- Speaker #0
Welcome to part three of our conversation with Eric Beery, CEO of SBS and deputy CEO of 74 Software. In the last episode, we talked about how SBS is embracing the new opportunities to come with AI. And now in part three, we will focus on the bigger stakes for banks, customers and society in general. So you talked... about sovereignty earlier, but practically speaking, how does a bank stay independent when the whole ecosystem is pulling toward a handful of providers?
- Speaker #1
This is not possible today. The reality is this one. So everyone can dream. I'm going to give you a short story. We are working with CDC. CDC is the public French bank. And of course, they are investing a lot in sovereignty and they are investing also in what we call a French cloud capability, what we call the second cloud for France. And of course, they would dream that all their different systems would be running in that infrastructure. But that infrastructure, even if they invest a lot of money each year for the last... seven, eight years, they are still investing 1,000 less than any hyperscaler from the US. So that means that if we want to do exactly the same, the cost to do it, because this is not at scale, will be higher. Without entering into the detail, we did a proposal on the regulatory reporting, and we gave first a standard proposal from us, and the standard proposal from us is... as it's not manipulating personal data. We are using AWS, public cloud, as a capability in SaaS. I'm going to give wrong figures, but to give you approximately. So the service is sold, one million per year, and it's fully operated, fully secured, fully under our control. I would say nothing to do for CDC, except we access the data, we prepare the monthly reporting for French central bank. European Central Bank and it's done right of course they wanted us to study the way to transfer that capability into the French secnum cloud so the one fully protected fully French and blah blah the cost and to be honest a large part of the work was not on our side because the product is still the product it's just operated by someone else and and there is no shared capabilities. So it has been estimated by a very strong local partner of CDC, and the total cost was multiplied by more than three. So that's the cost of sovereignty. And then all banks and all financial institutions, they are not trying to do black or white, but they do. what they call impact analysis and risk analysis saying what if that activity is impacted by a chaos or suddenly a cable are cut in the atlantic sea or whatever crazy scenario right and they say okay that activity is it really uh critical or is it medium critical or is it not critical and easy to replace? And they are mapping. for the last 18 months, all their different business process, and they study how it is backed by which kind of players. And by the way, we are seen as a French and European player, which is not bad compared to some of our competitors, at least in Europe. When we are in the US, it's exactly the opposite. And they study that, and then they start to build plan, mitigation plan, with different level of criticity. based upon the risk, the impact, and what happens if, right? These are the key three questions. So there are some cases where they will say, okay, I'm ready to pay three times more. I want this in a very secure, protected French environment where I do not take any risk because this is very valuable. This is very critical. We cannot take any risk. There are other activities where they are... only expecting what we call a disaster recovery plan in case there is a big problem, but they don't want to put more money. And there are other things, they just don't care and they forget. And it's like this. And if one day something is happening, they will react. So that's the way they look at sovereignty today. Because unfortunately, you cannot say, I don't want any software, any infrastructure, any, any, any from the US and China. This is not going to happen. So even in the infrastructure in France, you will have chips coming from not Europe. Maybe you will be still having some software not coming from Europe. So your ability to be 100% on sovereign capability is not achievable.
- Speaker #0
So you've just told me what is the cost of sovereignty, but what could a bank lose if it gets sovereignty wrong?
- Speaker #1
Today, they see... two kinds of risks, right? The first one they see is being exposed, being exposed in front of regulation, being exposed in front of cyber, and or not being in a situation to solve a problem because they cannot have access to resources or capabilities. So this is the first risk they see. When they look at sovereignty itself, we are more in a medium to long-term risk mitigation strategy. So if they have to take a decision the morning at 7.12, I'm laughing, they will put 99% of the resources first on the first topic immediately. But their responsibility is to make it sustainable for the next 10, 15 years. So of course they study that. We did not see any major shift from one system suddenly completely migrated. But they are domains where they take care a lot more. Some did invest a lot. When I'm looking at BPC or when I'm looking at BNP Paribas, their investment in their own private cloud in Europe, we are talking about billions. So there is already a reality. How much time does it take? Is it sustainable for everything? So again, they would... this will be not a question of back and right. It's a question of selective domain activities where that makes sense to follow that pattern.
- Speaker #0
And how do we make sure that customers stay in control of their own data and decisions?
- Speaker #1
First, I should ask them how do they manage that because it's their responsibility. So there are two kinds of clients, if I'm really honest. the what we call tier one tier two with a lot of it capabilities the reality is that they are trying to do our job for their internal clients so of course they take care about data management they take care about the cyber security they take care about many many many topics so usually they just give us a list and please be compliant with all of this and and they try to take as much as possible control on many things and and then they rely on us on delivering the product, supporting the product, but usually they try to take care about all the rest. When we are in front of tier 3, tier 4 banks, and it's a large part of our revenue also, we are more in a situation where I call it one-stop shop. They don't want and they don't have the money, the time to be distracted in spending time with 20 different top parties. Let's call it like this. So usually we are there because we are managing the core of their core business. So they like to ask us to manage and to orchestrate, but they are topics which are not our core business. But usually, at least on data management, on security, up to the control plane, like we were talking earlier on AI, they prefer to rely on us in covering a full front-to-back capability. and then giving strong commitment in front of them. So these are the two worlds, I would say, where we are operating. And I think that's our role. So we just need to be very clear on where we need to be really engaged and committed and where this is not our business. And to be very clear, when it's not our business, it's not our business.
- Speaker #0
And to conclude this podcast, What do you see as the biggest opportunity AI has to offer? And more broadly, what's your take on what lies ahead?
- Speaker #1
For any people like you and I. Yeah. I think there is an opportunity to really spend time on what matters. And I'm really trying to, for myself, by the way, but also to give that to the people working for us. We need to find a way to gain efficiency and to do it right first time. So we were trying to do this even before. But when we were studying the detail of the activities and what you are doing, starting at 7.12, up to 10 in the night, I'm sure there are many things you are doing still today which are not really contributing to what makes you happy and and efficient and delivering outcome so i think the opportunity is really to save part of this known core activities we are all having and then to concentrate it does not mean doing more i think it goes on for me it's more spending time on what matters for me for people close to me for the company and if we are able to do that i think we are a lot more impactful for the future and not because doing more but just impacting positively I think that would be a fantastic achievement.
- Speaker #0
Great. Thank you so much for your advice and thanks for being with us today.
- Speaker #1
Every time, big pleasure. Thank you, Karine.