IBM Royal Bank of Canada blockchain

IBM and Royal Bank of Canada: Critical Partnership for the Future

I’m at IBM Think this week and this is a huge conference. IBM can still pull an amazing number of IT professionals into an event. One of the more interesting discussions came during the Ginny Rometty keynote. This discussion was between the Royal Bank of Canada and IBM. Now why I found this interesting is a little different than why you should find this interesting. You see, I used to work for IBM and—for a time—was a bit of a troubleshooter. One of the big problems that dropped on my desk was that this same bank was planning on leaving IBM because key systems they needed to run the bank—systems that typically have downtime measured in seconds—had been down for months and not a single IBM executive was aware of this.

The cause was IBM first-line managers gaming their compensation system to maximize bonuses by concealing critical problems. They were fired—along with an impressive number of other folks—and the Royal Bank got the resources they needed but, had it been me, I’d have likely dropped IBM like a hot potato. Well, here we are about 25 years later, and the Royal Bank is not only still an IBM client, they are a huge IBM advocate and doing amazing things.

That’s why I care. Why you should care is the amazing things they are doing with IBM.

Blockchain In the IBM Cloud

Blockchain is the new banking darling even though banks are mixed on cryptocurrency. What Blockchain does is massively reduce fraud, but it does come at a cost in terms of performance. For trading—stock trading—this performance problem has been a real barrier to adoption. But, for banks not so much because they lose billions on fraud and a few extra seconds for a transaction is a trivial cost to avoid millions of dollars in theft.

Onboarding what is a very different process would have been both painful and excessively time-consuming but using a typical public cloud implementation—which is often untrusted—would have been too risky. IBM Softlayer, one of the few enterprise cloud services, became ideal because it was both secure and IBM had developed a powerful expertise in blockchain, seeing the potential for this process early on.

The result was a powerful effort by both Royal Bank of Canada and IBM to leapfrog into this innovative technology rapidly without incurring excessive risk.

Connecting Customers

One of the big problems all banks are dealing with is the move to mobile technology. They had just gotten used to people using their PCs and reformatting their services to better fit PC screens when they had to rethink everything to get it to all fit on a small screen. Then there were issues with security, digital payment systems, alerts, and other aspects of mobile transactions that made the transition even more difficult.

Layered on this were the extra risks introduced by social media, where customers could express their displeasure with a service to huge numbers of people long before the bank would even be aware there was a problem.

It is perhaps orthogonal thinking to believe that IBM—a firm that seems far removed from mobile technology these days—would be good at helping resolve these problems. But few realize that IBM created what is believed to be the first smartphone, the Simon, back in the 1990s and it turns out you don’t need to build a phone to understand how to interface with phone users. Given the phone is basically a terminal—and IBM has more knowledge than most on terminals—this shouldn’t have been a surprise at all.

Wrapping Up: Why Banks Make Great Advocates

The reason the Royal Bank of Canada makes a great advocate is that banks are extremely conservative. They aren’t motivated to promote vendors, and their integrity is one of their primary assets. This means that they go to extremes to validate the technology they use. They won’t advocate it unless they feel they can put their brand behind it, and they can’t be bought. Given their past painful history with IBM, having them on stage supporting IBM reflects on not only how much IBM has improved since then—it also showcases that the solutions must truly be impressive.

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