BNP Paribas joins IBM financial services cloud project

BNP Paribas has joined an ecosystem of banks and technology suppliers developing cloud-based financial services applications in IBM’s cloud.

IBM hopes the success of its financial services cloud will demonstrate to other highly regulated sectors, such as healthcare, that they can use public cloud services and retain regulatory compliance.

IBM’s public cloud ecosystem for the sector, known as IBM Cloud for Financial Services, is a cloud development environment that meets the regulatory requirements for financial services workloads, including high levels of security.

Banks are rapidly moving to the public cloud to help them cut costs and become more agile as competition in the sector grows amid an explosion of often cloud-native digital challengers. But banks are heavily regulated, with a high bar in terms of data security and availability. Mainframes still account for most of a bank’s processing, and these systems are secure, cheap, reliable, and understood by regulators.

BNP Paribas will use a cloud developed and managed by IBM and will become what IBM describes as an “anchor client” in Europe, with a role in bringing more banks to the ecosystem.

“As we continue to expand our collaboration with IBM, we’re driving innovation in the financial services industry and are able to partner with a growing ecosystem of technology providers, from small startups to leaders in the industry,” said Bernard Gavgani, CIO at BNP Paribas. “That’s an important step forward for BNP Paribas Group to accelerate its transformation journey and be compliant with European regulations.

“IBM Cloud for Financial Services helps us to further our transformation journey to the cloud and migrate mission-critical workloads with confidence, knowing that we can meet the regulatory standards established for the industry.”

Bank of America and Japan’s MUFG are part of the ecosystem, as well as about 30 technology suppliers such as VMware.

David Reilly, a senior technology infrastructure executive at Bank of America, said: “We have been looking to identify a financial services-ready solution that offers the same level of security and economics as our private cloud with enhanced scalability. That’s why we’re partnering with IBM to create an industry-first, third-party cloud that puts data resiliency, privacy and customer information safety needs at the forefront of decision-making.”

David Bannister, analyst at Aite, said: “From a general cloud adoption perspective, IBM is in a good position to capitalise on banks’ increasing willingness to use public cloud.” He added that in the past few weeks, there “has been a flurry of announcements”, including HSBC with AWS, Deutsche Bank with Google and National Australia Bank with Microsoft.

“It has been growing for a while, though,” said Bannister. “The big vendors like ACI, Finastra, FIS, Fiserv, Infosys and Temenos have been converting their systems to cloud architectures for the past few years, and that’s starting to filter through to banks’ implementation schedules.”

But there are still issues such as regulatory compliance, with data sovereignty a major concern, he added.