IBM, Bank of America Team Up on Public Cloud Aimed at Banks
November 05 2019 - 11:30PM
Dow Jones News
By Angus Loten
Bank of America Corp. and International Business Machines Corp.
have teamed up to develop a public-cloud computing service for
banks, which have been reluctant to store customers' financial data
outside their in-house systems.
The tool, unveiled Wednesday, features measures designed to meet
the banking sector's regulatory and compliance requirements, IBM
and Bank of America officials said. They include automated security
tools and top-level encryption -- a process of preventing
unauthorized access by converting data into code.
"Even people at IBM with deep access to the cloud will not have
access to the key" to unlock a bank's encrypted data, said Arvind
Krishna, IBM's senior vice president for the cloud.
The two companies have been working on the project for more than
a year.
With a public cloud, businesses rent computer capacity from
third-party providers including IBM, Microsoft Corp., Amazon.com
Inc. and others. Unlike a company's own private cloud, a public
cloud is shared by other businesses. Mr. Krishna says he hopes the
move catches the attention of other banks in the months ahead.
An important benefit of public-cloud computing is cutting the
cost of running on-premise data centers and servers, Mr. Krishna
said. A public cloud also offers more storage and the flexibility
to access a wider range of applications and emerging technologies,
such as blockchain and artificial intelligence.
He said AI could enable banks to speed up lending decisions,
such as mortgage applications, by quickly parsing a range of
applicants' financial data.
Most banks have been hesitant to shift payments and other
back-end systems to public-cloud services, in part due to concerns
over security and data privacy.
That is giving less-regulated financial-technology upstarts an
edge over banks in online payments, digital lending and investing,
and other fast-growing markets.
Venmo, a digital money-transfer service operated by PayPal
Holdings Inc., reported more than 40 million active users for the
first three months of 2019. Over the same period, Bank of America
reported 37 million active digital users, while Wells Fargo &
Co. counted 29.8 million. Among large U.S. banks, only JPMorgan
Chase & Co. surpassed Venmo, reporting 51 million digital users
for the first quarter.
Bank of America said the move to a public cloud is part of a
plan launched in 2012 aimed at paring down the use of its own data
centers and servers.
As of October, the bank is running 80% of its IT workloads in
its private cloud, cutting the number of on-premise servers to
70,000 from 200,000 seven years ago. It operates 23 data centers,
down from 60 in 2012. The bank said it now spends $2.1 billion less
per year on infrastructure than it did in 2012. It now plans to
gradually shift many of these workloads into the public cloud.
Cathy Bessant, the bank's chief operations and technology
officer, said the move to IBM's public-cloud service is "one of the
most important collaborations in the financial services industry
cloud space," according to a statement.
Write to Angus Loten at angus.loten@wsj.com
(END) Dow Jones Newswires
November 06, 2019 00:15 ET (05:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Bank of America (NYSE:BAC)
Historical Stock Chart
From Apr 2024 to May 2024
Bank of America (NYSE:BAC)
Historical Stock Chart
From May 2023 to May 2024