IBM and BNP Paribas renew their vows

IBM yesterday announced what it claims is ‘one of the largest cloud deals in Europe’ - an eight-year contract extension that makes it the premier cloud partner for BNP Paribas, itself one of the world’s top 10 largest banks.

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The deal was structured through the BNP Paribas Partners for Innovation joint venture (also known as ‘BP2i’) that IBM and BNP Paribas formed back in 2003. The JV is jointly and equally owned by IBM and BNP Paribas with the sole goal of servicing the bank’s IT needs.  

With an eye on client sensitivities, the bank spells out very specifically that it ‘will not use the public cloud for either customer data or production environments with sensitive information’. This indicates that the majority of the solution will be based on IBM’s private cloud solutions, although the deal does also include use of IBM public cloud (based on Softlayer) for non-critical and non-customer uses like software test and development. 

Back in 2016 (the most recent date for which we’ve seen numbers) the JV already turned over EUR 500m. Given the private cloud focus of the extension, PAC would if anything expect the spend to increase. This would be in line with the broader trend in Enterprise cloud adoption, where market demand is now driven more by the need for increased flexibility, rather than by demand for cost reduction. 

While performance and security will always represent minimum table stakes for banking technology, traditional banks are under significant pressure to adapt better to the needs of a new digital generation of customers. Few sectors are as culturally conservative as banking, and at the same time few sectors are as fundamentally challenged by new digital competitors. While investing in cloud technology is no guarantee of long term survival, as banking painfully adapts to 21st century expectations, it is undoubtedly a step in the right direction.