Cloud Consumer Banking
Point of View
Institute for Business Value
Partner’s Name, Partner’s Title
DD Month YYYY
© 2014 IBM Corporation
Executive summary
 Cloud computing offers potential to redefine customer relationships, transform banking operations and
expand business potential and capabilities
 Although slow to initially embrace cloud computing due to privacy and security concerns, banking industry
has now adopted cloud starting with private clouds based on its requirements
 Leading banks have leveraged cloud for
• Business model / ecosystem innovation
• Revenue model innovation
• Operational innovation
 A structured risk assessment and mitigation strategy will help address security and data privacy concerns
as well as compliance issues that may arise due to cloud adoption. Regulatory authorities, recognizing
cloud’s potential in banking transformation and enhancing operational efficiencies, are providing guidance
to banks in many countries for cloud adoption
 Banks should have a clear business-linked Cloud strategy that not only transforms its IT function but
evaluates new business opportunities leveraging cloud’s potential
 IBM, with significant experience in helping several banking clients to adopt cloud, is uniquely positioned to
help you with innovative cloud based solutions
2
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© 2014 IBM Corporation
1
Cloud is
transforming the
business of
banking
2
Charting the path
for cloud adoption
3
IBM and cloud
3
IBM Institute for Business Value
© 2014 IBM Corporation
Market forces are characterized by headwinds that challenge
growth
Driving volatile earnings…
Turbulent economic conditions
1993 – 2006 average 14.4%
20%
15%
10%
5%
0%
$
Decreasing returns on equity
Need to optimize use of capital
Shrinking operating margins
Increasing regulations and
oversight
Rebuild customer trust &
marketplace confidence
Source: Capital IQ (Top 250 banks), Banker Database, FDIC,
Comments from Analyst Reports
4
2013
2012
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
-15%
1994
Evolving consumer expectations
1993
-10%
2011
2Q 2013
10.6%
-5%
2009
2010
Intense competition
Non-traditional entrants
…and increasing operating costs
Operating Expenses ($B)
1,821.8
1,850
1,800
1,750
1,700
1,650
1,600
1,550
1,816.5
1,665.9
2008
IBM Institute for Business Value
1,710.6
1,701.0
2009
1,660.6
2010
2011
2012
2013
© 2014 IBM Corporation
To overcome these challenges industry leaders must deliver on four
key imperatives
Create a customer
focused enterprise
Increase flexibility
and streamline
operations
Drive innovation
while managing cost
Optimize enterprise
risk management
Optimize data and
leverage analytics to
adapt to new behaviors,
cultivate trust, and drive
profitable growth
Improve operating
leverage with variable
cost structures that
increase flexibility
and reduce risk
Deliver new services
quickly that decrease
cost per transaction and
drive competitive
differentiation
Maximize return on
equity, combat fraud and
mitigate operational risk
while achieving
compliance objectives
Cloud computing improves efficiency, expands innovation
potential and drives revenue growth
5
IBM Institute for Business Value
© 2014 IBM Corporation
Business is being transformed on three technology enabled
dimensions
Data
The new natural resource
Cloud
Systems of
Engagement
Enables new business
models
Redefines customer
relationships
 Sophisticated analytics
across disparate data
sources will drive business
outcomes
 Cloud’s “game changing”
attributes revolutionize
industry value chains,
forcing companies to
embrace new business
models
 Mobile connectivity,
access and participation
are growing rapidly
 Time value of data will
enable “speed of insight”
and “speed of action” as
core differentiators
 Cloud is enabling
transformation of IT and
business processes into
digital services
 Data is the new basis of
competitive advantage
6
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 Social media is quickly
becoming the primary
communication &
collaboration format
 Mobile and social enhance
speed of responsiveness
and personalization
© 2014 IBM Corporation
There are numerous examples across the industry where cloud has
enabled business and operating model innovation
• Barclays1 “Pingit” cloud
based mobile payment
platform and service
launched in seven months
• A private cloud helps Pingit
deploy features 12x faster
• Pingit puts Barclays 2
years ahead of other UK
bank cashless capabilities
with 2.5M downloads and a
rich set of features and
functions for consumers,
small business and
corporate clients
• Fidor2 is a “cloud native” bank
built on a cloud ecosystem of
financial product providers
• The bank built it’s own API
centric core bank platform
• Social media is used
exclusively for acquisition,
retention, cross sell, R&D
• Fidor has a community of
300k+ users and 65k+
customers (Aug 2014)
• IT cost per user is $15US,
average CpC is $32US (Aug
2014)
• Crédit Agricole3 created a
platform that allows 3rd
parties to co-create apps
with CA customers.
• Customers that want to use
the apps are charged $1 a
month to secure their data.
• There are 20+ apps and
the majority of fees go to
the developers.
• Customers are getting the
latest technology and the
bank is tapping into open
innovation.
Source: See speaker notes
7
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© 2014 IBM Corporation
Cloud fosters capabilities that traditional computing can’t…
Cloud characteristics
and technologies
Essential characteristics
of cloud 1
 Broad network access
 Rapid elasticity
 On-demand self
service
 Measured service
 Resource pooling
Technologies enabling
cloud
 Virtualization
 Provisioning and
Orchestration
 Service automation
 Usage tracking
 Web 2.0 / SOA
Expands business
capabilities
Cost flexibility
Business Scalability
Market adaptability
Masked complexity
Context-driven
variability
Ecosystem
connectivity
Enabling
Industry / Business
model innovation – create
new industry ecosystem or
disintermediate an existing
value chain
Revenue model
innovation – create new
products and services or
utilize new channels or
payment models
Operational innovation –
maintain competitive parity
and place in existing value
chain
Source: [1] National Institute for Standards and Technology, US
8
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud adoption by banks delivers efficiencies, growth and
competitive advantage
Business model
innovation
 Third-party services can be
extended into bank
ecosystem
 Open collaboration and
sharing can be expanded
 Innovation can be introduced
across systemically
Revenue model
innovation
Operational
innovation
 Customer relationships can
be more readily monetized
 Simple and faster processes
drive internal efficiency
 Time to market can be
enhanced
 Reduced complexity enables
more data to manage risk
 Value-added services from
partners can be more easily
introduced
 IT capacity can be readily
aligned to business volumes
Cloud enables individual bank integrated, compelling customer experiences…….in so doing, first
mover banks are more likely to lock-in customers impeding foothold for new entrants
9
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IBM helps leading banks capture the benefits of cloud
Business model
innovation
180
Countries
connected
enabling trade
Eurobank1, a large Greek
bank created a Cloud-based
multi-lateral trade offering
between Greek businesses
& their international trading
counterparts across 180
countries.
Revenue model
innovation
and
% US$30k
more volume
34
per month
Signature Mortgage
Corporation2 implemented a
cloud-based integrated
collaboration mortgage
solution, so customers can
apply and complete loans
electronically.
Operational
innovation
reduction
% Cost
and faster time
35
to market
A large bank implemented a
cloud environment that
delivers personalized
product offers across
multiple channels to
customers in real-time.
Source: See speaker notes
10
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© 2014 IBM Corporation
Cloud accelerates time to market, enhancing customer experience
Using a combination of cloud delivered services,
can create “as a service” components to analyze
data from social media
SaaS: Enterprisegrade business
apps to
accelerate
innovation
IaaS: Self-service
configurable IT
infrastructure
resources
1. Define development
environment
The bank partnered with IBM to quickly develop, test
and deploy applications using IBM PureApplication
System, MobileFirst, Bluemix and API catalog
2. Add database service
Bank was able to
 Reduce development provisioning from days to
less than 30 minutes
 Shorten development cycles from 6 weeks to 2
 Deliver innovative customer service tools
3. Extract & feed social
media data into database
4. Add social
analytics service
5. Add Monitoring service
instance
6. Provision resources
and secure the service
Iterate
PaaS: Rapid app
development
through
composable
services and APIs
IBM is helping Tangerine Bank, the leading digital
bank in Canada operate a device agnostic Mobile
Bank, allowing freedom of choice for their customers
We give our customers what they need and are
challenging the status quo
And we’re challenging the banking industry
through our innovation and technology
Peter Aceto, Chief Executive, Tangerine Bank
Source: See speaker notes
11
IBM Institute for Business Value
© 2014 IBM Corporation
As banks evolve with cloud adoption, business users will be able to
design and prototype applications quickly



Organizations are benefiting from new user-driven, mobile and cloud-centric IT
Cloud is transforming Enterprise IT functions, roles and responsibilities
Business Managers are increasingly using cloud for application development to enhance agility

IT departments need to
• be “Managers” of Corporate information
assets spread across different suppliers
and multi-tenant ecosystem
• facilitate and broker the sources of IT
resources that enhance business value
without loss of control



Cloud enables collaboration with business
users, developers, architects, and designers
Vendors / CSPs provide no-code or low-code
alternatives to compose / build apps
Cloud speeds up prototyping and testing the
application with internal business users or a
select set of customers
Business Manager
Finalize
requirements
Design
Develop /
compose
application
Test
application
Deploy
application
Cloud service provider (CSP)
Source: See speaker notes
12
IBM Institute for Business Value
© 2014 IBM Corporation
1
Cloud is
transforming the
business of
banking
2
Charting the path
for cloud adoption
3
IBM and cloud
13
IBM Institute for Business Value
© 2014 IBM Corporation
Enterprise Cloud Adoption
Structured process helps banks to determine how to adopt cloud
Selection – Prioritization – Quantification – Migration
Cloud First
New
project
New
project
Replace
existing
app / infra
BPaaS
PaaS
SaaS
IaaS
Business
case
Migrate existing
workloads
Select
Prioritize
Workload
analysis
14
Evaluate a blend of cloud options
that best suit the project
requirements
IBM Institute for Business Value
Quantify
Migrate
Migration Plan
Wave 1
Wave 2
Wave 3
© 2014 IBM Corporation
Banks can start cloud adoption with quick wins
Selection – Prioritization – Quantification – Migration
Total addressable market (TAM) for cloud computing software
Application category
TAM $ bn
Collaboration
$30.7
Email & Office Productivity
$20.7
CRM
$16.4
Security
$9.9
HCM
$8.2
Supply chain management
$7.1
Travel & Expense Management
$2.7
IT Service Management
$3.0
Analytics
$2.9
Finance & Accounting
$1.4
Digital Marketing
Total Addressable Market (TAM)
Banks can look at these application categories
for cloud adoption where

Deployment ease is higher

Security and data privacy issues are lower

A variety of Software as a Service (SaaS)
offerings are available in the market
Banks can start realizing business benefits
through these quick wins while planning for
industry applications that may require
significant efforts for cloud migration
$21.0
$124.0
Source: BofA Merrill Lynch Global Research 2013
15
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© 2014 IBM Corporation
Selection – Banks leverage born-on-cloud solutions to quickly
realize business benefits and gain momentum in cloud adoption
Customer relationship
management
Enterprise risk management
(ERM)
Sourcing and Contract
Management
RCI Banque Spain1 works
with IBM to implement
Oracle CRM software as a
Software-as-a-Service
solution. Today, the
company can identify
customers whose loans and
similar financial contracts are
coming to an end, and make
timely, personalized
offers, greatly reducing the
threat of competitors stealing
their clients and increasing
renewals and new business.
Wind Info2 will incorporate IBM's
cloud-based risk management
software, IBM Algo Risk Service
on Cloud, and the locally
installed IBM Algo One Risk
Aggregator directly into its
Trading Terminals. This hybrid
solution will conduct
sophisticated risk data
processing in the cloud while
keeping all client position data
protected and confidential within
the boundaries of China, an
important requirement of
Chinese law.
A Swiss investment banking
client3 implemented IBM’s
Cloud-enabled Emptoris
SaaS solution to streamline
and automate their sourcing,
contracting, risk &
compliance processes.
The client is expecting a
savings of $159M as a result
of adopting SaaS solution
Source: See speaker notes
16
IBM Institute for Business Value
© 2014 IBM Corporation
Selection – A bank has a set of services, functions and processes
across six domains to run and manage a bank
Strategy &
Insight
Strategy &
Governance
Business
Strategy &
Resource
Planning
Front office and Channel Management
Management
Sales & Servicing
Distribution
Planning
Relationship
Oversight &
Management
Channel
Operations
Strategic
Change
Governance
Marketing
Customer Insight
Customer
Analysis &
Models
Customer
Profile
Contact / Event
History
Customer
Probity
Check
Trading
Brand &
Segment
Management
Proposition Development
Product
Development
Product
Catalogue
Channel Planning & Development
Product Operations
Planning &
Development
Processing / Back office
Common
Application
Processing
Statements &
Correspondence
Document
Management
Customer
Fulfilment
Product
Accounting
Transactions
Market Info
Collections &
recovery
Underlying Asset Procurement &
Management
Complaint &
Exception Handling
Customer
Maint
Ops Mgmnt
Specific
Cheque
Processing
Reconciliation
Card
Processing
Cash
Inventory
Transaction
Execution
Merchant
Operations
Payments
Transaction
Authorization
Treasury
back office
Trade Finance
specific
Processing
Billing
Fraud / AML
Detection
Cash
Managmnt
Clearing &
Settlement
Custody &
Other specific
processing
Helpdesk
Services
Human
Resource
Management
Risk
Risk Portfolio
Management
Lending Policy
& Planning
Finance
Financial
Control &
Consolidation
Performance
Management &
Reporting
Finance
Policies
Fixed Asset
Register
Accounting / GL
Treasury
Compliance
Support Services
Systems
Development &
Operations
Risk &
Financial
Management
Asset / Liability
Policy &
Planning
Product Factory
Campaign
Execution
Campaign
Management
Market Insight
Segment
Analysis
Transaction
Capture
Services
Corresponde
nt Banking
Brand & Product Management
Public
Relations
Market
Research
Deal Structuring
(Securitization /
Syndication)
Servicing
Routing &
Tracking
Business & IT
Architecture
Acquisition &
Alliance
Planning
Sales
Customer
Information
Management
Distribution
Performance
Management
Distribution Support
Audit/QA/Legal
Facilities
Operation &
Maintenance
Procurement
Business
Policies &
Procedures
Source: IBM’s Component Business Model for Banking
17
IBM Institute for Business Value
© 2014 IBM Corporation
Selection – Of the dozens of business services essential to financial
organizations today…
Strategy &
Insight
Strategy &
Governance
Business
Strategy &
Resource
Planning
Front office and Channel Management
Management
Relationship
Oversight &
Management
Channel
Operations
Sales & Servicing
Distribution
Planning
Distribution
Performance
Management
Business & IT
Architecture
Acquisition &
Alliance
Planning
Strategic
Change
Governance
Servicing
Routing &
Tracking
Transaction
Capture
Services
Marketing
Brand &
Segment
Management
Campaign
Management
Proposition Development
Market
Research
Application
Statements &
Market Info
Processing
Correspondence
Document
Product
Collections &
Management
Accounting
recovery
Customer
Underlying Asset Procurement &
Fulfilment
Management
Complaint &
Customer
Ops Mgmnt
Exception Handling
Maint
Customer
Profile
Contact / Event
History
Corresponde
nt Banking
Trading
Customer
Probity
Check
Product
Development
Product
Catalogue
Channel Planning & Development
Transactions
Cheque
Processing
Cash
Inventory
Product Operations
Planning &
Development
Payments
Billing
Specific
Reconciliation
Transaction
Execution
Transaction
Authorization
Fraud / AML
Detection
Card
Processing
Merchant
Operations
Treasury
back office
Cash
Managmnt
Custody &
Other specific
processing
Helpdesk
Services
Human
Resource
Management
Risk
Risk Portfolio
Management
Lending Policy
& Planning
Finance
Financial
Control &
Consolidation
Performance
Management &
Reporting
Finance
Policies
Campaign
Management
= Cloudable / yes, 100%,
cost savings 30% to 80%
Fixed Asset
Register
Trade Finance
specific
Processing
Accounting / GL
Clearing &
Settlement
Treasury
Compliance
Support Services
Systems
Development &
Operations
Risk &
Financial
Management
Asset / Liability
Policy &
Planning
Processing / Back office
Market Insight
Customer
Analysis &
Models
Deal Structuring
(Securitization /
Syndication)
Product Factory
Campaign
Execution
Common
Customer
Insight
Sales
Customer
Information
Management
Brand & Product Management
Public
Relations
Segment
Analysis
Distribution Support
Audit/QA/Legal
Facilities
Operation &
Maintenance
Procurement
Business
Policies &
Procedures
…IBM can help you identify those that can be delivered and consumed
most efficiently, effectively and securely over the cloud.
18
IBM Institute for Business Value
© 2014 IBM Corporation
Selection – Cloud workload analysis helps banks determine
cloudable functions and processes
High-level representative view of banking functions and processes
Strategy &
Insight
Front office and
Channel
Management
Bank provides the following inputs
 Servers and Operating systems
 Location distribution
 Overall storage
 Non functional requirements
(NFR)
 Application and workload data
 Current costs
Input/output, disk
and utilization
mapping
19
Brand &
Product
Management
Processing /
Back office
Risk & Financial
Management
Support
Services
Cloud service provider can provide
the following inputs
 Target cloud configuration
 Target cloud NFR
 Historical data
Cloud workload
analysis
NFRs
examination
 Target cloud cost
Operating system
and software
compatibility
IBM Institute for Business Value
Migration
difficulty
© 2014 IBM Corporation
Prioritization – Some banking functions and activities are more
conducive to cloud than others
CATEGORY 1 – READY FOR CLOUD
CATEGORY 2 – NOT READY FOR CLOUD
Characteristics
A third category relates to
workloads that require
individual analysis and
may be ready for cloud
Standardized applications
Apps that require on-premise data (that
cannot be migrated to cloud)
Self-contained workloads
High degree of customization
Example workloads are
Applications developed using Service
oriented architecture
Legacy systems
 Isolated workloads
Complex application integration
Apps that need high performance
 Preproduction systems
 Batch processing
Example workloads
Analytics
Sensitive data
Collaboration
Highly customized
Infrastructure compute & storage
Not yet virtualized third-party software
Workplace desktop and devices
Complex processes and transactions
Business processes
Regulation sensitive
Disaster recovery
Legacy industry applications
Development and test
Source: IBM cloud implementation projects and analysis
20
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© 2014 IBM Corporation
Prioritization – A cloud readiness assessment shows 35% of
existing workloads can be moved to cloud
More ready for cloud
Front office and Channel Management
Strategy &
Insight
Strategy &
Governance
Business
Strategy &
Resource
Planning
Management
Sales & Servicing
Distribution
Planning
Relationship
Oversight &
Management
Distribution
Performance
Management
Channel
Operations
Business & IT
Architecture
Acquisition &
Alliance
Planning
Strategic
Change
Governance
Customer Insight
Customer
Analysis &
Models
Customer
Profile
Contact / Event
History
Sales
Customer
Information
Management
Servicing
Routing &
Tracking
Transaction
Capture
Services
Marketing
Deal Structuring
(Securitization /
Syndication)
Corresponde
nt Banking
Trading
Customer
Probity
Check
Proposition Development
Product
Development
Product
Catalogue
Channel Planning & Development
Product Operations
Planning &
Development
Processing / Back office
Common
Application
Processing
Document
Management
Customer
Fulfilment
Statements &
Correspondence
Transactions
Market Info
Product
Accounting
Collections &
recovery
Underlying Asset Procurement &
Management
Complaint &
Exception Handling
Customer
Maint
Ops Mgmnt
Not ready for cloud
Risk &
Financial
Management
Risk
Risk Portfolio
Management
Lending Policy
& Planning
Asset / Liability
Policy &
Planning
Product Factory
Campaign
Execution
Campaign
Management
Brand &
Segment
Management
Market Insight
Segment
Analysis
Distribution Support
Brand & Product Management
Public
Relations
Market
Research
May be ready for cloud
Specific
Cheque
Processing
Reconciliation
Card
Processing
Cash
Inventory
Transaction
Execution
Merchant
Operations
Payments
Transaction
Authorization
Treasury
back office
Trade Finance
specific
Processing
Billing
Fraud / AML
Detection
Cash
Managmnt
Clearing &
Settlement
Custody &
Other specific
processing
Finance
Financial
Control &
Consolidation
Performance
Management &
Reporting
Finance
Policies
Fixed Asset
Register
Accounting / GL
Treasury
Compliance
Support Services
Audit/QA/Legal
Systems
Development &
Operations
Helpdesk
Services
Human
Resource
Management
Facilities
Operation &
Maintenance
Procurement
Business
Policies &
Procedures
NOTE: The above is a representative example only
21
IBM Institute for Business Value
© 2014 IBM Corporation
Quantification – A 35% partial workload migration to cloud helps
bank improve its profits and reduce costs
16,000
15,843
9,105
A representative bank’s financials overview
(to illustrate impact of cloud migration)
9,325
14,000
12,000
$ million
10,000
8,000
6,000
5,693
1,045
366
220
825
5693
Op.
Costs
(excl IT costs)
**IT
Costs
Current
Costs for
cloudable
workloads
Projected
Savings
Projected
IT Costs
Projected Op.
Costs
(excl IT Costs)
4,000
2,000
0
Revenue
PBIT
Projected
PBIT
Improvements in banking operations



Enhanced customer centric operations
Increased collaboration, capability & reach
Focused selling



Increased efficiency with rapid turnaround time
Shorter time to market
Enhanced service orientation
** IT Costs is estimated at 6.6% of revenue using Gartner’s IT Key Metrics data
Note: The above is a representative example only
22
IBM Institute for Business Value
© 2014 IBM Corporation
Migration – Cloud migration from architecture through
implementation
1
Create Cloud
strategy,
architecture
and plans
Determine the
organization goals,
platform requirements
& complexity
associated
Develop enterprise
cloud strategy, options
available and roadmap
Envision the cloud
architecture that will
support cloud initiatives
Update IT Strategy and
IT plans to align them
with cloud strategy
2
Identify and
prioritize
workloads
3
Determine
cloud
deployment
options
4
Develop Cloud
business case
Define business drivers
to prioritize use cases
for cloud
Define multi-sourcing
models and cloud
vendor selection criteria
Develop cloud cost
models including
transition
Implement a
CloudFirst strategy to
evaluate right blend of
cloud options for new
projects
Assess and determine
how to best leverage
the options of private,
public and hybrid
delivery models
Finalize a cloud
business case and
examine its ROI
including time required
for initial payback
Assess and evaluate
from the current
applications, the best
candidates for cloud
Develop Cloud Service
Catalog, SLAs and
KPIs
5
Prepare for
implementation
Prepare infrastructure
for cloud
Develop
 Cloud Risk
Management plan
and policies
 Security and
Compliance plan and
processes
 Transition plan
including workforce
transition
Assess impact on
operating model;
identify and plan
changes required
Determine the
applications to be
moved to cloud
Cloud planning should result in accelerated migration, quick wins and mitigated risks
Note: The above shows an overall plan and will include aspects of workload prioritization and migration discussed in other slides
23
IBM Institute for Business Value
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A defined approach and accelerators speed up cloud adoption
Strategy
1
2
3
4
Actions for migration
Create Cloud strategy,
architecture and plans
Identify and prioritize
workloads
Accelerators
 Develop a vision for cloud, align business – IT objectives & goals
 Identify changes in Enterprise Architecture and IT plans
 Use assessment & decision framework as a tool for prioritization
 Identify bank’s functions, processes and applications that can be moved to cloud
Determine cloud
deployment options
 Assess workloads, data, impact on security and compliance
 Rapidly assess and determine optimal option from private, public and hybrid
models
Develop Cloud business
case
 Determine models for business case
 Identify business functions / processes impacted by cloud, business benefits,
overall costs, and risks
Prepare for implementation
24
5




Acquire / prepare cloud infrastructure
Develop Cloud Risk Management plan
Develop transition plan including workforce transition
Assess impact of cloud on current operating model
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud strategy comprises four elements
Strategy
1
2
3
4
5
APPLICATION AND
DELIVERY PLATFORMS
BUSINESS MODELS
ENABLED BY CLOUD
Driving agility and productivity
for the enterprise; tested
strategies to improve life cycle
performance
Promoting highly competitive
initiatives at the enterprise
and Industry level
INFRASTRUCTURE
PLATFORMS
DATA PLATFORMS
Instantiating well-integrated
business intelligence to
manage the enterprise
Delivering consumable,
secure and readily available
resources to enable agile
execution
25
IBM Institute for Business Value
© 2014 IBM Corporation
Enterprise innovation is realized by integrating new technologies
with existing core systems
Strategy
1
2
3
4
5
Systems of insight
Advanced analytics and cognitive computing
systems that harness big data enabling competitive
advantage for banks
Systems of engagement
Leverage mobile and social to transform
relationships with customers, employees & citizens
Systems
of
Systems
of
Insight
Insight
Systems of record
The traditional core systems such as accounting
applications and product systems that record key
internal data
Enterprise
Enterprise
Innovation
Innovatio
Systems of
Systems
Record of
Record
n
Systems of
Systems of
Engagement
Engagement
Pervasive Security Intelligence
A dynamic approach to threat reduction through a
life cycle of prevention, detection and response.
Enabled by Cloud
Pervasive Security
Intelligence
26
Cloud enables leaders to take a systematic
approach to integrate these capabilities to drive
enterprise innovation
IBM Institute for Business Value
© 2014 IBM Corporation
A phased migration to cloud helps manage risks
Prioritization
1
2
3
4
5
Potential migration risks
 Incorrect analysis and identification of
workloads
Phased migration approach
Discovery Phase
 Inability to meet non-functional
requirements
Discover
Analyze
 Incorrect ROI analysis
 current assets
and usage
 cloud feature /
fit
 topologies &
dependencies
 cloud providers
 Inadequate preparation of infrastructure
/ apps for cloud
 Complex applications’ interoperability &
integration
 platforms and
licenses
 Failure to comply with security, privacy
& regulatory requirements
 SLA’s, security
& compliance
 Management complexity as resources
get distributed in a virtualized
environment
27
Analysis Phase
Migration &
Validation Phase
Establish the
Migration Toolkit
Cloud-enable
infrastructure &
applications
 contract
models
Migrate
 resource sizing
 Applications,
Platforms and
Data
 workloads
 Infrastructure
 Operations
Services
Validate
Migration
IBM Institute for Business Value
© 2014 IBM Corporation
Banks can adopt type of cloud that best meets their requirements
Deployment options
1
2
3
4
Private cloud
28
5
Hybrid cloud
Public cloud
Software, hardware and
platforms are hosted in a data
center owned by a retailer and
used by different departments /
units inside of the retailer
Software, hardware and
platforms are hosted both in
third party data centers, as well
as inside of a retail organization
Software, hardware and
platforms are hosted externally
by a third party vendor who
manages all aspects of the
services for the organization
Value drivers …
Value drivers …
Value drivers …
.… Customization, efficiency,
availability, resiliency, security and
privacy
…… Flexibility and benefits of private
and public cloud while addressing
data security, governance,
compliance and budgetary challenges
.…Standardization, capital
preservation, flexibility and time to
deploy
IBM Institute for Business Value
© 2014 IBM Corporation
Private cloud can help bank reduce its technology spend and Capex
Business Case
2
3
4
5
Bank’s total Operating System
Image (OSI) requirements
Mission
critical,
1%
Business
important,
16%
A. Impact on spend
Cost comparison chart
Cost in USD mn
1
(including 10% YoY increase in OSI images)
20
100%
15
75%
10
5
-
47%
49%
48%
47%
13%
Year 1
Year 2
Year 3
Year 4
50%
Traditional
computing
25%
Private cloud
costs
0%
% reduction
Year 5
~50% savings from year 2 can be used for strategic initiatives
Utility,
61%
Development
& Test, 21%
Source: The above is based on actual business case developed for an
IBM banking client and is used here as a representative example. Actual
results for other banks will vary
29
Capex / Opex%
B. Impact on Opex profile
OSI Opex profile
100%
100%
75%
80% 80%
80% 80%
50%
50%
25%
0%
75%
0%
30%
Current Year 1 Year 2 Year 3 Year 4 Year 5
status
Based on agreed workload transition plan
IBM Institute for Business Value
25%
0%
Capex
Opex
Opex
improvement
© 2014 IBM Corporation
Security, privacy and compliance concerns can be addressed with
cloud
Implementation
1
2
3
4
5
Critical elements to address security, privacy and
compliance concerns
As banks start planning to adopt cloud, key
questions come up about their data & apps:
 Where is our data stored? What about data
sovereignty?
 How does cloud affect our regulatory
compliance?
BANKS
 How do we protect our customers’ privacy?
IT Strategy
 Is a business continuity plan available for
cloud?
Risk
Management
Plan
Monitoring &
Auditing
CLOUD SERVICE
PROVIDER
30
Cloud
requirements
IBM Institute for Business Value
Cloud SLA
Risk & Security
Management
processes
Physical &
Logical controls
implementation
Audits & reports
© 2014 IBM Corporation
Cloud is driving a new operating model aligned to business strategy
Implementation
1
2
3
4
5
 An operating model is a framework for
formulating an operations strategy that best
deploys and determine the explicit choices
needed to achieve business goals
BUSINESS GOALS AND STRATEGY
Target
Operating
Model
 Market shifts in the digital economy
necessitate banks to adopt new technologies
like cloud, mobile, social media and analytics
 To succeed with cloud, banks have to assess
the impact of cloud on the operating model
and all its dimensions and determine what
actions are required to make cloud adoption
smoother and more successful
Customer
Experience
Sourcing &
Alliances
Assets &
Locations
CULTURE
Technology
TOM
Skills &
Capabilities
Processes
Organization &
Governance
Performance
Metrics
ROADMAP FOR CHANGE
31
IBM Institute for Business Value
© 2014 IBM Corporation
1
Cloud is
transforming the
business of
banking
2
Charting the path
for cloud adoption
3
IBM and cloud
32
IBM Institute for Business Value
© 2014 IBM Corporation
Banks are looking for “solutions as a service” – solutions that go
way beyond the “software as a service” model
 The IBM Payments-as-a-Service solution is a cloud
based alternative to the expensive option of banks
running and maintaining a complex payments engine in
house
 IBM® and Fundtech have partnered to provide such a
solution, called Global PAYplus Services Platform™
 It represents a collection of rules-driven payment
services designed to allow the orchestration of end-toend payment processing, data management, and
integration across all channels through back-office
systems and clearing and settlement systems, using
industry standard interfaces.
Fundtech’s Global PAYplus–Services Platform is a shared
service framework that includes payments, cash and liquidity
management, financial messaging, the financial supply chain
Back End Applications
Customer
Information
Systems
 IBMs FTM product is the orchestration and integration
layer, and therefore works with the Fundtech product in
this solution.
 It runs on IBM Power® Systems supported by AIX®,
Oracle Java, and Microsoft SQL Server.
33
Accounting
System
Other
• Data Warehouse
• Investigations
MQ
Web Service
AML
ESB – Routing & Transportation
MQ
 Built on the industry-leading ISV application from
Fundtech, hosted on SoftLayer with GBS services
wrapped around it
 Pay-per-use, with guaranteed minimum volumes
Customer
Balance
Checking
System
FX
Engine
Capture
Pre-processing
Files & Payments
Bank Operators
across different
countries
Direct
Access
To GPP
IBM Institute for Business Value
Payment
Processing
Engine
AT
DE
Analysis —
Validation, matching
GPP
IT
Payments
Between multiple
countries
Decisions —
Which clearing to use
Fees, FX, balance checks
Completion —
Accounting, advices
© 2014 IBM Corporation
SoftLayer has designed and deployed a global, interconnected
platform to meet key operational and economic requirements
Flexibility, Performance and Automation – Globalization, Transparency and Control.
SOFTLAYER CLOUD ARCHITECTURE
On demand compute with consumptive billing
 Common user interface and APIs across a unified platform. Customers can mix and match dedicated, public and
private clouds, and manage them from a single control panel
 Private network provides seamless integration across architectures with low latency
 Scalable computing with fast provisioning
BARE METAL SERVERS
PUBLIC (VIRTUALIZED MULTITENANT) CLOUD
 Better I/O performance (e.g., no
“hypervisor tax”) and network
 Select virtualization of choice
 Customized configuration allowed
 Provisioned in minutes
 Open API standards
 Higher degree of customization possible
for hardware, network, security
 Direct VPN to private network created
instantly
 Based upon enterprise Citrix Xenserver
 Lower cost for workloads with high
server utilization
 Better security possible than multi-tenant
cloud
 Lower cost for burst workloads
21,000+ customers in 140
countries
34
PRIVATE (VIRTUALIZED SINGLETENANT) CLOUD
22,000,000 domains
IBM Institute for Business Value
 Customer can select DC / POD
100,000+ devices
34
© 2014 IBM Corporation
IBM is serving the cloud computing imperatives in banking
Strategize how to use
cloud to drive savings
and revenue growth.
35
Build and run your
private or hybrid cloud.
Utilize cloud services
delivered from IBM
Cloud.
Cloud Strategy
and Design
Expert
Integrated
Systems
Business Process
as a Service
Cloud
Implementation
Cloud Platform
Technologies
Software
as a Service
Cloud Migration
Services
Cloud
Infrastructure
Technologies
Platform
as a Service
Cloud Security
Services
Hybrid Cloud
Technologies
Infrastructure
as a Service
IBM Institute for Business Value
© 2014 IBM Corporation
IBM is helping our clients achieve compelling business outcomes,
no matter where the entry point is
36
BUSINESS PROCESS
SOFTWARE
PLATFORM
INFRASTRUCTURE
as a Service
as a Service
as a Service
as a Service
Automating Business
Innovation
Marketplace of High Value
Consumable Business
Applications
Rapid App Development
through Composable and
Integrated Platform built using
open standards
Enterprise Class, Optimized
Infrastructure built using
open standards
Business Process:
Marketing
Mobile
Compute
Recruiting
Commerce
Security
Networking
Accounting
Supply Chain
Big Data & Analytics
Storage
Procurement
Talent Management
Development & DevOps
Payment Processing
Analytics
Integration
Help Desk
Collaboration
Integration/ API Mgmt.
IT Management
Traditional Workloads
IBM Institute for Business Value
© 2014 IBM Corporation
IBM cloud marketplace provides easy access to our as-a-service
portfolio
IBM CLOUD MARKETPLACE
Your gateway to cloud innovation
Explore hundreds of IBM and Business Partner services from across the cloud spectrum.
Sign up to offer your cloud services in the marketplace today.
Enterprise-grade business
apps to accelerate innovation
(SaaS)
Powerful services and APIs
via an integrated cloud
platform (PaaS)
Self-service IT
infrastructure configurable
to your needs (IaaS)
Biz
Dev
Ops

Over 200 IBM and Third-Party Software
and Services

Leverage world-class IBM partner ecosystem

Curated solution pages with IBM expertise

Easy access to build, consume, deploy and
purchase services
ibm.com/cloud/marketplace
37
IBM Institute for Business Value
© 2014 IBM Corporation
IBM can support you locally and globally …
Banking Regional Contacts
38
[FACE
PIC]
Jon O’Donnell
jon.odonnell@uk.ibm.com
Vice President, Europe GBS Banking
& Financial Markets Leader
[FACE
PIC]
Greg Sarafin
greg.sarafin@us.ibm.com
US GBS Banking and Financial Markets
Industry Leader
[FACE
PIC]
Yoshiki Minowa
YMINOWA@jp.ibm.com
Vice President, Japan Financial
Solutions and Consulting Services
[FACE
PIC]
Steve Bingham
steve.bingham@au1.ibm.com
Managing Partner & Global FSS Leader
Asia Pacific
[FACE
PIC]
Luis Loleo
loleo@ar.ibm.com
Vice President & Managing Partner FSS LA Sector Leader
[FACE
PIC]
Likhit Wagle
Likhit.Wagle@uk.ibm.com
Vice President - Global Industry Leader:
Banking & Financial Markets
IBM Institute for Business Value
© 2014 IBM Corporation
IBM can support you locally and globally …
Banking Regional Contacts
[FACE
PIC]
[FACE
PIC]
Banking Global Contacts
Robert (Bob) Hoey
rjhoey@us.ibm.com
Vice President, Financial Services
Sector, North America
R P (Raoul) Engelshoven Van
raoul_engelshoven-van@nl.ibm.com
Vice President, Banking and Financial
Markets, Europe
[FACE
PIC]
[FACE
PIC]
[FACE
PIC]
39
IBM Institute for Business Value
David K Zimmerman
davidzim@us.ibm.com
Global Solutions Executive and
Worldwide Cloud Leader, IBM Global
Banking & Financial Markets
Anthony J Lipp
anthony.lipp@us.ibm.com
Global Strategy Leader
Banking & Financial Markets
Boxley C Llewellyn
llew@us.ibm.com
Global Retail Banking Director
© 2014 IBM Corporation
IBM can support you locally and globally …
IBM Cloud CoC Advisory Leaders
IBM Cloud CoC Advisory Leaders
Cindy Warner – Managing Partner
Global Cloud Advisory
cindywarner@us.ibm.com
313.903.8787
Mike Owens – Associate Partner Cloud
Advisory
mike.owens@us.ibm.com
951.375.9588
Nathan Herber – Associate Partner
Cloud Advisory
nlherber@us.ibm.com
916.616.5350
IBM Cloud Category Leaders
Nancy Agosta – Cloud Industry Leader
Cloud Category
nagosta@us.ibm.com
919.481.3233
Becky Carroll – Associate Partner
Cloud Advisory
rlcarroll@us.ibm.com
858.204.6723
40
IBM Institute for Business Value
© 2014 IBM Corporation
IBM can support you locally and globally …
IBM Institute for Business Value Contacts
Nicholas Mark Drury
Global Banking Leader - IBM Institute for Business
Value
Nickd@sg.ibm.com
65-9840-6874
Anthony E Marshall
Global CEO Study Program Director, Strategy and
Analytics Leader, IBM Institute for Business Value
anthony2@us.ibm.com
1-720-395-0506
Surendra Ramaiah
Senior Managing Consultant – Strategy & Analytics
rsurendra@ae.ibm.com
971-50900-1372
41
IBM Institute for Business Value
© 2014 IBM Corporation
42
IBM Institute for Business Value
© 2014 IBM Corporation
APPENDIX
 Target Operating Model
 IBM Cloud implementation examples
 Additional slides
43
IBM Institute for Business Value
© 2014 IBM Corporation
 Target Operating Model
44
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud is helping banks evolve a new operating model tightly aligned
to business strategy
Implementation
1
2
3
4
5
 An operating model is a framework for
formulating an operations strategy that best
deploys and determine the explicit choices
needed to achieve business goals
BUSINESS GOALS AND STRATEGY
Target
Operating
Model
 Market shifts in the digital economy
necessitate banks to adopt new technologies
like cloud, mobile, social media and analytics
 To succeed with cloud, banks have to assess
the impact of cloud on the operating model
and all its dimensions and determine what
actions are required to make cloud adoption
smoother and more successful
Customer
Experience
Sourcing &
Alliances
Assets &
Locations
CULTURE
Technology
TOM
Skills &
Capabilities
Processes
Organization &
Governance
Performance
Metrics
ROADMAP FOR CHANGE
45
IBM Institute for Business Value
© 2014 IBM Corporation
Customer experience with banking will drastically change
CUSTOMER JOURNEY
46
1
2
3
Robert, an young
Manager in an IT
company, is traveling
overseas for a project.
He completes a video
conference on mobile Skype with his
bank’s Relationship Manager (RM) to
finalize purchase of property and
mortgage.
He submits the loan
application to the bank
on his mobile. Bank
processes the loan
quickly. It also contacts
one of its partners for home
insurance. All documents are sent
electronically, the insurer completes it
without Robert visiting their office.
Robert is happy that his
bank handled all
formalities and was able
to complete the property
purchase before his
travel. He checks his account and
confirms that his RM has setup
electronic debit for his loan
deductions in the first week of every
month.
4
5
6
The first weekend in his
travel, Robert logs into
his bank account using
his glasses. He checks
the balance on his
glasses and issues voice instruction
to transfer money to his father’s
account. He calls his father to inform
him who confirms he has received it.
Robert steps out for
checking out the new
city. As he enters a
shopping mall, his
banking app picks up
two offers from electronics shops
(based on his previous searches for
iPad Pro). His bank offers him a loan
option based on his profile.
Robert visits the
electronics shop and
tries out the new iPad
Pro. His bank also
offers him enhanced
benefits on his loyalty program due to
local festivities. He opts for a
personal loan and transfers it to his
mobile wallet through which he pays
for the new iPad Pro.
IBM Institute for Business Value
© 2014 IBM Corporation
New partnerships and alliances can speed and harden cloud
adoption
SOURCING & ALLIANCES
IMPACT
IMPLICATIONS
 Organizations will have more partners and
alliances through “Services” being offered by
outside organizations
 Procurement and sourcing functions will
need to be automated and have shortened
cycles
 Complexity will increase in service contracts
due to consumption-based billing
 Vendor and service management will be an
integral part of the Procurement function
 Service quality and availability need more
focus as they are managed through
relationships and agreements with diverse
third party ecosystem
 Service level agreements to be defined
clearly and governed by the need to secure
and protect customer data in a shared
environment
 Service adoption to meet benefits
realization needs to be included in the
negotiating process
47
IBM Institute for Business Value
© 2014 IBM Corporation
Business leaders redesign business architecture and processes to
leverage cloud
PROCESSES
IMPACT
IMPLICATIONS
 The cloud strategy and technologies will
require a shift from systems-based processes
to services-based processes
 Traditional legacy processes to be
decommissioned or integrated into the new
cloud-enabled processes
 Cloud’s speed of service delivery impacts
current processes as they need to match and
deliver at the same speed
 Banks will need control over the continued
availability, reliability and utility of the cloud
based processes and the platforms
underpinning them
 Process framework will migrate from
functional silos to an integrated set of
processes spanning organizational
boundaries
 Dynamic processes for billing and allocation
of resources are required to not be an
impediment in achieving value
 Cloud’s service composition model provides
freedom to engage/disengage functions as
needed
48
 Processes to be made simpler and faster
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud will promote change in organization design and governance
ORGANIZATION & GOVERNANCE
IMPACT
IMPLICATIONS
 Major shift in how the new environment is
managed and operated will have significant
impact on the optimum organizational
structure required in the future
 Organizations will become more flexible,
managing a fluid set of internal / external
resources and service providers
 Organizations and functions will no longer be
constrained by the physical location of data
centers, hosting providers and hardware
platforms
 As products and services become more
‘composable’, Governance across the
ecosystem will become critical
 Governance becomes more centrally
defined with decentralized execution
 Cloud service selection should follow the
overall enterprise cloud governance
standards
 Strong risk management systems are
critical to manage increasing risks arising
out of broader cloud deployment
 Current organization need to evolve
• Organization Design, roles and
responsibilities
• Management systems
49
IBM Institute for Business Value
© 2014 IBM Corporation
Organizations will overhaul performance management to optimize
value from cloud
PERFORMANCE METRICS
IMPACT
IMPLICATIONS
 Cloud requires a dynamic financial model that
measures consumption
 Performance management strategy
introduces new levels of complexity in
management reporting
 With the change in business model, new
metrics that measure service availability,
service quality, responsiveness, ability to
change will gain more importance
 Performance metrics are built into third
party and service management contracts for
all vendors delivering the cloud based
service
 Dynamic metrics tied back to SLAs will be
critical for measuring success for cloud
based services
50
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud will drive rapid change in enterprise skills and capabilities
SKILLS & CAPABILITIES
IMPACT
IMPLICATIONS
 Cloud brings customer centricity to focus
which makes customer and service
orientation skills critical within the bank
 Deeper data analytics and customer insight
capabilities will be the norm
 Vendor management, contracting and
relationship management skills will be critical
to manage all the vendors and alliances
 Training of staff on new skills required
related to new and innovative services
 Existing IT and other functional staff will
likely need to be retrained or redeployed
 Legal / operational support skills will be key
to manage partnership agreements
 Skills shift to managing vendor contracts
and relationships of many vendors
51
IBM Institute for Business Value
© 2014 IBM Corporation
Banks will benefit from cloud most when they accelerate adoption of
other emerging technologies
TECHNOLOGY
IMPACT
IMPLICATIONS
 The technology function will be leaner with a
more strategic focus rather than operational
 IT Strategy, Architecture and IT Plans to be
reviewed and updated to reflect changes in
business strategy and cloud-enabled future
bank
 Cloud’s big impact on Technology will be to
move on-premise technology deployment to
cloud
 As more services migrate to cloud, Service
Management, IT Vendor management and IT
Quality management will become key
differentiators
 IT teams need to be retrained and
redeployed
 Budget for the maintenance of legacy
systems may reside, so they need to be
budgeted and worked into the overall costs
 An IT services catalog needs to be dynamic
globally and be applicable for each market
 A DevOps approach will be required to get
the cloud service delivered faster to achieve
value
52
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud enables more efficient location strategies
ASSETS & LOCATIONS
IMPACT
IMPLICATIONS
 Migration to the cloud will require
decommissioning and consolidation of
technology assets
 Decommissioned technology assets may
still book value and impact the existing
operating budget
 Decommissioned assets and locations will be
a factor in the future state financial model
 One-time financial write-offs will need to be
factored into the overall business case
 Removal of physical / technology assets will
reduce the quantity of needed remote offices
and data centers
 Excess data centers and remote locations
will have to be repurposed or sold / leased
to recoup cost
 Role of branches need to be redefined and
enhanced to provide a much better
customer experience
53
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud-enabled organizations will rethink and recalibrate
organization culture
CULTURE
IMPACT
IMPLICATIONS
 The shift to a cloud-based environment will
also require changes in long-held
organizational beliefs and cultural norms
 Need to address perceived loss of control /
potential resistance by existing IT and other
functions whose processes will move to
cloud
 Banks as a whole need service-orientation,
with a shift in mindset toward valuing the
customer experience above all else
 Open and collaborative reporting and
management across organizational functions
and units facilitates faster customer response
 Need to educate employees on this shift:

How will our culture change, and why?

What is the risk if we do not make this
change? What would be the
consequences of continuing as is?

Requires reinforcement of expected
behaviors through formal and informal
mechanisms and interventions
 Requires changes in

Leadership Behaviors

People practices
 Regular communications on changes
54
IBM Institute for Business Value
© 2014 IBM Corporation
 IBM cloud implementation examples
55
IBM Institute for Business Value
© 2014 IBM Corporation
A bank in Japan uses customer analytics to enable more
personalized engagement and more effective campaigns
This bank in Japan operates nearly 200 branches in Japan and other areas in Asia
CHALLENGE
When this bank saw deeper customer engagement
as essential to its growth and profitability, it knew
that having solid, data-driven insights on customer
behavior and preferences was the foundation. The
real key, it recognized, was to infuse these insights
into customer touch points such as outbound
campaigns and inbound calls.
SOLUTION
The bank is using cloud-based behavioral modeling
to find service propensity patterns across its
customer segments. And it’s incorporating those
insights directly into its campaign management and
inbound customer interactions to deliver a more
personalized experience across all channels.
Effectiveness – 20% increase in conversion rates
for marketing campaigns expected
Customer satisfaction – Improves satisfaction by
providing customers with a more personalized and
relevant experience
Efficiency – Increases efficiency of marketing
operations by significantly shortening the marketing
campaign cycle
Source: http://w3-01.ibm.com/sales/ssi/cgi-bin/ssialias?infotype=CR&subtype=NA&htmlfid=0CRDD-9KJ6QW&appname=crmd
56
IBM Institute for Business Value
© 2014 IBM Corporation
Bank significantly reduces deployment time and achieves optimized
resource use by implementing virtualization and cloud computing
One leading Chinese commercial bank is constantly seeking ways to set itself apart from its
competitors and boost profitability
CHALLENGE
A leading Chinese commercial bank wanted to
boost the flexibility and efficiency of its operations
in order to better react to customer demands, and
stay ahead of competitors.
SOLUTION
Partnered with IBM to launch a virtualization
strategy, supported by servers with IBM®
POWER7® processors and IBM PowerVM®
technology, as well as the IBM SmartCloud™ Entry
solution.
Flexibility – 99% increase in flexibility & workload
deployment by implementing a virtualized
computing environment
Resource utilization – Optimized resource use,
helping to cut costs and complexity.
Source: http://www-03.ibm.com/software/businesscasestudies/us/en/corp?synkey=Y901642O93237U20
57
IBM Institute for Business Value
© 2014 IBM Corporation
A leading Card Management System vendor now offers its system
as Software as a Service based on an IBM PCI DSS Cloud Platform
A global provider of card payment solutions and IT consultancy to 120 international and domestic
banks, service providers and retailers to enable 7 mn transactions per hour, 1 mn merchants & over 60
mn cards
CHALLENGE
The client were looking for a resilient and PCI DSS
compliant infrastructure in continental EU to start
offering its card solution using a private cloud.
SOLUTION
The client deployed a private cloud architecture
hosted at a pair of data centers and designed to
feature numerous physical and logical security
measures. IBM manages this environment around
the clock.
Availability – High availability (99.999%) in a PCI
Compliant multisite data center scenario in Europe
with disaster recovery between data centers
Enabling a CSP – Flexible pricing and architecture
to let the client became a Cloud Service Provider
Time-to-market – Fast time-to-market avoiding to
buy assets & breaking barriers at customers.
Source: https://w3-03.sso.ibm.com/sales/support/ShowDoc.wss?docid=0CRDD-8ZMP4Q&appname=w3skm
58
IBM Institute for Business Value
© 2014 IBM Corporation
A bank in the US protects retail and commercial customers from
cybercrime with advanced cloud-based fraud prevention solution
This bank in the United States provides a full line of retail and commercial banking products through 13
full-service branch offices in a large metropolitan area
CHALLENGE
This bank saw many security risks targeted at both
commercial & retail customers. Despite having
numerous fraud-prevention solutions, the bank
sought to implement an extra level of security that
would be easy to maintain while keeping costs
under control.
SOLUTION
A cloud-based security solution facilitates clientless
detection of malware attacks and infected devices.
Using over 40 million endpoints worldwide, the
software collects intelligence on active phishing
and malware attacks, then applies behavioral
algorithms to detect, block and remove security
threats, including new variants.
Speed – 72 infections detected and removed from
customer devices in the first month of
implementation
Resolution –helps prevent potential losses by
detecting and resolving malware infections
Customer loyalty – Increases loyalty from
customers through proactive efforts to resolve
security issues
Source: http://w3-01.ibm.com/sales/ssi/cgi-bin/ssialias?infotype=CR&subtype=NA&htmlfid=0CRDD-9LDLLH&appname=crmd
59
IBM Institute for Business Value
© 2014 IBM Corporation
 Additional slides
60
IBM Institute for Business Value
© 2014 IBM Corporation
IBM has helped banks in cloud-enabled business and operating
model innovation
 GE Capital1, using IBM’s
BlueMix, built a cloudbased DevOps platform to
accelerate software delivery
and time to market
 Built software and apps,
including the award winning
GE Capital Bank, from the
scratch in weeks rather
than years
 DevOps capability provides
GE Capital Bank with the
agility of a startup and the
resources of a large
enterprise
 Sun Trust Bank2 implemented
IBM WebSphere Cast Iron
cloud integration to connect
back-end enterprise
applications, the company’s
shared services, and the cloud
 Integration enhances the way
relationship managers work
with customers, even when
they are not directly
connected to bank’s back-end
systems
 Commercial bank in
Nigeria3 captures market
share of first-time bankers
when it deployed a private
cloud environment based
on IBM Power Systems
technology
 New solution enables the
bank to save an additional
30 percent of its mobile
banking revenue,
previously forfeited
 Provides access to accurate
information, reducing delivery
times for customers
Source: See speaker notes
61
IBM Institute for Business Value
© 2014 IBM Corporation
IBM is helping leading banks capture the financial and strategic
benefits of cloud
Operating
Efficiency
Operating
Efficiency
Revenue
Growth
40% reduction
in total cost of ownership
Improve the advice &
experience delivered to
customers¹
Single view of customer
drives new revenue
BUSINESS SERVICES
A major bank in Brazil1
COGNITIVE BANKING
DBS Bank Singapore2
ANALYTICS
A leading Polish bank1
The bank reduced total cost of
ownership by 40% by creating
an inter-site cloud to host
previously existing physical
servers.
DBS is using Watson’s cloud
based service to "redefine" how
voluminous amount of data,
structured and unstructured, can
be analyzed to provide
intelligence that was previously
not "humanly" possible.
Data can now be entered into
the system once, giving the bank
a 360-degree view of customer
data—which embedded
analytics can use to help
generate more sales.
Source: See speaker notes
62
IBM Institute for Business Value
© 2014 IBM Corporation
Cloud has helped early-adopters motivate new forms of innovation
and collaboration
 Cloud promotes standardization, supporting
flexibility and agility
 Cloud supports refocus on customer
experiences, integrating disparate set of
processes designed and engineered to
provide customer value
 Cloud supports next generation marketing
and omni-channel interactions that are of
interest to customers where, when and how
they want to be engaged
 Cloud is transferring various functions such
as IT, from fixed cost centers to variable
cost structures
Under Cloud Cover survey: How leaders are
accelerating competitive differentiation
69%
achieved rapid innovation of
novel products and services
56%
reinvented their customer
relationships in response to
changing dynamics
51%
increased engagement and
collaboration across organization
and ecosystem (colleagues,
partners, customers)
of the banks
of the banks
of the banks
Source: IBM Center for Applied Insights Under cloud cover: How leaders are accelerating
competitive differentiation. For more info, visit: ibm.com/ibmcai/globalcloudstudy
63
IBM Institute for Business Value
© 2014 IBM Corporation
A 35% partial workload migration to cloud helps bank improve its
profits and reduce costs
A representative bank’s financials overview
(to illustrate impact of cloud migration)
$ million
16,000
15,843
Comparative view of costs for Traditional IT & Cloud
Computing
60%
9,105
42.5% 41.1%
45%
14,000
30%
12,000
15%
10,000
0%
8,000
1,045
366
6.6%
5.2%
IT costs as a % of
Revenue
220
5,693
6,000
52.9% 54.3%
Bank's operating
costs as a % of
Revenue
Traditional IT
PBIT as a % of
Revenue
Cloud Computing
4,000
2,000
0
Revenue
PBIT
Op.
Costs
(excl IT
Costs)
**IT
Current Projected
Costs Costs for Savings
cloudable due to
workloads
35%
migration
** IT Costs is estimated at 6.6% of revenue using Gartner’s IT Key Metrics data
Note: The above is a representative example only
64
Improvements in banking operations
 Enhanced customer centric operations
 Increased collaboration, capability & reach
 Focused selling
 Increased efficiency with rapid turnaround time
 Shorter time to market
 Enhanced service orientation
IBM Institute for Business Value
© 2014 IBM Corporation
Regulatory authorities are actively monitoring and supporting cloud
adoption in banks
Regulatory authorities have recognized cloud’s role in banks’ business transformation, operational efficiency
and innovation…….they are in various stages of evaluation to provide necessary guidelines in cloud usage
1
De Nederlandsche Bank (DNB), the
Netherlands’ national banking regulator, has
approved use of cloud in the country’s
financial sector subject to its guidelines
3
Monetary Authority of Singapore has
approved use of cloud subject to completion
and approval of Technology Checklist and
rights to conduct its own audit
2
Reserve Bank of India (RBI), the Indian
banking regulatory authority, has
 recommended an approach for cloud
computing for Urban Cooperative Banks
 IDRBT has established an Indian Banking
Community Cloud
 IDRBT has developed a Cloud Security
Framework for banking industry
IDRBT - Institute for Development and Research in Banking
Technology (established by RBI)
Source: See speaker notes
65
IBM Institute for Business Value
© 2014 IBM Corporation
IBM Institute For Business Value Cloud Consumer Banking Point of View
Thank You
© 2014 IBM Corporation