IBM in $700 million deal with lender Santander
According to IDC estimates cited by The Wall Street Journal, banks worldwide will spend $12 billion on public cloud services per year by 2021, compared with $4.0 billion in 2017. IBM (IBM), which wants to have a front row seat as the banking industry’s spending on cloud skyrockets, recently secured a contract to help Banco Santander (SAN) modernize its IT. Santander, Europe’s largest bank in terms of market capitalization, operates in Europe and the Americas and boasts 144 million customers. IBM stands to earn $700 million over five years from the Santander deal.
IBM wants to help banks reduce IT costs
As banks move to modernize their IT environments by transitioning to the cloud, IBM’s pitch to banks is that its cloud services can help them cut costs and meet the high compliance standards in their industry. In a case study, IBM showed that banks could reduce their IT costs by up to 40% by taking advantage of cloud computing.
Cloud vendors treading carefully
The banking industry is important for cloud vendors. As indicated by The Wall Street Journal, Amazon (AMZN), Microsoft (MSFT), and Google (GOOGL) are trying to be careful about their relationship with banks, important potential cloud customers. Amazon and Google are also expanding into the financial service space, challenging banks.