New cloud for financial services model can accelerate innovation needed to rebuild from COVID-19

Author: Steve O’Donnell, IBM New Zealand’s Managing Partner for Global Business Services. 

As a trader in London during the Great Recession when so many banks were put under intense strain, I learnt first-hand how important it is that our financial sector builds resilience to withstand shocks.  What is key for New Zealand banks is that they find a way to allocate scarce resources to not only build this resilience and maintain regulatory compliance, but in parallel, search for ways to accelerate innovation in the services they provide.

Fortunately, stress-testing banks against the impact of potential shocks is a regular part of the compliance work undertaken by the banks, regulators and technology vendors. The country’s largest foreign-owned banks are building back-up New Zealand only banks that could stand up within a matter of hours. 

Under the RBNZ’s BS11 policy, these back-up banks need to be completely ready in three years’ time. BS11, and other major industry milestones that preceded it, like cleared funds and intraday payments, require serious investment in people and systems to get the technical infrastructure compliant within the timeframe. 

The ‘regulation fatigue’ emerging from these multi-year work programmes has added to the pressure on banks who are also being challenged to innovate faster to compete with cloud-first fintechs. Yet accelerating innovation is more important than ever post COVID-19 to create new businesses and jobs, and reduce transaction costs within the financial system.

By coming pre-configured with mandatory international cyber security standards, safety and regulatory measures, Cloud for Financial Services takes on much of the heavy lifting on future infrastructure projects.

In addition to the regulatory compliance aspect, banks hold a vast treasure trove of transactional data which sits dormant but which could stimulate new products and services. The promise of Open Banking is closer to being realised with the availability of IBM Cloud for Financial Services. This industry-specific public cloud built on Red Hat OpenShift – designed to integrate the features and functionality of on-premise workloads, on all clouds, and on the edge – will facilitate the multicloud managed environments needed to open up the value of data and allow new services to flourish.

If financial institutions can have the confidence they are meeting stringent industry regulations, more resources can be directed to innovation as well as reducing transaction costs, something we need now more than ever. 

Steve O’Donnell is Managing Partner, Global Business Services, IBM New Zealand and works with leading companies in New Zealand to take advantage of exponential technologies, powered by data to create a next-generation business model IBM calls the Cognitive Enterprise. Steve has extensive experience in technology, finance, consulting, operations and executive leadership gained from working across Asia Pacific and the UK. 

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Hear from Hillery Hunter, VP & CTO for IBM Cloud and IBM Fellow, on The Australian’s Forward Slash podcast to learn more about the emergence of industry-specific cloud.