The financial services industry is at an inflection point, analysts say, creating business opportunities for companies that can help banks better mine and use their data. IBM and companies such as Oracle Corp. and Hewlett-Packard Co. are jockeying for position.
"IBM has a broad footprint and broad expertise," said Rodney Nelsestuen, a senior research director at TowerGroup. "But they have a lot of competition, and it's not bad, either. The demand for data and information is growing in order to better understand customers and meet regulatory requirements; the financial services industry is undergoing change, and they all have a great opportunity that is unfolding in 2010."
To seize this opportunity, IBM went on an acquisition tear in 2009. It purchased Exeros Assets, a data discovery software firm; SPSS Inc., which focuses on statistical analysis software; Ounce Labs Inc. for its source code analysis; RedPill Solutions Pte. Ltd. for its analytics and optimization capabilities; Guardium Inc. for database monitoring and protection; and Lombardi for business process management.
Meanwhile, IBM topped the list of corporate patent issuers in 2009 for the 17th year, while landing new partnerships and deepening others.
It announced an extension of its global strategic alliance with Temenos Corp. in November to enable large retail operations to implement core system modernization and replacement strategies. It also announced a partnership with Odyssey Financial Technologies Inc., a provider of wealth management software.
Greg Conley, who served two stints at IBM striking partnerships and is now on the other end of the relationship as Odyssey's chief executive, said that IBM's overriding goal through acquisitions, partnerships and innovation is to outrun commoditization. "IBM does not want to be a commodity vendor of tools, but a solution provider; it wants to take industry-specific knowledge and create a solution and drive value for the customer," he said. "They don't want to be selling just to the IT guys, but to the CEO and business owners. It's then that you're delivering real competitive advantage to businesses and not just solving tech problems."
To pull these partnerships, acquisitions and research together to better coordinate its financial services offering, IBM created a Banking Industry Framework, announced in September. Boxley Llewellyn, director of growth initiatives for banking and financial markets at IBM, said the Banking Industry Framework will be "an organizing principle for us and the next decade's view of how we will deliver solutions."
IBM bills the Banking Industry Framework as a software technology backbone that makes a wide range of smart banking solutions possible and uses IBM's entire software portfolio. The framework also provides integration between IBM middleware and partner applications from crucial independent software vendors. The combined IBM and ISV products offered by the IBM Banking Industry Framework are aimed at helping banking customers speed time to market, reduce development risk, lower development costs and improve their return on investment.
Jeff Goldberg, a senior analyst at Celent, said the Banking Industry Framework fits perfectly with IBM's plan: "create an overall framework and methodology — a domain-specific model they can bring to the banking industry or insurance industry, and then they fill out the technical components with technology partners or by building it themselves. It's always been a little bit of both. IBM wants to have a full story to present to customers."
Nelsestuen said banks tend to hire chief information officers for their technology know-how, but the CIOs lack domain expertise. This makes IBM's focus on domain knowledge particularly attractive to them.
