IBM, Bank of America team up to launch financial services-specific cloud

(Reuters) - International Business Machines Corp IBM.N said on Wednesday that it has built financial services-specific cloud technology in collaboration with Bank of America Corp BAC.N, which will be the first major bank to use the platform.

FILE PHOTO: A Bank of America logo is pictured in the Manhattan borough of New York City, New York, U.S., January 30, 2019. REUTERS/Carlo Allegri

The public platform, IBM’s first industry-specific cloud, is designed to meet the high regulatory, security and resiliency standards required of the financial services industry.

“By setting a standard that addresses the concern of hosting highly confidential information, we aim to drive the public cloud to a safety level that is unmatched,” said Cathy Bessant, chief operations and technology officer of Bank of America.

Bank of America has focused on its internal cloud computing capabilities. Over the past several years the second largest U.S. bank has gotten down to about 70,000 servers from over 200,000 and trimmed its data centers to 23 from 67.

Streamlining those operations has saved $2 billion annually, Chief Executive Brian Moynihan said on an earnings call last month. However, the bank still relies on cloud services from external vendors since third parties can usually offer the service 23%-30% cheaper, he said.

“We don’t need to own the hardware,” he said. “We just need to find out who can provide it the right way.”

Investing in cloud computing is key for banks as more transactions become digital. It is critical that the platform can transfer information quickly, keep data private, and prevent service outages.

Bank of America customers reported trouble accessing online banking and card services late last month, according to

Cloud services used by banks have come under scrutiny in Washington after a massive data breach at Capital One Financial Corp COF.N raised questions over the risks posed by banks’ reliance on third-party cloud providers.

U.S. lawmakers have asked regulators to consider direct oversight of the cloud services big tech companies provide to banks - like Inc's AMZN.O Amazon Web Services, Microsoft Corp's MSFT.O Microsoft Azure and Alphabet Inc's GOOGL.O Google Cloud - saying they have become a critical component of the global financial system. IBM was not one of the cloud providers mentioned in the letter.

Before cloud technology became popular, both IBM and Red Hat, which IBM acquired earlier this year, had strong customer bases in financial services industry. But Microsoft and Amazon have been going after those customers during the cloud transition.

Reporting by Imani Moise; Editing by Leslie Adler and Bill Berkrot