Upload
ibmbanking
View
234
Download
0
Embed Size (px)
Citation preview
8/14/2019 IBM Banking: Core Banking Transformation with System z
1/16
Service-
oriented
architecture
Revolutionizing today's
banking systems
Application InnovaServices
Banking
IBM Institute for Business Value
IBM Global Business Services
8/14/2019 IBM Banking: Core Banking Transformation with System z
2/16
IBM Institute or Business ValueIBM Global Business Services, through the IBM Institute for Business Value,
develops fact-based strategic insights for senior executives around critical public
and private sector issues. This executive brief is based on an in-depth study by
the Institutes research team. It is part of an ongoing commitment by IBM Global
Business Services to provide analysis and viewpoints that help companies realize
business value. You may contact the authors or send an e-mail to [email protected]
for more information.
8/14/2019 IBM Banking: Core Banking Transformation with System z
3/16
1
Globalization continues to pressure industries for increased collaboration
within their value chains. The banking industry, a virtual backbone for all
other industries, feels this pressure both within their industry and with those
they serve. Collaboration demands technology integration, and approachesso far have resulted in redundancy and inefficiency wired together with
inefficient systems. Through a modular approach to underlying technology
integration, service-oriented architecture (SOA) can help reduce redundancy,
inflexibility and inefficiency in crucial banking processes such as payments,
multichannel integration and account opening.
Service-oriented architectureRevolutionizing today's banking systems
By Jay DiMare and Richard S. Ma
Service-oriented architecture
Bankingcustomers(thanksinlargepart
totheInternet,whichhasalteredthe
balanceofpowerbetweencompanies
andcustomerseverywhere)aregoingto
demandmoreadvocacy,morepersonal
securityand,aboveall,morecontrolintheir
bankingrelationships.
Withtheuniversalbankingbusiness
modelcomingunderincreasingpressure,
communitybanks,industryspecialistsand
non-bankswillcompetebyofferingunique
andrelevantvaluetotargetedgroupsof
customers.
Banks,recognizingthatnomatterhowgood
theyare,theycannotbeworld-classin
everythingtheydo,willsourceproductsand
IntroductionItsnosecrettobanksandtheircustomers
alikethatthebankingindustryisfacing
significantchallenges.Itsalsoevidentthat
therequirementsfordoingbusinesssuccess-
fullyindeedatallaregoingtochange
dramaticallyoverthenextdecade.Theques-
tionis,giventhenatureoftodaysbanks,and
giventhewaytheytend(orareable)toreact
tochange,aretheypreparedforavastly
differentfuture?Andjusthowdifferentwillthe
futurebe?
AccordingtoanIBMInstituteforBusiness
Valuestudy,TheparadoxofBanking2015:
Achievingmorebydoingless,thefuture,
byanymeasure,isgoingtobedrastically
different:
8/14/2019 IBM Banking: Core Banking Transformation with System z
4/16
8/14/2019 IBM Banking: Core Banking Transformation with System z
5/16
3 Service-oriented architecture
Service-oriented architectureRevolutionizing today's banking systems
SOAisanITarchitecturalstylethatsepa-
ratesanorganizationsapplicationsintotheirelementalparts,calledservicecomponents
(commonbusinesscommandslikecheck
creditorcalculateinterestrate,forexample).
Thesecanthenberearrangedwithunprec-
edentedspeedtocreatenewapplications
(meaning,amongotherthings,thatbanks
canextendthelifeofexistingITassetsalmost
indefinitely,andconserveonthepurchase
ofnewassets).ThinkoftheLegotoy,orthe
atomicelements.Fromafewbasicparts,
bankscancreateavirtuallyunlimitednumber
ofcombinations,ofanysizeorshape.This
modularconceptisattheheartofSOA.
Now,duetoopenbusinessandtechnology
standards,servicecomponentsfroman
institutionsapplicationscanbecombined
withthoseofitspartners,suppliersandeven
itscustomerstocreatenewsuperapplica-
tionscompositesoffunctionalitythatcan
spancompaniesandindustries.Throughthis
kindofintegrationandcollaboration,SOAcan
sparkinnovation,andleadtoentirelynewbusi-nessopportunities.
Inessence,SOAmakesITadapttothe
needsofbusinessinawayneverbefore
possible.BeforeSOA,tohavethislevelofflex-
ibility,aninstitutionmighthavecompelledto
deployandintegrate20differentsoftware
applications.WithSOA,anenterprisehasto
buildonlyonewhich,comparativelyfast,it
canreconfigure20differentwaystomeetthe
imperativesofchangingbusinessandmarket
conditions.
Itisthisextraordinaryflexibility(therootof
allSOAbenefits)thatwewilldiscussinthecontextofpayments,multi-channelintegration
andaccountopening.
Simpliying paymentsInpayments,becausethereareduplicate
applicationswithpoint-to-pointconnections,
thearchitectureistraditionallycostlytomain-
tain.SOAcanprovidealayertoreducethe
numberofintegrationpointsanddecrease
overallcoststhroughthereuseofcommon
services
The business challengeInmanybanks,factorssuchasmergeractivity
mountingregulatoryrequirements,globaliza-
tionandelectronicpaymenthaveresulted
inapplicationsthathavebecome,toputthe
matterstarkly,virtuallyimpregnabletowersof
verticality,muchlikeadjacentskyscrapers.
Becausenootherpracticableoptionswere
available,thetendencyhasbeentobuildnew
applicationstomeetnewrequirementsnotto
reconfigureexistingones.
Ingeneral,thishasresultedinduplicate
interfacesandapplications;complexpoint-
to-pointsolutionsthataredifficulttomaintain
andupdate;lessflexibility,sincethebusiness
logicisimprisonedinsiloedapplications;a
lackofstandardsforintegratingapplications;
increasingmaintenanceandimprovement
costs;andalackoftimely,consistentinforma-
tionacrosschannels.
8/14/2019 IBM Banking: Core Banking Transformation with System z
6/16
4 IBM Global Business Services
Furthermore,regulationsliketheEuropean
UnionPaymentServices,BaselII,the
SingaporePaymentSystemsAct,EUCreditfor
Consumers,USCheck21andEUSettlement
&Clearingareforcingchangesintheway
paymentsaremadepavingthewayfornewcompetitors,addingmoretransparencyto
paymentsystemsandexpeditingtheadoption
ofstandardpaymentprotocols.1
Armedwiththechoicesandinformation
providedbytheInternet,customersare
puttingmorepressureonbankstomake
paymentsfaster,lesscostlyand,increasingly,
morecustomized.Thereiscertainlyaninexo-
rablemovetowardelectronicpaymentsand
invoicing,meaningthatbanksmustfollowsuit.
Iftheyaretemptedtoresist,theycouldpayaheavyprice:non-banksowingmainlytothe
availabilityofstandardizedbusinessprocesses
madepossiblebySOAarestartingtoinvade
theplayingfield.
Thegoalisnotnecessarilytobuildor
purchaseanewapplicationeachtimeanew
regulationorcustomerdemandarises;itisto
beabletoreconfigure,totheextentpossible,
existingITassetstoaddresstheseevolving
requirements.
How it works todayFigure1showsageneralizedviewofthe
currentpaymentssituation.Thetangleof
linesamongtheenterprisesystemsandthe
externalpaymentssystemsorchannelsvividly
illustratestheproblem.
External paymentchannels
Real time grosssettlement*
Check
Card
Norw: Likely multiple channels, one per country. The UK system is
CHAPS, US is Fed Wire, Singapore is MEPS+, etc.
Source: IBM Institute for Business Value.
Automatedclearing house
FIGURE 1.
Current view o the banking payments domain.
Paymentsystems
Tradefnance
DDA
Bill pay
Cashmanagement
Loan
Treasury
Ontheleftisatypicalsetofcorebanking
systemsthatmayoriginateoraccepta
payment;ontherightarethedifferentpayment
systemsorpaymentchannels.Theimplica-
tionisthatthecoresystems,andthenumber
ofpaymentchannels,canvaryfrombank
tobank,aswellaswithinthebank.Yearsof
changeandsystemsevolutionhavemade
thesituationmorebrittle;asinglechange
canhavesomanyrepercussionsthatbanks
becomediscouragedfromtryingtoadapt.
Thisexample,seeminglysimpleandstraight-
forwardatfirstglance,showssixinternal
connectionslinkingtofourexternalsystems
resultingin24uniquenetworkconnections.
Eachtimeanewinternalsystemisadded,four
newconnectionsmustbecreated.Conversely
eachtimeanewexternalsystemisadded,
youcancreatesixnewconnections.Butthisis
onlypartofthestory.
A primary goal o
using SOA to simpliy
payments is to enable
banks to reconigure
existing IT assets whennew regulations or
customer demands arise
potentially avoiding the
need to build or purchase
new applications.
8/14/2019 IBM Banking: Core Banking Transformation with System z
7/16
5 Service-oriented architecture
Continuingourexample,eachofthe24network
connectionsmustthensupportandmaintain
eighttypesofbusinesstransactions,consisting
ofapproximately160messagetypes.Many
willrecognizethetypesoftransactionsand
messagetypesinFigure2assomethingweknowhappens,butusuallynotdirectlyinthe
contextoftheprimarytransaction.
Now,considerthemath.Inourpartialexample,
wehave160messagetypesandover24
networkconnectionsandwehaventeven
beguntotalkaboutcomplicationslikemain-
tenancecostsorchangesrequiredbythe
paymentchannelstokeepupwithtechnology
changes.Thesheernumberofcombina-
tionsandpermutationsoftransactionsand
messagetypesflowingovervariousnetworkconnectionsisdaunting.Whatisneeded
isasystemthatcanreducethenumberof
connectionsamongallofthepartnersinthe
paymentprocess.Thedifferentcoresystems
canthenabsorbthenewwayofmaking
payments,andwithoutimpactingtheflowof
business.
Integrating payment applicationsInthepast,manybanksattemptedtointe-
gratepaymentapplicationsbyinstallinga
centralpaymenthuborgatewaytodealwith
aspecificbankingpaymentchannel.These
solutionseventuallyevolvedtogateways
supportingmultiple,butstillspecific,payment
channels,andincludeddatatransformation,
messageformatting,loggingandsoon.In
manycases,thesecentralsolutionsarenow
aged,andasinflexibleasthesystemsthey
connect.Worse,theyaddanadditionallayero
fragileconnectionsfurthercomplicatingourmathexample.
SOAprovidesawaytoemployreusable
servicestoconductthedifferentpayment
transactiontypes.Theseservicescanbe
independentofthecorebankingapplica-
tionsystemsandthepaymentchannelsthey
support.ThisapproachisillustratedinFigure3.
Thelayerofservicessupportingpayments
canalsosupportanynumberofpayment
channelsorsystemswithoutcausinganychangetothecoreenterprisesystemsorigi-
natedortargetedbythepayments.Ineffect,
thislayerofservicesabsorbs,orbuffers,
changesmadeinthebanksystemsor
externalpaymentsystems.
Source: IBM Institute for Business Value.
FIGURE 2.
Four o eight payment transactions withcorresponding message types.
Accept out-payment instructionModiy out-payment instruction
Generate communication detailsRepair queue
Retrieve in-payment profleAccept in-payment instructionGenerate communication detailsRepair queue
Accept transer instructionRecord transer instructionGenerate communication detailsRepair queue
Accept out-payment instructionModiy out-payment instructionGenerate communication detailsRepair queue
Provide out-payment
Enact in-payment
Provide account transer
Administer paymenttransaction
Sample businesstransactions
Sample messagetypes
8/14/2019 IBM Banking: Core Banking Transformation with System z
8/16
6 IBM Global Business Services
Wecanseetheadvantagenumerically.Inthis
example,SOAreducesthetotalnumberof
networkconnectionsfrom24to10,thetotal
businesstransactionsfrom192to48and,
astoundingly,thetotalnumberofmessagetypesfrom3,840to44.SOAnotonlydecreases
thenumberofconnectionpoints,itenables
thereuseanutterlycentralSOAconceptof
commonmessagetypes.Thisgreatlyincreases
theprobabilitythattheservicescreatedcanbe
usedbymost,ifnotallsystems,withinthebank.
Changescanbemadeinwavestominimize
businessdisruptions.
The value SOA can bringThevaluereturnedtothebankcanbesignifi-
cant.Atitscore,thisapproachsetsthestagetosignificantlyreducecostswithfewerinter-
faces,andfewerbusinesstransactionsand
messagetypestomanage.Plus,thecreation
ofcommonmessagetypescanresultinless
duplicationofeffortandreducedsystems
maintenancecosts.
Importantly,thereareopportunitiesfornew
revenuesources,sincenewsystemssuch
asmobilepaymentscanbeintegratedinto
existingsystems.Currentsolutionsoftenhinde
thebankbyrenderingthecurrentstateinflex-
ibleandresistanttoanyrequestedchanges.
WithSOA,thebankcaneasilyaddnew
paymentchannelsandnewapplicationsto
existingpaymentscapabilitieswithoutupset-
tingbusinessasusual.ThisisreallywhatSOA
isallabout.
Intermsofreducingoperationalrisks,SOAcanenhancemonitoring,sincemoreapplica-
tionsuseacommonapproachtosendingand
receivingpayments.
FIGURE 3.
Proposed SOA services supporting payments.
External payment channels
* Likely multiple channels, one per country. The UK system is CHAPS, US is FedWire, Singapre is MEPS+, etc.
Source: IBM Institute for Business Value.
Paymentsystems
Tradefnance
DDA
Bill pay
Cashmanagement
Loan
Treasury
Out-payment servicesGenerateout-paymentinstructionModifyout-paymentinstruction Sendout-paymentinstructionIn-payment servicesReceivein-paymentinstruction Acceptin-paymentinstruction
Account transer services Accepttransferinstruction Testfundsavailability Applyaccountingentry
SOApaymentsservices
e.g., Send out-payment
e.g., Provide out-payment
e.g., Provide out-payment
Bank enterprise systems
Real time grosssettlement*
Check
Card
Automated clearinghouse
8/14/2019 IBM Banking: Core Banking Transformation with System z
9/16
7 Service-oriented architecture
Integrating multiple channelsTraditionally,bankingapplicationsarediscon-
nectedacrosstheorganization,makingit
difficulttooptimizeexistingcustomerpotential.
SOAcanprovideanintegrationlayertoenter-
priseapplications,andanall-encompassingviewofthecustomerrelationship.
The business challengeTooptimizecustomerloyalty,profitabilityand
growth,bankswillhavetocapitalizeonthe
potentialofeachcustomerrelationship,and
providecustomerswiththemostattractive
rangeofproductsandservices.Oneofthe
biggestbarriershereisthelackofintegrated
customerinformationitistypicallyfrag-
mentedacrosschannels.
Fiercecompetitionamongfinancialinstitu-
tionsfueledtoagreatdegreebytheInternet
hasresultedinarangeofproductoffer-
ingstailoredtocustomerneedsandtohelp
reachpotentialcustomers,andbasedonthe
entirerelationshipthecustomerhaswiththe
bank.Thedevelopmentoftheseproductswill
become,webelieve,anincreasingsource
ofsustainablecompetitiveadvantageand,
therefore,awaytoextractpremiumpricing.
Currently,todeveloptheseproducts,banks
mustrelyheavilyondata-gatheringsystems
thatintegrateapplicationswithinthebank.
Theseinteractionsassumingtheyexistat
allarecostlytomaintain(eatingintothe
marginsthatthepremiumpricingwouldother-
wiseincrease),inflexible,andpronetoerror.
How it works todayAsFigure4suggests,thetangledwebof
interfacesrequiredandthelackofavail-
ableinterfacesimpedethebanksrealtime
accesstotherequireddata.
Inmanycases,eachmajorservicegoesto
marketthroughthesamesetofchannels.
Thoughthesechannelsmightdealwiththe
sameproductsandservices,thereisoftenno
integrationamongtheapplicationssupporting
thechannelandtheapplicationssupporting
theproductareas.Forexample,ifacustomer
usesthebankscreditcardservices,heorshemustreinitiatetherelationshipwiththebank
ifapplyingforamortgage,andthenagain
forwealthmanagementservices.Thebank
cannotcapitalizeonthecustomerscurrent
interest,orcountonreachingtheoptimalprice
becauseitcannotaccessalltheinformation
itneeds.Theresultcanbeadissatisfying
experienceforthecustomer,aredundant,
time-consumingandcostlyprocessforthe
bankandamissedopportunitythatishard
torecover.
Core businessapplications
Source: IBM Institute for Business Value.
FIGURE 4.Banking channels use o key bank applicationplatorms.
Channelapplications
Teller
ATM
Kiosk
Branchplatorm
Post
Internet
Phone
Retail
Core bankingapplications
Credit cardapplications
Wealth managementapplications
Brokerageapplications
8/14/2019 IBM Banking: Core Banking Transformation with System z
10/16
8 IBM Global Business Services
Information when and where neededToaddressthisproblem,channelapplica-
tionsaretailbranchtelleroraWeb-based
homebankingsystem,forexampleneeda
consistentwaytoaccesscorebankingappli-
cationsintheservicearea.SOAprovidesastandards-basedapproach.
Figure5belowshowsalesscumbersomeway
tointegratechannelapplicationsandservice-
areasupportapplicationsusingasinglesetof
SOAservices.
Aswithpayments,therearetechnologiesthat
candothis.WhatisdifferentwithSOAisthe
services layer.Forexample,inorderforaretail
branchplatformapplicationtogetinformation
aboutthetotalbank/customerrelationship,theapplicationmustconnecttoallproduct
systems,andwillrequireaconstantflowof
realtimeinformationfromthecoresystemsthat
canbeupdatedandviewedacrosschannels.
AsshowninFigure5,thatinformationwould
include:
Customerinformation
Productinformation
Ratesandfees
Balancedetails.
WithSOA,abankcanemploydifferent
categoriesofservicescustomer,product,
balance,historyandcreateastandard
setofservicestoshareinformation.Asingle
getbalanceservice,forinstance,couldbe
appliedtoanyproductwhereitwouldberele-
vant.Acrossmultipleservices,thatamounts
toabigconservationofresources,andhuge
gainsinefficiency.
Returning value with SOA
Thebanknowhasaholisticviewofitscustomer.AndbecausetheSOAlayermakes
iteasiertointegrateapplications,thebankcan
offeritscustomersmoretailoredproductsand
services,atthepremiumpricesthemarketwill
bear.Sinceinformationissharedinrealtime,
controloftheprimaryproductremainswiththe
Core business applications
Source: IBM Institute for Business Value.
FIGURE 5.SOA Services supporting channel applications and other service-area applications.
Channel applications
Retail bank supportapplications
Support applications
Wealth managementsupport applications
Credit cards supportapplications
Brokerage supportapplications
SOAservices
Get account details
Retail Internet
Post Phone
Inormation servicesGetrates,fees,lookupAccount servicesCustomerinformationGetaccountdetailsBalances,positionsTransactionsProduct servicesProductdetails
Get account details Core bankingapplications
Credit cardapplications
Wealth managementapplications
Brokerageapplications
By integrating customer
inormation across
channels, SOA can
help banks develop and
leverage a holistic viewo each customer to
build customer loyalty
and to oer the most
attractive range o
products and services.
8/14/2019 IBM Banking: Core Banking Transformation with System z
11/16
9 Service-oriented architecture
applicationbestsuitedtomanageit.Eachtime
aserviceorchannelisadded,itcanconnect
toandaccesseverythingelsethroughthe
SOAlayer.Thishelpsimproveflexibility,lower
labortimeandcosts,reducerisk,andoptimize
thevalueofeachcustomer.Italsopermitsthebanktopursueoptimizedpricingbasedona
customersentirerelationshipwiththebank.
Standardizing account openingAccountopeningisacorebankingfunc-
tionthathasbecomeamajorexpense,and,
ironically,apotentiallysignificantbarrierto
businessgrowth.Whiletryingtomaintain
orevenimprovethisservice(afterall,itis
acustomersfirstrealcontactwithabank),
banksmustalsoattempttoreduceitsexpense
strivingforthatelusivegoal:betterserviceat
alowercost.
The business challengeTheaccountopeningprocesshasbeen
hamstrungbyfactorslikelegacysystem
constraintsandduplicateeffortsacross
productlinesandchannels;themaintenance
ofmultipleinterfacesamongmultipleaccount
openingsystemsandapplicationsacross
productlinesandchannels(perhapsthe
biggestsinglecostitem);frequentdisruptions
andalterationsresultingfrommergersand
acquisitionsactivity;andtheproliferationof
regulationssuchasThePatriotActandknow
yourcustomerpractices,amongmanyothers.
Theentireprocesshasbecomepainfulfor
banksandcustomersalike.Pre-salessuffers
fromlowclosurerates,incompletecustomer
views,tellersblurredcustomerfocus,and
ashortageofcollaborativematerialtoease
theprocess.Theapplicationstageisafflicted
bycomplexforms,fewuniformapplicationsacrosssimilarproducts,errorsduetothere-
keyingofinformation,and,again,nosingle
customerview.Theverificationstagelacks
thebenefitofdigitalimagingand,onceagain,
offersnovisibilityintocustomerpatternsand
expectationsinatimelyoruniformway.
Addressingandfulfillingtheserequirementsis
hard,duetonodigitalsignaturecapability,a
lackofautomatedfunding,thehigheradmin-
istrativecostsofpaperletters,andineffective,
disappointingfollow-upforinactiveaccounts.
How it works todayLetsfirstconsidertheplayersandsystems
involved.Rememberthat,inmostcases,there
isacorebankingsystemforeveryproduct
forwhichacustomerwouldopenanaccount.
Also,asmentionedinthepreviousscenarios,
thereareanumberofdifferentchannelsoftensupportedbymultipleapplications.Fulfillment
isusuallyaseparateorganization.And
customersdealwiththedifferentchannels,not
withfulfillmentorotherinternalbankdepart-
ments.Itiseasiesttograsptheproblemand
itscurrentsolutionbylookingattheprocess
typicallyemployedtoopenanewaccount,as
showninFigure6.
Therearesomecriticalthingstonoteinthis
process.First,theend-to-endcycletimeis
hamperedbytheneedtoaccessmultiplesystems,somelegalconsiderationsand
thenumberofpartiesinvolved.Second,
numerousactivitiesarepronetoerrors,
causingredundanciesandfurtherdelays.This
iscomplicatedenoughforanyonebusiness
areaorproductline.Now,considerduplicating
thisprocessforthenumberofotherprod-
uctsthatabankhastooffer.Mostlikely,this
sameprocessisexecuteddifferentlyforeach
productandalso,possibly,variesacrosseach
channel.
8/14/2019 IBM Banking: Core Banking Transformation with System z
12/16
10 IBM Global Business Services
Simplifying the processTheaccountopeningprocessisaclassic
exampleofatechnology-enabledprocess(or,
forsomebanks,the lackofone)impededby
theaccumulatedlegaciesofthefast-evolving
technologylandscape.
Whatisneededhereiswholesalebusiness
processchangewithflexibilitybuiltinto
accommodatefurtherchange.Itiseasiest
tochangeprocesseswhensystemsareat
thefirstpointofcontactwheretheaccount
openingisfirstrequested,andwhenthebank
canaccessthenecessaryinformationand
systemsinrealtime.WhetheritisaCRMappli-
cationoranewaccountopeningapplication,
anysingleapplicationattemptingtocoverthistaskwillrequireextensivesystemsintegra-
tioncapabilitywithinthebanksinfrastructure.
ShowninFigure7istherevisedprocess,
whichassumesthatthebankcanachievethe
levelofsystemsintegrationneededtosupport
therevisedflow.
Thisnewaccountapplicationispossibleonly
ifitcanaccessthesystemsrequired,suchas
electronicformsandcompliance.Thisgoes
beyondtheread-onlyaccessrequiredbefore
finalreview.Ideally,thenewaccountapplica-
tionwoulduseSOAservicestoactuallycreate
theaccountintheproductsystemitself.How
wouldwebuildsuchasystemusingSOA?
Figure8showshow.
FIGURE 6.
General representation o the current account opening process.
CustomerReceive and
complete
Retail/internet
Legal
Compliance
Time
Send ormsto client
Send tobranch withsignature
Receive andreview
Accountprocessingapprovals*
Receive andapprove*
Receive andapprove*
Retail CRMSystem
Receive andreview
Receive andreview
RetailAccountSystem
Fulfllment
Systems
Initialrequest
Retail CRMSystem
Retail CRMSystem
ComplianceSystems
ComplianceSystems
RetailAccountSystem
Send checks,cards, etc.
Account isopened
!
Accountopen
* May cause another round of customer interactions, if data is not valid/compliant.
Source: IBM Institute for Business Value.
Repeat until complete
Repeat until complete
Repeat until complete
SOA streamlines
the account opening
process; it provides a
consolidated customer
view and more eicient
processing that can
reduce bank costs and
improve customer
service.
8/14/2019 IBM Banking: Core Banking Transformation with System z
13/16
11 Service-oriented architecture
FIGURE 7.
General representation o a revised account opening process using an SOA-enabled application.
Customer
Retail/internet
Legal
Compliance
Time
Collect dataAutomatedvalidations
Final review
Retail CRMSystem
Receive andreview
Fulfllment
Systems
Initialrequest
ComplianceSystems
RetailAccountSystem
Send checks,cards, etc.
Account isopen
Source: IBM Institute for Business Value.
New Account Application System
Complianceapproval
!
Accountopen
Exceptions
Core business applications
Source: IBM Institute for Business Value.
FIGURE 8.Building or integrating a new account application using SOA services.
Channels
Core bankingapplications
Credit cardapplications
Wealth managementapplications
Mortgage andlending applications
SOAservices
Retail
Internet
Post
Phone
Validation servicesCheckforduplicate
accountsAccount servicesFindaccountCreateaccountUpdateaccountDeleteaccount
Create account
New AccountApplication
System
8/14/2019 IBM Banking: Core Banking Transformation with System z
14/16
12 IBM Global Business Services
Thebankwouldbuildalayerofservices
andusetheservicestoaccesstheaccount
managementfunctionalityinthecorebusiness
applications.Asinglesetofserviceswouldbe
built.Aservicetofindanaccountmayactually
haveadifferentfunctionineachcorebusinessapplication.However,therewouldbeasingle
SOAserviceforeachaccountmanagement
function.
Inthisexample,weshowaNewAccount
ApplicationSystemusingtheseservices.This
doesnotalwayshavetobethecase.These
servicescanbeusedbyotherbankapplica-
tionsdirectly.Forexample,theonlinebanking
applicationcouldusetheSOAservices
directly.Thistypeofimplementationsetsthe
basisforfuturereuse,andmoreimportant,ITflexibility.
The value to the bankBankscanrealizeasignificantreturnfromthis
processandthesystemsusedtocreateit.
Aboveall,therevenuegainsfromfocusingon
theprocesscanhelpjustifythecoststobuild
thisreusableapplicationinfrastructure.The
increasedclosureratesonnewaccountscan
yieldnewrevenueandbroadentherelation-
shipbankshavewiththeircustomers.
Therearenumerouscostsavingsforthebusi-
ness,inareaslikedatacollectionanddata
sharing.Thereisalsomoreflexibilityforboth
thebusinessanditsITenvironment,since
a360-degreeviewofthecustomercanbe
achievedwithcurrentcorebankingsystems.
Thisisaremarkablesetofbenefits,and
typicalofSOAinthatitoffersbetterserviceat
lowercost.Usually,technologieshaveoffered
oneortheother,butnotboth.Inthissense,
SOAtriumphsovertheconstraintsoftraditional
economics.
ConclusionBanksmustcollaborateandtechnology
mustbepartofthatcollaboration.SOAoffers
anapproachtobankingpaymentsthatisa
progressivesolutionwithlowercostofopera-
tionthantodaysalternatives.Theinherentflexibilitywouldpositionabankfornew
paymentchannelsandnewpaymentsources
andtargets.
Tosupportmultipledistributionchannels,a
layerofSOAservicesallowsmoreflexibility
forchangeandgreaterproductdistribution,
aschannelapplicationsandchannelsupport
applicationsarenolongertightlylinkedtocore
bankingsystems.AnSOAsolutioncanalso
enabletheopeningofanaccountformultiple
productlinesthatisseamlesslyintegratedwith
multipleback-endsystems.Thebenefitscan
includenotonlylowercosts,butincreased
revenueandoptimizedcustomerrelationships
SOAisindeedrevolutionary.Byexploitingits
capabilitiesinternally,aswellaswithexternal
entitiesofallkinds,institutionscanforgenew
connectionsandsupportnewlevelsofcollab-
orationandinnovation.Thereissimplynolimit
tothenumberofconnectionsandconfigura-
tionswithbenefitsthatpromisetoreshape
notonlyabusinessoranindustry,butawhole
economyeventheglobaleconomy.Inthis
way,IBMbelieves,SOAispotentiallyastrans-
formativeastheInternet.
Butpreciselybecauseofitsrangeandpower,
SOAcanbealittledauntingtotheorganiza-
tionthathasyettouseit.Likeanythingelse
ofthisscale,itmustbeemployedrespon-
siblyandintelligentlywithasenseofvision,
purposeandstrategy.Throughourownuseof
SOAandinthousandsofSOAengagementsacrosstheworld,IBMhasgainedaverygood
senseofhowtoproceedwithSOA:
8/14/2019 IBM Banking: Core Banking Transformation with System z
15/16
13 Service-oriented architecture
Focusonabusinessproblem,anduseSOA
tosolveit.SOAisameanstoanendnot
anendinitself.
Ifpossible,startwithrevenue-generating
capabilities.Forbanks,thismightmean
multi-channelintegrationoraccountopening.
Startsmall.UseyourfirstSOAprojectto
learntheropes.Ifitissuccessful,showitto
otherpartsofthebusinesstodemonstrate
whatcanbedonewithSOA.
Begintobuildnewhumancapabilities.SOA
requiressomespecializedskillsthatentaila
learningcurve.Itisbesttoinstilltheseskills
now.
Thinklong-term.Thehardest,mostprolonged,andmostexpensivepartof
SOAisbuildingtheinitialarchitecture.Once
thatsinplace,additionsorchangesnew
channels,back-officefunctionsorbusiness
linescanbemademuchfasterandless
expensively.Overtime,thereturnonthis
initialinvestmentcanbedramatic.
Whetheryoubuild,buyorevolvetoanSOA
infrastructure,thetimetostartisnow.SOA
canhelpreducetheITinhibitorstochange
allowingbankstocollaboratemoreeffectively
withintheirownfourwalls,amongeachother,
andwiththeircustomers.
About the authorsJayDiMareisanAssociatePartnerwithinIBM
GlobalBusinessServices.Hehasovertwenty-
fiveyearsexperienceinthedevelopmentof
large-scale,complex,cross-organizationappli-
cationsinthefinancial-markets,bankingandinsuranceindustries.Jayiscurrentlythegloba
leaderfortheApplicationInnovationServices
teamattheIBMInstituteforBusinessValue.
Hisrecentlypublishedpaper,Service-oriented
Architecture:Apracticalguidetomeasuring
returnonthatinvestment,presentsaframe-
workformeasuringthebusinessvalueofSOA
investments.Heholdsapatentforsoftware
algorithmsapplicabletodocumentmanage-
mentapplications,andhasdevelopedIBM
softwareproductsinpartnershipwithclients.
JayisanIBMCertifiedITArchitectandacerti-
fiedMasterITArchitectwithTheOpenGroup,
aswellasamemberoftheIBMITArchitect
CertificationBoard.Jaycanbecontactedat
RichardS.MaisaSeniorManagingConsultant
withtheStrategyandChangepracticewithin
IBMGlobalBusinessServices.Hehasover
seventeenyearsofexperienceinabroad
rangeofindustries.Hiskeyskillsincludestra-
tegicplanning,riskevaluation,program/project
management,financialanalysis/modeling,appli-
cationdesignanddevelopment,andvendor
selectionandnegotiation.PriortojoiningIBM,
Richardworkedasanauditor,amanagement
consultantandoperationsdirectorforseveral
companies.Mostrecently,hewasacorpo-
rateriskSVPforaglobalfinancialservices
company.HiscertificationsincludeCPA,
CISSPandCBCP.Richardcanbecontactedat
8/14/2019 IBM Banking: Core Banking Transformation with System z
16/16
GBE03015-USEN-01
The right partner or a changing worldAtIBMGlobalBusinessServices,wecollaboratewithourclients,bringingtogether
businessinsight,advancedresearchandtechnologytogivethemadistinct
advantageintodaysrapidlychangingenvironment.Throughourintegratedapproach
tobusinessdesignandexecution,wehelpturnstrategiesintoaction.Andwith
expertisein17industriesandglobalcapabilitiesthatspan170countries,wecanhelp
clientsanticipatechangeandprofitfromnewopportunities.
Related publicationsDiMare,Jay.Changingthewayindustrieswork:Theimpactsofservice-oriented
architecture.IBMInstituteforBusinessValue.October2006.http://www-935.ibm.
com/services/us/gbs/bus/pdf/g510-6319-01-soa-changing.pdf
DiMare,Jay.Service-orientedarchitecture:Apracticalguidetomeasuringreturnon
thatinvestment.IBMInstituteforBusinessValue.October2006.http://www-935.ibm.
com/services/us/gbs/bus/pdf/g510-6320-soa-roi.pdf
Hedley,Kimberly,JohnWhite,CormacPetitditdelaRocheandSunnyBanerjea.The
paradoxofBanking2015:Achievingmorebydoingless.IBMInstituteforBusiness
Value.November2005.http://www-935.ibm.com/services/us/imc/pdf/ge510-6225-
banking-2015.pdf
Reerence1 Formoreinformationonthesesampleregulations,pleasesee:EuropeanUnion
PaymentServices(acollectionofdirectives,regulations,andrecommendations).
http://ec.europa.eu/internal_market/payments/index_en.htm;BaselII(referstothe
BaselIIFramework).http://www.bis.org/publ/bcbs107.htm;SingaporePayment
SystemsAct(boththeinitialregulationsandsubsidiaryregulations).http://www.
mas.gov.sg/legislation_guidelines/index.htmlandhttp://www.mas.gov.sg/legisla-tion_guidelines/payment_system/payment_act2006/PSOA_Subsidiary_Legislation.
html;EUCreditforConsumers(legislationaddressingconsumerloans).http://
www.europarl.europa.eu/oeil/file.jsp?id=225692;USCheck21(CheckClearing
forthe21stCenturyAct).http://www.federalreserve.gov/paymentsystems/trun-
cation/default.htm;EUSettlement&Clearing(aspartoftheEUFinancialMarkets
Infrastructure).http://ec.europa.eu/internal_market/financial-markets/clearing/
index_en.htm
CopyrightIBMCorporation2009
IBMGlobalServicesRoute100Somers,NY10589 U.S.A.
ProducedintheUnitedStatesofAmerica March2009AllRightsReserved
IBM,theIBMlogoandibm.comaretrademarksorregisteredtrademarksofInternationalBusinessMachinesCorporationintheUnitedStates,othercountries,orboth.IftheseandotherIBMtrademarkedtermsaremarkedontheirfirstoccurrenceinthisinformationwithatrademarksymbol(or),thesesymbolsindicateU.S.registeredorcommonlawtrademarksownedbyIBMatthetimethisinformationwaspublished.Suchtrademarksmayalsoberegisteredorcommonlawtrademarksinothercountries.AcurrentlistofIBMtrademarksisavailableontheWebatCopyrightandtrademarkinformationatibm.com/legal/copytrade.shtml
Othercompany,productandservicenamesmaybetrademarksorservicemarksofothers.
ReferencesinthispublicationtoIBMproductsandservicesdonotimplythatIBMintendstomakethemavailableinallcountriesinwhichIBMoperates.