IBM Solutions for Financial Services: Banking Tradition Meets Hybrid Cloud Transformation

By Charles King, Pund-IT, Inc.  June 10, 2020

It is difficult to think of an industry that has been more deeply involved with and fundamentally transformed by computing technologies than financial services, especially via their engagements with IBM. After all, some of the earliest workplace solutions that banks employed were mechanical calculators (literally the “Business Machines” in IBM’s acronym).

Those devices were eventually replaced by digital transaction solutions, including multiple generations of IBM mainframe systems. Over time, those and complementary technologies enabled companies to extend their operations globally and massively scale business services including checking, savings, loans and credit cards into billions of secure daily transactions.

But along with serving the traditional needs of their customers and partners, successful banks constantly, proactively seek new ways to assist their clientele. In some ways this is simply a matter of self-preservation, but it also reflects a simple truth about the industry: Since financial challenges and needs are constantly evolving, solutions must also evolve.

So, it isn’t surprising that banks are often leading-edge adopters of the latest technological solutions, such as hybrid cloud, digital transformation and artificial intelligence (AI). Recently, IBM detailed the work it is doing with two enterprise customers, CaixaBank in Spain and Lotte Card in Korea, that highlight how the company is helping financial services vendors adapt to new opportunities and challenges. Let’s consider these examples.

CaixaBank continues its hybrid cloud journey

With offices in Spain and Portugal, CaixaBank serves over 15.5M customers, including 6.5M digital clients (making the company Spain’s largest digital financial institution). IBM has been a strategic technology provider for CaixaBank since 2011 and has aided a range of projects and initiatives, including migrating key applications and workloads to a hybrid cloud infrastructure.

The company also helped CaixaBank develop one of Europe’s first virtual banking assistants. Leveraging IBM Watson, the AI-enabled virtual assistant manages over 1.5M client discussions per month and assists with tasks ranging from supporting staff inquiries to providing assistance to mobile clients via chat sessions.

The renewed agreement with IBM Services aims to accelerate CaixaBank’s transition to hybrid cloud and enhance development of robust digital-first solutions for business transactions. The bank will leverage IBM’s Cloud Pak for Applications, an environment running on Red Hat’s OpenShift that has tools for planning modernization efforts, building cloud native apps and running critical workloads in hybrid, public and private cloud environments.

CaixaBank also agreed to keep working with IBM in their joint innovation center to apply advanced technologies, like AI, and to explore emerging technologies, including quantum computing and blockchain. In fact, CaixaBank recently developed a prototype of a machine learning algorithm based on quantum computing to analyze customers’ credit risk.

Lotte Card transforms core systems with hybrid cloud

Lotte Card is a Korea-based credit card company that services retailers, including cinemas, department stores and hypermarkets. The company recently announced that it will work with IBM Services to transition its entire enterprise system environment, including mission critical and core financial accounting systems to a hybrid cloud environment.

By leveraging IBM’s cloud native solutions and Red Hat OpenShift to migrate core applications to managed private cloud, Lotte Card believes it will achieve enhanced visibility, security, scalability and speed while also reducing costs, complexity and risk.

Previously, Lotte Card worked with IBM Services to migrate its mobile application to the cloud to gain greater scalability and flexibility. That project succeeded and delivered positive results, including improved customer satisfaction, better mobile app performance and a reduction in total cost of ownership (TCO).

The company believes that adopting a broader hybrid cloud environment and strategy will allow it to respond to market and competitive shifts in near real time. Lotte Card also plans to deliver new services and solutions, like an expansion of its Lotte Card LIFE application which supports super-personalized service that provides mobile customers deep insights into the company’s best offerings and benefits.

Final analysis

CaixaBank and Lotte Card are interesting in terms of both technological and business innovation, but they are also indicators of the evolutionary progression of hybrid cloud technologies. The strategic reasoning behind their respective plans is clear. However, the efforts of the companies and IBM Services will also need to adhere to the rigorous governance and compliance regulations common in the financial services industry.

In that respect, it’s worth noting that CaixaBank and Lotte Card are the most recent successes in a much broader IBM effort. Last November, the company announced that it was building a hybrid cloud platform and solutions designed specifically for the needs and requirements of financial services customers. During the Think 2020 conference a few weeks ago, IBM executives provided further details about the platform, including how the company has successfully addressed the robust security and data protection demands of financial services customers and regulatory bodies.

In short, CaixaBank and Lotte Card both offer valuable insights on the benefits that financial institutions can achieve by adopting forward-thinking IT strategies and leading-edge solutions, such as IBM’s hybrid cloud services and offerings. These and other emerging innovations prove that IBM’s decades of leadership in financial services technologies is likely to extend far into the future.

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