IBM Uses Hybrid Cloud To Assist Two European Banking Groups Become Digital

IBM has announced two major core banking modernization projects in Europe using hybrid cloud technology. Rural Services Informaticos (RSI), a Spanish banking IT services company, will use hybrid cloud technology and industry expertise from IBM and Red Hat to boost its digital products and services offerings through a platform called Cloud Office.

RSI provides core banking services to Caja Rural Group which has a network of over 46 cooperative banks and rural financial entities. RSI’s banking platform provides services to 8 million end-users. The bank services company will use the new IBM Z16 mainframe which it expects will reduce energy consumption by 25% and reduce CO2 emissions, helping the bank meet sustainability goals.

Europeans have a lot of focus on ESG, said Shanker Ramamurthy, global managing partner for banking & financial markets at IBM. “The amount of energy consumed by data centers is phenomenal; the opportunity to move to IBM Linux can lead to massive savings from an energy standpoint.”

The IBM Z16 also has an integrated on-chip, AI accelerator designed to analyze transactions in real-time at scale to detect and prevent financial fraud more efficiently. In Italy, IBM has signed a four-year agreement to help BPER Banca Group accelerate its development into a truly digital business.

“The banking sector is undergoing rapid transformation and the benefits and potentials that emerge today from the dynamics of technological innovation are very wide,” said Elvio Sonnino, deputy general manager and chief operating officer at the bank. “The collaboration with IBM will allow us to carry out an important technological upgrade, to achieve greater synergy of processes and to expand the offer of quality omni-channel services, to respond even more effectively to the ever-increasing needs of customers.”

The banking group is evolving its business model to prepare for a digital future alongside a focus on ESG and the integration of its latest acquisition — Italian bank Banca Carige. To meet the needs of digitally savvy customers, new AI-powered software capabilities will be incorporated to develop personalized digital services across multiple channels. This allows Gruppo BPER to unlock new value by expanding the volume of digital products sold via automated journeys.

IBM has developed a capability around core transformation to help clients, especially large financial institutions, with that journey, said Ramamurthy. Three to four years into that journey, the pace is accelerating, he added. The company has built vendor relationships with more than 125 ISVs including such firms as Thought Machine, FIS, Temenos, and SunTec in core banking systems.

“Changing core systems is incredibly complex,” he added. “The biggest challenge, especially given today’s macro economic backdrop, is that most clients are not able to make a long-term investment to put a lot of money into this with payback in three to four years. It is all about time to money — how to modularize it using a small number sharp teams who can unlock economic value through progressive modernization rather than rip and replace.”

IBM offers a secure cloud, IBM Cloud for Financial Services, to meet the demands of the financial industry, he said.

“It leverages the security and regulatory capabilities that we at IBM have invested in, using Red Hat and Open Shift to enable workloads to move based on their security and manage that on an integrated basis. Highly regulated workloads cannot be tackled by a standard cloud.”

Both BPER BANCA and RSI will use IBM Cloud for Financial Services with its built-in security and compliance controls designed to help companies manage regulatory barriers impeding IT landscape and application modernization. Supported by more than 125 technology partners and FinTechs, the platform is designed to speed financial institutions’ transformations while helping reduce third- and fourth-party risks throughout the supply chain, the company said in its announcement.