What the IBM-Apple Deal Means for Banks

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IBM's new partnership with Apple, in which it is building industry-specific apps for iPhones and iPads, will bring about a new set of applications bank employees can use on the go.

But the real value, especially for large banks, may be the integration services that will come out of this collaboration that will allow legacy systems written in old code, like Assembler or COBOL, to run on the iPhones and iPads that many employees prefer to use.

Most large banks already use IBM software and hardware throughout the organization, points out David Potterton, research director at Cornerstone Advisors. And many offer some level of support for employees' use of iPhones and iPads.

Making existing mainframe applications usable on iPads could help banks bring mobility to old technology. For instance, a bank running on a mainframe-based core banking system could use the IBM tools and services to deliver an app for "universal tellers" in the branch, one that could draw from the transaction data stored in the core. Without such a "bridge," so to speak, it would be extremely difficult to build iPad apps that work with the core.

"That's going to be a nice marriage, when you can bring more of the applications that are right now stuck on mainframe, legacy applications out where people can use them remotely," Potterton says. "That's where people have been stuck."

IBM is also providing services, such as support, security and backup, to cover Apple devices used within a company.

"It's a good crossover because you've got IBM, which is known and trusted for security, cloud, and the business practices they bring, and you marry that with Apple's more cutting edge [technology]," Potterton says. "I think it takes a worry point off. Banks know IBM, they've been on it forever, and they may not be as comfortable with some of the [mobile operating systems], especially around security. I think this is going to give people better peace of mind."

Small banks might not care about the Apple-IBM deal because they tend to use core and workplace systems from providers such as Fiserv, FIS and Microsoft that build their own mobile extensions of their software. However, IBM does plan to build applications specifically for them.

IBM plans to launch a set of about 100 new "IBM MobileFirst for iOS" applications starting in September that will address "industry pain points." These will be based on the MobileFirst app series IBM debuted earlier this year, but built for Apple's operating system to take advantage of its native capabilities. The MobileFirst platform is also meant to provide security, backup, control of data movement and integration for these apps.

One of the first apps in this series lets a flight attendant rebook people on a plane. Another is for "saving the sale" in the retail industry: if a customer's been shopping in a store for a while, the app might prompt a salesperson to go help him, armed with knowledge of that customer's size and the type of pants he likes.

"The ultimate objective is to help with an industry pain point to enable better customer experiences, improved productivity, and increased revenue opportunities, as well as empower employees," says Saul Berman, global chief strategist for IBM Global Business Services.

At least one of the new apps to be released in September will be specifically created for banks, Berman says.

"In banking, we're thinking about, 'where do these ideas apply?'" Berman says. One idea under discussion is a wealth management app that would help financial advisors collect the information they need to come up with financial strategies for their clients.

"We think there's a lot of information that could be brought to the point of contact and shared with different parts of the organization, to help an advisor gather information for a customer," he says. ANZ Bank already uses IBM's Watson technology for a similar purpose. While an ANZ advisor is chatting with a client, Watson goes out and pulls all the documents and data needed to assess that customer's financial situation.

Another idea IBM and Apple are considering, Berman says, is developing a small-business banking app that could help a banker and small business owner interact. For instance, a small business owner looking for a loan might push updates on his company's financials to his banker through the app.

IBM will extend some existing technology to the new Apple program. For instance, its Maas360 mobile device management software could be brought in to manage an organization's mobile devices and apps. Its security apps, such as Trusteer, could be used to secure devices and apps in the initiative. The program also includes an AppleCare component in which IBM geeks will take the role of Apple Geniuses within banks and other companies, handling all service, repair and troubleshooting.

"We'll bring in whatever fits and create the right platforms for clients, working with clients to tailor these apps to their needs," Berman says.

This initiative could give IBM and Apple an advantage over Microsoft and Google in the enterprise mobility market.

"This is definitely a shot across the bow of both Microsoft and Google, and a smart partnership in my opinion," says Sam Maule, consulting manager at Carlisle and Gallagher Consulting Group. "We've come a long way from Steve Jobs' and Apple's infamous 1984 inspired commercial directed at IBM. And in this day and age I believe Steve would approve."

The two companies could help banks address privacy and regulatory concerns, for example. And come up with interesting new apps. "Imagine the simplification of the interface Apple can provide with the data analytics and security components IBM can provide," Maule says. "Blend the 'ease of use' of iOS and enterprise developers with IBM's BlueMix [IBM's cloud architecture] and you have a powerful mix."

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