The development, knows as fully homomorphic encryption, allows for the unlimited analysis of encrypted data without affecting confidentiality, the company claims.
It added that the solution may help to strengthen cloud computing, as vendors may be able to carry out tasks at the request of their clients without having to expose original data, something which may help to improve security for the financial services sector.
"At IBM, as we aim to help businesses and governments operate in more intelligent ways, we are also pursuing the future of privacy and security," said vice-president of software at research at the firm Charles Lickel.
Such an approach could help organisations to make better informed decisions based on more studied analysis without putting data security at risk.
Earlier this week, IBM Financial Services argued that firms on Wall Street are increasingly looking to cloud computing as a means of cutting costs while the downturn continues.