How fintech innovation is driving digital transformation for communities across the globe

To meet the demands of today’s consumers, enterprises must be continuously innovating. But innovation doesn’t happen in silos. Fintechs, for example, have been transformational for the financial services industry, from democratizing finance to establishing digital currencies that revolutionized the way that we think of money. 

As fintechs race to keep up with the needs of their customers and co-create with larger financial institutions, they can leverage AI and hybrid cloud solutions to drive true digital transformation and meet these evolving demands. 

How Dollarito is connecting larger financial institutions with financially underserved communities 

According to research from the US Government Accountability Office, roughly 45 million people lack credit scores because they don’t have certain data points that credit scores are based on, which limits their eligibility. Traditional credit report models use parameters such as the status of an active loan or credit card payment records to give an individual a credit score. If someone does not fit within these parameters, it can be difficult to procure a loan, take out a mortgage or even buy a car. However, with a more accurate model, such as one powered by AI, financial institutions can better identify applicants who are fit for credit. This can result in a higher approval rate for these populations that otherwise would typically be overlooked. 

Dollarito, a digital lending platform, is focused on helping the Hispanic population with no credit history or low FICO scores access fair credit. The platform offers a unique solution that measures repayment capabilities by using new methodology based on AI, behavioral economics, cloud technology and real-time data. Leveraging AI, Dollarito’s models tap into a wide store of data from banking transactions, behavioral data and economic variables related to the credit applicant’s income source. 

With IBM Cloud for Financial Services, Dollarito, an IBM Business Partner, is able to scale their models continuously and quickly deploy the services that their clients need, while ensuring their services meet the standards and regulations of the industry.  

“Dollarito uses IBM Cloud for Financial Services technologies to optimize infrastructure and demonstrate compliance, allowing us to focus on our mission of providing financial services to underserved communities. We are dedicated to building a bridge of trust between these populations and traditional financial institutions and capital markets. With AI and hybrid cloud technologies from IBM, we are developing solutions to serve these groups in a cost-effective way while addressing risk.” – Carmen Roman, CEO and Founder of Dollarito 

Dollarito is also embracing generative AI, integrating IBM watsonx™ assistant to help its users interact easily and get financial insights to improve the likelihood of access to credit. Like IBM®, Dollarito recognizes the great opportunity that AI brings for the financial services industry, allowing enterprises to tap into a wealth of new market opportunities.  

How Ionburst is helping to protect critical data in a hybrid world 

Data security is central to nearly everything that we do, especially within financial services as banks and other institutions are trusted to protect the most sensitive consumer data. As data now lives everywhere, across multiple clouds, on-premises and at the edge, it is more important than ever before that banks manage their security centrally. And this is where Ionburst comes in. 

With their platform running on IBM Cloud, Ionburst provides data protection across hybrid cloud environments, prioritizing compliance, security and recovery of data. Ionburst’s platform provides a seamless and unified interface allowing for central management of data and is designed to help clients address their regulatory requirements, including data sovereignty, which can ultimately help them reduce compliance costs.  

Ionburst is actively bridging the security gap between data on-premises and the cloud by providing strong security guardrails and integrated data management. With Ionburst’s solution available on IBM Cloud for Financial Services, we are working together to reduce data security risks throughout the financial services industry. 

“It’s critical financial institutions consider how they can best mitigate risk. With Ionburst’s platform, we’re working to give organizations control and visibility over their data everywhere. IBM Cloud’s focus on compliance and security is helping us make this possible and enabling us to give customers confidence that their data is protected – which is critically important in the financial services sector,” – David Lanc and Anne Lanc, Co-Founders and Inventors of Ionburst 

Leveraging the value of ecosystems

Tapping into innovations from fintechs has immensely impacted the financial services industry. As shown by Ionburst and Dollarito, having an innovative ecosystem that supports your mission as a larger financial institution is critical for success and accelerating the adoption of AI and hybrid cloud technology can help drive innovation throughout the industry. 

With IBM Cloud for Financial Services, IBM is positioned to help fintechs ensure that their products and services are compliant and adhere to the same stringent regulations that banks must meet. With security and controls built into the cloud platform and designed by the industry, we aim to help fintechs and larger financial institutions mitigate risk, address evolving regulations and accelerate cloud and AI adoption. 

Source: ibm.com

Continue reading

Accelerate hybrid cloud transformation through IBM Cloud for Financial Service Validation Program

The cloud represents a strategic tool to enable digital transformation for financial institutions

As the banking and other regulated industry continues to shift toward a digital-first approach, financial entities are eager to use the benefits of digital disruption. Lots of innovation is happening, with new technologies emerging in areas such as data and AI, payments, cybersecurity and risk management, to name a few. Most of these new technologies are born-in-cloud. Banks want to tap into these new innovations. This shift is a significant change in their business models, moving from a capital expenditure approach to an operational expenditure approach, allowing financial organizations to focus on their primary business. However, the transformation from traditional on-prem environments to a public cloud PaaS or SaaS model presents significant cybersecurity, risk, and regulatory concerns that continue to impede progress.

Balancing innovation, compliance, risk and market dynamics is a challenge 

While many organizations recognize the vast pool of innovations that public cloud platforms offer, financially regulated clients remain accustomed to the level of control and visibility provided by on-prem environments. Despite the potential benefits, cybersecurity remains the primary concern with public cloud adoption. The average cost of any mega-breach is an astonishing $400 plus million, with misconfigured cloud as a leading attack vector. This leaves many organizations hesitant to make the transition, fearing they will lose the control and security they have with their on-prem environments. The banking industry’s continued shift toward a digital-first approach is encouraging. However, financial organizations must carefully consider the risks that are associated with public cloud adoption and ensure that they have the proper security measures in place before making the transition. 

The traditional approach for banks and ISV application onboarding involves a review process, which consists of several key items like the following: 

• A third-party architecture review, where the ISV needs to have an architecture document describing how they are deploying into the cloud and how it is secure. 
• A third-party risk management review, where the ISV needs to describe how it is complying to required controls. 
• A third-party investment review, where the ISV provides a bill of material showing what and how services are being used to meet compliance requirements, along with price points. 

The ISV is expected to be prepared for all these reviews and the overall onboarding lifecycle through this process takes more than 24 months today.

Why a FS Cloud and FS Validation Program? 

IBM has created the solution for this problem with its Financial Services Cloud offering, and its ISV Financial Services validation program, which is designed to de-risk the partner ecosystem for clients. This help accelerating continuous integration and continuous delivery on the cloud. This program ensures that the new innovations coming out of these ISVs are validated, tested, and ready to be deployed in a secure and compliant manner. With IBM’s ISV Validation program, banks can confidently adopt new innovative offerings on cloud and stay ahead in the innovation race. 

Ensuring that the success of a cloud transformation journey requires a combination of modern governance, standard control framework, and automation. There are different industry frameworks available to secure and provide compliance posture. Continuous compliance that is aligned to an industry framework, informed by an industry coalition that is composed of representation from key banks worldwide and other compliance bodies, is essential. IBM Cloud Framework for Financial services is uniquely positioned for that, meeting all these requirements. 

IBM Cloud for Financial Services® is a secure cloud platform that is designed to reduce risk for clients by providing a high level of visibility, control, regulatory compliance, and the best-of-breed security. It allows financial institutions to accelerate innovation, unlock new revenue opportunities, and reduce compliance costs by providing access to pre-validated partners and solutions that conform to financial services security and controls. The platform also offers risk management and compliance automation, continuous monitoring, and audit reporting capabilities, as well as on-demand visibility for clients, auditors, and regulators. 

Our mission is to help ISVs adapt to the cloud and SaaS models and prepare ISVs to meet the security standards and compliance requirements necessary to do business with financial institutions on cloud. Our process brings the compliance and onboarding cycle time down to less than 6 months, a significant improvement. Through this process, we are creating an ecosystem of ISVs that are validated by IBM Cloud for Financial Services, providing customers with a trusted and reliable network of vendors. 

Streamlined process and tooling

IBM® has created a well-defined process and various tools, technologies and automation to assist ISVs as part of the validation program. We offer an integrated onboarding platform that ensures a smooth and uninterrupted experience. This platform serves as a centralized hub, guiding ISVs throughout the entire program, starting from initial engagements and leading up to the validation of final controls. The onboarding platform navigates the ISV through following steps: 

Orientation and education

The platform provides a catalog of self-paced courses that help you become familiar with the processes and tools that are used during the IBM Cloud for Financial Services onboarding and validation. The self-paced format allows you to learn at your own pace and on your own schedule. 

ISV Controls analysis

The ISV Controls Analysis serves as an initial assessment of an organization’s security and risk posture, laying the groundwork for IBM to plan the necessary onboarding activities.

Architecture assessment

An architecture assessment evaluates the architecture of an ISV’s cloud environment. The assessment is designed to help ISVs identify gaps in their cloud architecture and recommend best practices to enhance the compliance and governance of their cloud environment.

Deployment planning

Deployment of ISV application in a secure environment and manage their workloads on IBM Cloud®. This step is designed to meet the security and compliance requirements of organizations. Providing a comprehensive set of security controls and services to help protect customer data and applications, meeting the suitable secure architecture requirements. 

Security Assessment

The security assessment is a process of evaluating the security controls of the proposed business processes against a set of enhanced, industry-specific, control requirements in the IBM Cloud for Financial Services Framework. The process helps to identify vulnerabilities, threats, and risks that might compromise the security of a system and allows for the implementation of appropriate security measures to address those issues. 

Professional guidance by IBM and KPMG teams

IBM team provides guidance and assets to help accelerate the onboarding process in a shared trusted model. We also assist ISVs with deploying and testing their applications on the IBM Cloud for Financial Services approved architecture. We work with ISVs throughout the controls assessment process to help their application achieve the IBM Cloud for Financial Services validated status. Our goal is to ensure that ISVs meet our rigorous standards and comply with industry regulations. We are also partnering with KPMG, an industry leader in the security and regulatory compliance domain to add value to the ISVs and clients. 

Time to revenue and cost savings

This process enables the ISV to be ready and go to market in less than eight weeks reducing the overall time to market and overall cost of onboarding for any end clients. 

Benefits of partnering with IBM? 

As an ISV, you have access to our extensive financial institution clients. Our cloud is trusted by 92 of the top 100 banks, giving you a significant advantage in the industry. 

Co-create with IBM team of expert architects and developers to take your solutions to the next level with leading-edge capabilities. 

Partnering with us means you can elevate your Go-To-Market strategy through co-selling. We can help you tap into our vast sales channels, incentive programs, client relationships, and industry expertise. 

You have access to our technical services, and cloud credits, as an investment in your innovation. 

Our marketplaces, like the IBM Cloud® Catalog and Red Hat Marketplace, offer you an excellent opportunity to sell your products and services to a wider audience. 

Finally, our marketing and direct investments in your marketing, can generate demand and help you reach your target audience effectively. 

Source: ibm.com

Continue reading

Building for operational resilience in the age of AI and hybrid cloud

Each year we see the challenges that enterprises face become more complex as they strive to keep up with the latest technologies, such as generative AI, and increasing customer expectations.

For highly regulated industries, these challenges take on an entirely new level of expectation as they navigate evolving regulatory landscape and manage requirements for privacy, resiliency, cybersecurity, data sovereignty and more. Organizations in the financial services, healthcare and other regulated sectors must place an even greater focus on managing risk—not only to meet compliance requirements, but also to maintain customer confidence and trust.

To do this, it’s crucial that enterprises place an emphasis on operational resilience with the aim of maintaining stability, preserving market integrity and protecting confidential data for themselves and their customers.

Prioritizing operational resiliency

In our view, the essence of operational resilience is an assumption that disruption is inevitable, and organizations must have measures in place to be able to absorb and adapt to any shocks. This includes cyber incidents, technology failures, natural disasters and more. With more dependency on technology and third and fourth parties, expectations are increasing for organizations to continue delivering critical business services through a major disruption in a safe and secure manner. This means actively minimizing downtime and closing gaps in the supply chain to remain competitive.

This is different from the long-standing industry practice of disaster recovery where, traditionally, companies would return to normal operations in the several days after an event with defined recovery point objectives and recovery time objectives. Although still an important practice, appetite for conventional disaster recovery approaches is diminishing across industries and especially with regulators. This is evident from emerging regulatory requirements and expectations in UK (Bank of England’s Critical Third-Party regime), Europe (Digital Operational Resilience Act), Australia (APRA CPS-230 Operational Risk Management) and Canada (OSFI – Operational Resilience and Operational Risk Management), etc. Similarly, in the U.S. the Office of the Comptroller of Currency (OCC) also indicated that the Federal Banking Agencies are considering updates to operational resilience frameworks and approaches for critical business services and for third-party services providers. 

As hybrid cloud and generative AI adoption increases, data and applications are everywhere—across multiple clouds and vendors (SaaS/Fintech), on premises and even at the edge. For this reason, it’s more important than ever for enterprises to ensure their cybersecurity and resiliency strategy incorporates their entire IT estate, no matter where it resides.

To do this, enterprises must first prioritize the most critical business services and develop a workload and data placement strategy to determine which applications and data should reside in a certain environment based on its specific security, resiliency and data sovereignty needs. 

According to the 2024 IBM X-Force Threat Intelligence Index, attackers are increasingly shifting from ransomware to malware that is designed to steal information, which reinforces the importance of leveraging technology and approach that provides holistic view and end-to-end protection across your entire IT estate, including your partners.

While partnerships are essential for businesses to remain competitive and tap into new entry points, enterprises must make sure third parties are thinking about security, resiliency and controls in the same way they and their regulators are.

It’s clear trust and security must be at the foundation of decisions about where workloads and data reside—regardless of the industry. But how can an enterprise ensure these priorities remain front and center, especially when working with third and fourth parties?

Taking an industry-specific approach to accelerating digital transformation

Hybrid cloud is now the dominant architecture adopted by enterprises, according to an IBM Study, but critical to hybrid cloud strategy is an industry cloud approach. Over the past few years, IBM Cloud® has continued to innovate on, and made significant enhancements to our enterprise cloud platform designed for regulated industries. This purpose-built approach has enabled clients to take advantage of cloud services, SaaS providers and Fintechs at a consistent level of security, resiliency and compliance to build and deliver world-class solutions for their customers, while managing third- and fourth-party risk. 

Several years ago, we took a strategic step to address the needs of our clients in regulated industries with the first industry-specific cloud platform designed to meet the needs of financial services sector. This includes the highest set of operational, resiliency, cybersecurity and regulatory standards with built-in controls informed by the industry. By meeting the stringent standards for financial services, it can be seamlessly leveraged across other industries including insurance, government, healthcare, manufacturing and telecommunications, allowing for continuous and central management of security and risk management. 

To support clients in their transformation journey, we are continuing our work with key industry organizations to further address risk and allow organizations to leverage the cloud with confidence. One of our premier industry forums is the IBM Financial Services Cloud Council, which now consists of a network of more than 160 CIOs, CTOs, CISOs and Risk and Compliance officers from over 90 financial institutions working together to develop safe, secure and compliant adoption of cloud and Gen AI.

Moreover, we are collaborating with industry leading organizations such as the Cloud Security Alliance to advance hybrid cloud security and Gen AI adoption for enterprises. On-going engagement with regulators around the globe and private-public sector collaboration through organizations such as the U.S. Financial Services Sector Coordinating Council (FSSCC) and engagements with the Financial Stability Board Third-Party Risk group are also important in developing practical and consistent industry-wide approach to common challenges.

Shared understanding and ownership

As enterprises continue to balance the complexities of innovation, risk and resilience, we believe the path forward will be working towards a common, risk-based understanding of the core principles that underpin effective operational resiliency. It’s essential for enterprises to take ownership of their operations and prioritize their actions and investments based on the impact to themselves, their customers and market stability, but this can’t happen in a vacuum. 

At IBM, we are committed to helping clients on this journey. We believe it takes all of us—enterprises, trade organizations, policy makers, regulatory authorities and cloud providers— to work in unison to accomplish the same critical mission: accelerating digital experiences that move the world in a secure, resilient and compliant manner. 

Source: ibm.com

Continue reading

6 benefits of data lineage for financial services

The financial services industry has been in the process of modernizing its data governance for more than a decade. But as we inch closer to global economic downturn, the need for top-notch governance has become increasingly urgent. How can banks, credit unions, and financial advisors keep up with demanding regulations while battling restricted budgets and higher employee turnover?

The answer is data lineage. We’ve compiled six key reasons why financial organizations are turning to lineage platforms like Manta to get control of their data.

1. Automated impact analysis

In business, every decision contributes to the bottom line. That’s why impact analysis is crucial—it predicts the consequences of a decision. How will one decision affect customers? Stakeholders? Sales?

Data lineage helps during these investigations. Because lineage creates an environment where reports and data can be trusted, teams can make more informed decisions. Data lineage provides that reliability—and more.

One often-overlooked area of impact analysis is IT resilience. This blind spot became apparent in March of 2021 when CNA Financial was hit by a ransomware attack that caused widespread network disruption. The company’s email was hacked, consumers panicked, and CNA Financial was forced to pay a record-breaking $40 million in ransom. This is where lineage-supported impact analysis is needed. If you experience a threat, you will want to be prepared to combat it, and know exactly how much of your business will be affected.

IT resilience is also threatened by natural disasters, user error, infrastructure failure, cloud transitions, and more. In fact, 76% of organizations experienced an incident during the past two years that required an IT disaster-recovery plan.

Most organizations struggle with impact analysis as it requires significant resources when done manually. But with automated lineage from Manta, financial organizations have seen as much as a 40% increase in engineering teams’ productivity after adopting lineage.

2. Increased data pipeline observability

As discussed above, there are countless threats to your organization’s bottom line. Whether it is a successful ransomware attack or a poorly planned cloud migration, catching the problem before it can wreak havoc is always less expensive.

That’s why data pipeline observability is so important. It not only protects your organization but also your customers who trust you with their money.

Data lineage expands the scope of your data observability to include data processing infrastructure or data pipelines, in addition to the data itself. With this expanded observability, incidents can be prevented in the design phase or identified in the implementation and testing phase to reduce maintenance costs and achieve higher productivity.

Manta customers who have created complete lineage have been able to trace data-related issues back to the source 90% faster compared to their previous manual approach. This means the teams responsible for particular systems can fix any issue in a matter of minutes, according to Manta research.

3. Regulatory compliance

The financial space is highly regulated. Institutions must comply with regulations like Basel III, SOC 2, FACT, BSA/AML and CECL.

All of these regulations require accurate tracking of data. Your organization must be able to answer:

• Where does it come from?
• How did it get there?
• Are we capable of proving it with up-to-date evidence whenever necessary?
• Do we need weeks or months to complete a report?
• Is that report even entirely reliable?

Data lineage helps you answer these questions by creating highly detailed visualizations of your data flows. You can use these reports to accurately track and report your data to ensure regulatory compliance.

4. Efficient cloud migrations

McKinsey predicts that $8 out of every $10 for IT hosting will go toward the cloud by 2024. In the financial space, 40% of banks and 41% of credit unions have already deployed cloud technologies.

However, if you have ever been involved in the migration of a data system, you know how complex the process is. Approximately $100 billion of cloud funding is expected to be wasted over the next three years—and most enterprises cite the costs around migration as a major inhibitor to adopting the cloud. The process is so complex (and expensive) because every system consists of thousands or millions of interconnected parts, and it is impossible to migrate everything in a single step.

Dividing the system into smaller chunks of objects (reports, tables, workflows, etc.) can make it more manageable, but poses another challenge—how to migrate one part without breaking another. How do you know what pieces can be grouped to minimize the number of external dependencies?

With data lineage, every object in the migrated system is mapped and dependencies are documented. Manta customers have used data lineage to complete their migration projects 40% faster with 30% fewer resources.

5. Improved workflow & IT retention

Data engineers, developers, and data scientists continue to be fast-growing and hard-to-fill roles in tech. The shortage of data engineering talent has ballooned from a problem to a crisis, made worse by the increasing complexity of data systems. The last thing you want is to continually overstretch your valuable data engineers with routine, manual (and frustrating) tasks like chasing data incidents, assessing the impacts of planned changes, or answering the same questions about the origins of data records again and again.

Data lineage can help to automate routine tasks and enable self-service wherever possible, allowing data scientists and other stakeholders to retrieve up-to-date lineage and data origin information on their own, whenever they need it. A detailed data lineage map also enables faster onboarding of data engineers to integrate new or less-experienced engineers into the role without impacting the stability and reliability of the data environment.

6. Trust and data governance

Data governance isn’t new, especially in the financial world. The Basel Committee released BCBS 239 as far back as 2013. The regulation was meant to strengthen banks’ risk-related data-aggregation and reporting capabilities—enhancing trust in data.

Report developers, data scientists, and data citizens need data they can trust for accurate, timely, and confident decision-making. But in today’s complex data environment, you’re dealing with dispersed servers and infrastructure, resulting in disparate sources of data and countless data dependencies. You need a complete overview of all your data sources to see how it moves through your organization, understand all touch-points, and how they interact with one another. You can only completely trust your data when you have a complete understanding of it.

Data lineage provides a comprehensive overview of all your data flows, sources, transformations, and dependencies. You’ll ensure accurate reporting, see how crucial calculations were derived, and gain confidence in your data management framework and strategy.

Why Manta is the right fit for data lineage in financial services

Manta has helped dozens of customers in the financial space realize the benefits of data lineage. We bring intelligence to metadata management by providing an automated solution that helps you drive productivity, gain trust in your data, and accelerate digital transformation.

The Manta platform includes unique features to make the most value out of your lineage, with more than 40 out-of-the-box, fully automated scanners. In addition, Manta works alongside the most popular data catalogs; our platform integrates with catalogs like Collibra, Informatica, Alation and more.

Don’t wait. Realize the benefits of automated data lineage today.

Source: ibm.com

Continue reading