February 29, 2012 – by Douglas Blakey
Publication: Retail Banker International
The Banking Industry Architecture Network (BIAN), the not-for-profit association of leading banks and vendors, is ramping up its efforts to promote a reduction in integration costs and promote the advantages of service oriented architecture.
Working closely with other standards initiatives, such as ISO 20022, IFX Forum and Open Group (TOGAF), the OMG Financial Domain Task Force and the TM Forum Enterprise Cloud Leadership Council (ECLC), BIAN’s mission is to define and set the de facto IT standards for banking interoperability services.
In practice, that means banks sharing their requirements for core banking solutions.
For software vendors and service providers, the drive is to implement these solutions based on formally defined semantics with the pitch for BIAN membership being a “win-win” solution for all.
Executive director of BIAN, Hans Tesselaar, told RBI that BIAN is entering a new era.
“As a direct result of the biggest financial crisis for 80 years, there is an imperative need for the IT community to change,” Tesselaar said.
“The days of unlimited IT budgets are gone and business colleagues are demanding more value for their IT spend. This month, Gartner revised downward its outlook for 2012 global IT spending to 3.7% from its previous forecast of 4.6% growth.”
He said the future is no longer in banks investing in their own system development; instead, banks need to integrate ‘off the shelf products’ into their existing legacy environment.
“Our experience is that integration costs are often treble the purchase costs of the original software,” Tesselaar added.
He argued that such costs can make or break the business case in the deployment of new functionality or purchased packages.
In particular, every time a common bank function is developed, or redeveloped in isolation, a wealth of industry knowledge and experience is lost.
Not only does this result in wasted time, but such a function is unlikely to be the most efficient option.
“Furthermore, every time a software vendor turns these redeveloped common functions into proprietary code and claims uniqueness, the banking industry is worse off,” Tesselaar said.
He added that, by adopting industry-wide IT standards, the banking industry can begin to move towards interoperability, whereby different IT systems within a bank can work together as seamlessly as possible, without additional time or cost requirements for integration.
Tesselaar argued that the work accomplished within BIAN has implications for banking in the cloud.
He said interoperability within the application landscape is a prerequisite for deploying applications in the cloud.
For banks to use the cloud effectively, the banking sector needs “an open and controllable environment (with audit trail) and reliable interfaces or services between the different components”, Tesselaar said.
“This is what BIAN Standards provide. Whether a private, virtual or public cloud, the same issues apply,” he added.
According to a report from Gartner, The Benefits and Drawbacks of BIAN Membership, one of the biggest benefits of active participation in BIAN offers “a boost in a bank’s reputation as being a forward-looking institution by taking a leadership position on a new technology approach to bank architecture”.
Membership has grown to over 30 members from the banking and IT industry.
Banking members include: Commonwealth Bank of Australia, Credit Suisse, Deutsche Bank, Deutsche Postbank, ING, Rabobank, Standard Bank of South Africa, Scotiabank and UniCredit. Prominent vendors signed up include: Callataÿ & Wouters, IBM, Infosys, Microsoft, SAP, SunGard, SWIFT and Temenos.