBM Cloud for Financial Services has focused on addressing the unique needs of the financial industry. The platform comes with a comprehensive set of industry-specific controls built in – designed to replicate in the cloud the same level of security that financial institutions enforce in their own data centres. IBM has partnered with more than 80 technology, security, risk and compliance experts representing 60-plus major financial institutions to develop and update our control framework that is critical to IBM Cloud for Financial Services. IBM’s controls framework is completely unique in the cloud industry, setting IBM’s financial services cloud apart from all other cloud providers.

IBM Cloud for Financial Services allows financial institutions to unlock the power of cloud, even for a bank’s most sensitive, mission-critical workloads. Banks can modernise critical infrastructure with a hybrid cloud approach, unify data siloes and tap into a vibrant ecosystem of fintechs to drive new customer experiences, automate business processes, increase operating efficiency and accelerate advanced analytics. All ecosystem independent software vendors (ISVs) are validated to IBM’s comprehensive control set, so banks can access a far broader array of relevant and compelling new financial technologies faster and easier than ever before.

To help banks address growing cyberthreats, IBM continuously invests in and focuses on cloud data security. Security and encryption tooling, including confidential compute and Keep Your Own Key (KYOK) – previously offered only on IBM mainframes – are inherent to IBM’s financial services cloud.

 

Q: Why does global trade need to cloudify? What ultimate challenges does this digital transformation address, and how does it help banks navigate the next normal?

Doroszczyk: Global trade transactions have long been document and data-intensive. After two-plus years, the pandemic has proven once and for all what global trade leaders have been saying all along: physical and financial supply chains built on paper are fragile. The industry needs to change. While all industries have felt some level of transformation imperative, for financial institutions engaged in global trade, the need to digitise, unlock data, move information at speed, automate manual processes and apply advanced analytics – including artificial intelligence (AI) and machine learning – has turned into an immediate imperative.

At most banks, global trade operations are comprised of multiple point solutions stitched together to support mission-critical business processes and front-end customer experiences. This kind of infrastructure doesn’t scale with ease, nor does it rise readily to the challenge of heightened regulatory scrutiny, growing transaction volumes and shrinking settlement timeframes. Furthermore, with critical data trapped in silos, global trade leaders are unable to capitalise on the wide range of opportunities that might be unleashed through a unified data layer attached to advanced business intelligence tooling.

For banks’ trade finance divisions, a fit-for-purpose cloud solution needs to inter-operate with existing infrastructure and applications to accelerate incremental as well as transformational change. A hybrid cloud architecture is the best way to enable coordination of workloads across multiple connected infrastructure environments – whether on-premises, or in public or private clouds – to orchestrate applications and processes for greater governance and control, and to better manage resources across clients’ full infrastructure estates. IBM Cloud for Financial Services is secure to the core at each layer; scalable and interoperable; and designed to reduce regulatory barriers and accelerate infrastructure and application modernisation, making it ideal for supporting a programme of continuous innovation, and the cornerstone of any bank’s hybrid, multi-cloud strategy.

 

Q: IBM Cloud advocates the “extreme digitisation” of financial services: where do we as an industry want to get to? What does a global trade ecosystem utopia look like?

Doroszczyk: A global trade ecosystem utopia would be data-driven, paperless, AI-enabled, and of course secure, scalable, resilient and compliant. Digitisation facilitates the accurate and timely transmission of data and information between counterparties, which, in turn, engenders the transparency and trust that form a firm foundation for any growing and thriving marketplace.

For financial services institutions engaged in global trade, trust needs to be built with regulators, customers and the supply chain. Trust is built on a consistent track record of secure, accurate and timely transactions, plus effective and unwavering stewardship of sensitive client and counter-party information.

In 2021, we saw headline-making cyberattacks that were successful because bad actors took advantage of holes in a complex, intermixed supply chain of vendors. Challenges for banks’ trade finance divisions extend beyond headline news to recurring problems that have the potential to undermine business models. These include aggregating essential documents from diverse sources, reconciling receipts, matching purchase orders with invoices, and accruing partial payments to account for full funding. Here is where a secure, hybrid cloud architecture comes in. IBM Cloud for Financial Services’ unique controls framework aims to remove a significant hurdle to cloud adoption and create a secure and trustworthy environment for all parties.

IBM helps financial institutions, their partners and fintechs reduce risk across the entire supply chain while accelerating innovation. Banks using IBM Cloud  for Financial Services can host key applications and workloads, as well as partner with ISVs and SaaS providers who have demonstrated compliance with the platform’s requirements.

 

Q: What’s next for IBM Cloud? What do you have in the pipeline for 2022, and what do you envision beyond that?

Doroszczyk: IBM is continuing to drive customers’ hybrid cloud journeys with an industry-specialised approach – underpinned by security and trust – to ease hybrid cloud adoption for highly regulated industries. This includes ongoing efforts to help the financial services industry transform, from banking to insurance and everything in between. IBM partners with an expansive ecosystem of ISVs and fintechs to support the financial industry’s digital transformation, including modernising key utilities like payments.

IBM Cloud is also partnering with some of the world’s largest financial services institutions to develop an extensible approach to global supply chain management. Ultimately, our mission has been and continues to be to ‘de-risk’ the financial services industry.