Is MYBank’s self-reliance on in-house cloud feeding the de-IOE (IBM, Oracle, EMC) trend?

Written by Qinwen Wang || June 18 2015

Since Beijing became more cautious on the use of foreign technology in the banking sector, Chinese banks have been intensely trying to figure out what to do next. One bank is not waiting and it's no surprise that the soon-to-launched Alibaba-affiliated internet private bank MYbank is moving in lockstep with the government policy as well as develop its own long-term technology strategy. MYbank announced it will be using an in-house cloud computing system instead of products from IBM, Oracle and EMC (IOE).

Aside from allaying security concerns, the in house cloud based big data could is reported to reduce bank’s technology costs and allow MYBank to provide borrowers with cheaper loans. Basically the bank is able to eschew the costs of buying an external core banking system and leverage its internal existing technology knowhow and cloud technology. 

Being the pioneer in in-house banking systems in China, MYBank paves the way to self-reliance in technology, compliance with data security regulations and possibly, lower costs. It is also a revolutionary step and a breakthrough to showcase China’s viability to drop foreign technology including IOE products. However, according to China’s regulatory authorities, the technology that MYbank aims to employ poses security risks due to the lack of in-person verification for account opening - definitely something that needs to be addressed as MYbank continues to pursue its expansion plans. 

Despite all the talk from Beijing of pushing China's banks off of foreign technology, at the current stage, it is still challenging for China’s commercial banks to migrate off of foreign technology products completedly. As a result of this reality and pressure from foreign governments, the Chinese government halted the “de-IOE” push. This gives a bit of breathing room to foreign technology companies.  

If the self-built MYBank system turns out to be a success, it may open a door for “de-IOE” trend for cloud and big data technology not in the financial sector only, but in other fields too. This could be especially pronouced as Alibaba Financial looks to potential sell the banking cloud as a service to other banks in China. A real game-changer.